siderweb FORUM: prices at their lowest, cautious optimism for 2025
Steel prices are expected to have bottomed out and a turning point now seems close. Participants at the round table ‘Steel in Italy and the World’ held during the siderweb FORUM appeared to agree on this.
‘The steel market is cyclical by nature,’ said Yuryi Rizhenkov, CEO of the Ukrainian Metinvest Group. The current bearish trend in the sector is the longest in the last 20 years. This alone leads me to be cautiously optimistic for 2025. Of course there are many uncertainty factors, such as the war that unfortunately continues in Ukraine and the crisis in the Middle East. However, we also see that governments, such as the one in China just now, are taking steps to stimulate the economy,’ he says.
“We only hope that the effects of the latest stimulus packages from China will have a lasting effect,” remarked Fernando Espada, president of EUROMETAL, noting how, on the European side, we are instead looking closely at the ECB’s upcoming moves.
‘I believe that prices are near the bottom, because flat steel producers around the world are suffering right now,’ said Antonio Marcegaglia, president and CEO of Marcegaglia Steel. ‘Moreover, I do not see any possibility of significant reductions in raw material and labour costs given the inflation levels. We need higher prices both to cover these costs and to address investments in decarbonisation’.
Despite a weak economy and geopolitical tensions, Alessandro Brussi, chairman and CFO of Danieli, described demand for steel plants worldwide as good. “Demand for steel,” he said, “is still growing in some areas and part of this growth is due to the availability of raw materials and factors such as gas, as in North Africa. In some areas, such as Europe, demand is driven by decarbonisation and the efficient use of resources such as scrap, energy and electrodes; in others, such as India, it is driven by the need to increase tonnes produced. ”
We have an interesting pipeline of orders,’ concluded Bruschi. “The main obstacle is the need for capital, for funding, for contributions from different governments to drive technological change within the sector.”
Asked what are the main challenges facing the steel market, Marcegaglia replied that ‘structurally high costs are undermining the competitiveness of European players’ and that in order not to succumb it is necessary ‘to focus on innovation in materials, processes, performance; to remain very lean in terms of organisation, flexible in adapting production levels to fluctuations in demand, and to move more towards services and value creation’.
At the same time, both Marcegaglia and Espada stated that although protection from unfair and aggressive imports is desirable, raising walls too high risks becoming ‘a boomerang’. According to Espada, the latest EU trade measures ‘are only protecting one part of the supply chain. On the one hand it is difficult to import certain products, but on the other hand we allow the import of products with higher added value. I think the Commission should focus on initiatives to increase steel consumption. Doing so would defend the entire supply chain’.
The CBAM, the Border Carbon Adjustment Mechanism, is according to Marcegaglia ‘a good objective, but with wrong and badly applied instruments, it risks being not only ineffective but even dangerous’. The chairman and CEO of Marcegaglia Steel added that so far, in its transitional phase, the CBAM has been more “a burden from an administrative point of view”, but has not brought about much change; however, all steel players are preparing to move towards more sustainable resources and making investments to supply green steel. Marcegaglia said he hoped that the CBAM would undergo changes, but was not very optimistic about it.
Despite the EU safeguard, duties and ongoing anti-dumping investigations,Italy remains the largest importer of flat steel in Europe. This was one of the main reasons for Metinvest to evaluate Italy for its investment project in partnership with Danieli. A project that was initially intended to be for the rolling of semi-finished products from Ukraine but which, with the loss of Azovstal due to the war, became that of a full-fledged steel mill. ‘Building a domestic production of this type of product would make the Italian economy more resilient and stable,’ he said. Moreover, the project ‘aims to revitalise the area’. ‘I believe we will finalise the Programme Agreement within the next two months,’ he remarked. The Metinvest-Danieli steel plant in Piombino will use raw materials largely from Ukraine, as well as both European and imported scrap. In this regard, Ryzhenkov emphasised that ‘at European level, there will be a big increase in the availability of scrap in the coming years. In fact, the export of this raw material is expected to grow in the next five years. So there should not be a supply problem’.
On the subject of investments, Marcegaglia said that his group’s investments are mainly driven by cost efficiency and innovation and the need for value chain integration in production. These were the drivers behind the acquisitions of Outokumpu’s stainless steel long products division and Ascometal’s Fos-sur-Mer site.
Stefano Gennari
