Speaking at the International Steel Trade Day organized by STSG-Eurometal in Milan on April 4, Cesare Viganò, general manager of Italy-based CLN, presented his outlook for the steel market in 2013.
The global steel industry has faced tough times since the onset of the financial crisis, which dampened demand particularly in the euro zone, with southern Europe in particular affected by falling profitability throughout the supply chain from mills to steel service centers, he said.
According to Mr. Viganò, the key challenges in the macroeconomic scenario are political uncertainty (not only in Italy), overcapacity (mainly in the most developed countries), price volatility and production costs (mills and distribution show a relative lack of profitability, leaving positive results only to the upstream side). Consolidation could be one of possible main drivers in the bid to increase profitability, even if difficult to achieve.
Viganò focused on the Italian market scenario, saying that the drop in consumption in all steel intensive sectors mainly involved construction and automotive. In Italy, the results for January show a strong increase in imports, mainly from non-EU countries, such as Turkey, China, India and South Korea. The import growth of 45 percent year on year, with flats and HRC up 85 percent and 453 percent respectively was mainly due to the case of Ilva's Taranto-based steel complex. Although Ilva was absent, during negotiations for late 2012 and January-February 2013 deliveries, domestic and European mills' price offers indicated a reduction, Viganò said.
Regarding Steel Service Centre (SCC) distribution in the Italian market, Viganò stated that due to over-competition, players' behavior had changed in the past few years, penalizing the industrial and service issues, while there is a strong emphasis on a speculative business model.