Federacciai at SteelOrbis Italy Forum: decarbonization risks becoming deindustrialization
Speaking at the SteelOrbis Italy Forum 2024 being held in Milan on October 8, Antonio Gozzi, president of Federacciai, the Italian federation representing steel companies, began his speech highlighting the critical issues that the Italian and European steel industries are facing, pointing out that, since the steel industry is a cyclical sector, the slowing demand – caused by several factors including geopolitical uncertainties and rising interest rates – has brought about oversupply.
These two issues are also affecting the decarbonization issue in the European steel industry, Gozzi commented. Disagreeing with the earlier statements made by Paolo Sangoi, president of the steel section of Assofermet, Gozzi said, “I think we all have to work for climate change, but the way the green deal is being applied to Europe deserves further analysis. In particular, the measures that have been taken did not consider impact analysis and cost-benefit analysis. In this way, decarbonization risks becoming deindustrialization, and that would be a débacle for Europe.”
This is because the closure of integrated steel mills will lead, according to Gozzi, to the interruption of the production of a particular type of flat steel that is essential to the automotive industry, which cannot be manufactured through EAF technology. This forces the suffering European automotive sector to import this product from outside Europe, mainly from Asia, Japan, China and South Korea, i.e., from competing countries in the automobile sector.
According to Gozzi, there will be no major investments in European steelmaking from a structural point of view in the next five to 10 years, because steelmaking is a long-term looking industry, and for now it is hard to make predictions. A key issue, however, is definitely the scrap industry, because as decarbonization of steel production is a global issue, there is a shift of production from electric furnaces from 25 percent to 43 percent around 2030, which will make scrap even a more strategic and critical material.
More than 60 countries have already taken measures to curb exports, and that is why Federacciai is calling for it to become a critical raw material which needs to be protected.
Another issue is that domestic scrap in Italy is more expensive than imported scrap, and one wonders how these many electric furnaces will be fueled. The way seems to be DRI, but the issue is controversial in Europe, as it requires particularly large investments. The plant investment must be accompanied by an investment in carbon capture technologies, because DRI is not neutral, even if it halves the blast furnace’s carbon footprint. Added to this is the cost of gas, which is the main power source for DRI.
Gozzi said he believes instead that as of today the priority is to concentrate all resources in the recovery of Taranto, so that it can return to being a plant that produces at least 6 to 7 million tons, which is the breakeven point.
The last topic addressed by Gozzi was trade policies. He said he believes that Europe made a mistake in not joining the US proposal for free trade through NAFTA (North American Free Trade Agreement), thus closing off a possible profitable market for exports.
Federacciai: Italy May crude steel production falls on year for fourth consecutive month
Italian crude steel production declined for a fourth consecutive month in May, falling 3.5% to 1.9 million mt, according to data released by Italian steel producers’ association Federacciai.
Production was weighed down by weak demand as well as low output at the country’s second-largest domestic steel producer, ADI.
In the first five months of the year, crude steel production fell 5.5% to 9 million mt.
Flat steel production saw the heaviest decline in May, falling 7.5% to 765,000 mt. Over the first five months of the year, flat steel production fell 9.3% to 3.76 million mt.
ADI has been operating at its lowest-ever rate since February, with the new management working to increase production.
Long steel production in May dropped 1.8% to 1.18 million mt, reflecting a weak construction industry, with January-May output falling 1% to 5.30 million mt.
Italian HRC prices dropped to Eur629/mt ex-works Italy by May 1 from Eur685/mt base ex-works at the beginning of January, according to assessments by Platts, part of S&P Global Commodity Insights. In May prices moved sideways and stabilized. They were last assessed at Eur620/mt base ex-works on June 17.
In April domestic hot-rolled coil prices fell to their lowest level since the beginning of the year at Eur620/mt base ex-works.
Meanwhile, Federacciai members last week confirmed Antonio Gozzi as the association’s president for the two-year period 2024-2026.
Gozzi will be supported in his role by vice presidents Antonio Beltrame, Mario Caldonazzo, Michele Della Briotta, Giuseppe Lucchini, Federico Pittini and Claudio Riva.
CBAM export impact concerns EU steelmakers: Federacciai
The transitional phase of the EU’s Carbon Border Adjustment Mechanism (CBAM) will begin on 1 October. As the implementation approaches, market participants in Europe are discussing the new system and its challenges. Steelmakers remain concerned for the future of steel exports.
Flavio Bregant, director general of Federacciai, the Italian steelmakers’ association, confirmed in a webinar on Thursday attended by Kallanish that the main problem for steelmakers is CBAM’s impact on their exports once the transitional phase is completed. CBAM’s full implementation is scheduled from January 2026.
“At the moment, CBAM only covers imports. We are happy to hear from the European Commission that they will look into the issue of exports in 2025, but we have explained the problem multiple times already and until now we have received no answers,” Bregant lamented.
From the beginning of 2026, free allocations of Emissions Trading System (ETS) certificates will be phased out, further increasing costs of production for European steelmakers to ensure the low-emission transformation takes place. This is set to make European steelmakers less competitive in the international steel market, hence the difficulties in exporting if fiscal support is not secured from the European Commission.
“Personally, I see exports of European steel products falling to zero once CBAM is fully implemented. This will result in the need for European steelmakers to reduce output at their mills, while keeping the doors open to imports,” Bregant explained. “I see exports falling, not imports.”
Other representatives of the steel supply chain, on the other hand, are concerned by the potential reduction in EU imports as a result of CBAM implementation (see related articles).
In 2022, European steelmakers exported over 16 million tonnes of finished steel products. This figure is over 10mt below the record levels registered in 2012-2016.
Emanuele Norsa Italy
