Mr. Manni, we have observed many people at this exhibition. How would you explain this level of interest?
Well, I also ask the same question of the players I meet here. I would like to understand it as well. The feeling is that most people are curious, they would like to catch information about the crisis from industry and market specialists: causes, development outlooks and forecasts. Meanwhile, end-users would like to know if prices have already hit bottom or if there is still further room for them to fall.
And what about the situation in your end-user markets?
The situation in our end-user markets perfectly reflects Italy's economic conditions, which have not spared the steel industry. Our end-user markets are represented essentially by two sectors: construction - which seemed to be the only sector hit by the crisis when the slump started in the USA - and machinery. The original forecasts, anyway, were not exact: the financial crisis also went on to have an impact on the machinery sector - a sector in which Italy is for the most part an exporter. The fall in consumption is equivalent to 35 percent for longs and to 50 percent for flat products (I'm referring to the trend observed in Q1 year on year). It would be delusional to hope that the situation will see a recovery in the near future. We will have to wait at least one year before this happens.
Will this slump at least have some positive effects?
I am sure this crisis will draw a line between the strong mills and the others. The strong mills are those which generate added value for their customers. To perform well every mill has to generate value and advantages for its customers. This will lead to producers, service centers, traders and end-users operating in a different tier.
Do you think that, in this global crisis, long-term agreements could be more attractive for customers?
Concerning prices, during the first half of 2008 they reached an excessive level. It has to be admitted that subsequent decreases did allow consideration of a more positive situation in some regards: e.g. lower raw material costs mean expanded demand for raw materials. Currently, we are in a wait-and-see situation which has become more pronounced for non-essentials (second house, third car and so on). This wait-and-see situation signals a lack of confidence. At the moment it does not make sense to talk about long-term agreements, but I am sure that in the middle term we will have to adjust the focus of our activity and build up customer loyalty; this can be achieved by offering a high quality service.
What about the construction industry?
We have 8,000 European customers operating in the construction industry, so I know it very well. The main difficulty at the present time is caused by unsold houses and flats. The first step, so, consists in selling off this unsold real estate , meanwhile, drastically decreasing new building activity given the current absence of demand. This is the only way to speed up the market recovery. The stimulus plans which involve new infrastructure projects will have surely positive effects, but we will have to wait at least until next year to see them.