Poland’s steel industry is fairly upbeat despite challenging external forces, thanks to supportive regulation and the revival of a national steelmaking icon. However, a reduction in energy costs, among the highest in Europe, and protection for downstream steel users will be critical to the industry’s future survival.
This was the conclusion of the steel industry panel during Friday’s European Economic Congress in Katowice attended by Kallanish.
Henryk Orczykowski, chief executive of distributor Stalprofil, even went as far to say that “the European steel industry is currently seeing its largest opportunity for future development of the 21st century” – what he called “a controversial argument”.
This is because it has been recognised by policymakers as strategic for economic development and defence. It has received support measures at EU level, such as CBAM and the new trade regime, and in Poland it is benefiting from local content regulation, the repolonisation drive, and infrastructure spending, he noted.
Adrian Sienicki, ceo of Huta Czestochowa, which went bankrupt under former owner Liberty and has since been acquired by the Polish government, said the mill has produced 500,000 tonnes of steel since “we basically got up off our knees”. Over 20% of this goes for export. “We’ve become part of the local content chain, maybe somewhat quietly,” he added, supplying product requested by domestic customers, such as for a recent naval vessel.
Downstream, as well as upstream steel industry players will need protection, with the most effective measures being “both simple and tight, regardless of products, regardless of countries [of origin]”, Sienicki said. Without specifying which, he acknowledged the will to help “the country that is victim of an attack” as a result of war, but added this should not happen at the cost of domestic industry.
Polish Union of Steel Distributors and Processors (PUDS) president Piotr Sikorski expressed concern over the growing volumes of steel-containing product imports into Europe, and the fact steelmaker-protecting trade measures have not addressed this. “We have to start thinking [about the steel market] in a complex way. This means, using the same trade defence, we need to cover all elements of the supply chain,” he noted. The simplest way would be to extend downstream the scope of measures that already exist.
While designed to support industry, the Industrial Accelerator Act does not contain a Made-in-EU mandate for steel, while it remains to be seen how local content regulation is implemented in Poland, he added.
ArcelorMittal Poland (AMP) chief financial officer and board member Adam Preiss meanwhile said his firm is “definitely happy with the introduction of CBAM” and already seeing its first positive consequences in the market. “The question is will it [also] be protection for our customers’ products, will they get driven out of the market?”
The most pressing steel industry requirement is low-cost energy, he continued. Polish energy prices exceeding €100/MWh make domestic industry uncompetitive on an EU scale, let alone globally.
Correcting earlier press reports that suggested AMP has scrapped its plan to transition to electric arc furnaces, he said the project has been “shelved” rather than cancelled and “is waiting for better times”, given uncompetitive energy costs.
Polish coke producer Koksownia Czestochowa Nowa ceo Marek Serafin pointed out it is critical to find a balance between protectionism and competitiveness – as too much of the former always hurts the latter. He suggested it is not necessary to produce everything in Poland or the EU, but what is important is to have control over key stages of the supply chain.
Coke makers are in a “system conflict” between themselves and steelmakers. “The market is open, everyone can bring in as much coke as they want, coke is not subject to ETS … there are no entry barriers,” Serafin noted. Coke makers have three ways to survive. Increase operational efficiency; look into downstream integration, through mill partnerships or long-term agreements; and lobbying, which the coke industry has not done as effectively as steelmakers, he added.
Whereas previously it was not possible to push the narrative that “there is no steel without coke”, this situation is changing now, he added. Polish coke makers could join hands to work on measures that support the industry’s continuity at least for another 10-20 years, to feed continued blast furnace steelmaking.
Author: Adam Smith
