EU protectionism to impact Italian quality coil procurement
Increasing European import restrictions pose a risk to the availability of specific coil grades and sizes that are not widely manufactured in Europe, Riccardo Benso, chief executive of coil service centre Albasider, told Kallanish during the Made in Steel tradeshow in Milan last week.
Certain high-quality products in Europe are priced at a premium and face limited availability. There are concerns regarding the willingness and capability of European mills to provide specific dimensions and qualities to small to mid-sized buyers.
“The rules imposed from above do not align with the needs of our complicated economic system. I’m concerned about the potential detrimental impact on quality,” said Benso, who is also a former president of Italian steel trade association Assofermet. “We had been around the world to select [coils] from the best origins; we formed partnerships that will have to be rethought, and now we will have to spend a lot of time researching new origins.”
“It is not certain that all new origins will offer the quality that our customers demand and, therefore, in my opinion, there will be an issue linked to the offer of high-end products that could, in any case, generate some perplexity among customers, some issues for the European industrial system,” he continued. “If Europe wants to be competitive on global markets, knowing that it has higher costs, it must in any case offer a product that has added value.”
Benso anticipates a transitional period will be required to adapt to the emerging protectionist landscape; however, he asserts that the downstream supply chain will implement appropriate countermeasures and successfully maintain equivalent quality standards.
The European Commission is currently revising the Carbon Border Adjustment Mechanism (CBAM). However, there is a significant risk the new framework may overlook the implications for Europe’s downstream and manufacturing sectors.
“Europe is a strong exporter … We excel at creating outstanding products and selling them, even if they are slightly pricier than others. We have to preserve our extraordinary ability to offer our products in global markets … We must pay attention to competitiveness variables, so we must not design a tool, CBAM, that only protects the upstream supply chain,” Benso noted.
Assofermet’s engagement with Europe and other steelmakers in the supply chain has improved, with collaboration beneficial to all parties. At the same time, the international trade war and the danger of US President Donald Trump’s tariffs are gradually easing.
“I am convinced that for him [Trump], the game has only just begun, and he will use it to bring as many parties as possible to the negotiating table. He has a strong vision for his country. During his presidency, he intends to do everything possible to restore the United States’ position, including an industrial one. I believe he has significantly underestimated the time and challenges associated with industrial restructuring that are required in the long run, to reallocate specific production once it has been dismantled and transferred,” Benso said.
He expects the market to require a period to absorb the existing overcapacity. The service centre sector is notably well-stocked. The current market conditions indicate an oversupply primarily in commodity grades; however, mills are reporting extended lead times for quality products and specific dimensions.
Despite subdued interest from service centres in acquiring coils, there are indications of a modest uptick in demand. Although automotive production remains subdued, the industry saw some improvement in the first quarter as car sales rose. Car component makers slightly increased their orders in Q1.
Benso anticipates a rebound in consumption in the upcoming year, with indications of a potential return of downstream demand emerging around September or October, following the summer period.
Natalia Capra France
