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dealers. Reviewing our strategies from week to week, if not almost daily, has become a difficult task, which is why I say that we need a total change of strategy.” e Assofermet Scrap division president reiterated the need for scrap dealers to retain their customers with regular and constant volumes, preparing to act as a strategic stock source for them. e main focus, however, he said, is to overcome the great fragmentation which exists in the market and to encourage the creation of associations and aggregations along the supply chain. Without this prerequisite, according to Pezzotti, scrap dealers and steel producers will continue to oppose each other in a game which sometimes hurts one side and at other times hurts the other side.
European steel output and exports significantly down in recent years During the afternoon session of the event, Joachim Schroeder, CEO of Research & Consulting Group (RCG), said that most global producing regions have been facing decrease of steel output in the last years. In Europe, in particular, the decline was 4.6 percent in 2011 and estimated in 3.2 percent for 2013. According to estimates, European steel output should reach 164 million mt in 2013, compared to 169 million mt of 2012. Schroeder went on saying that in EU-27 in recent years long product production was characterized by greater volatility compared to flat steels—the share of
Volume 7; Issue 1
AssofermetDay
tons of scrap was exported from the EU to Turkey, while in the first nine months of 2013 the volume was 8.9 million metric tons. In Germany (where Feralpi subsidiaries are based, including ESF Elbe-Stahlwerke Feralpi GmbH and EDF Elbe-Drahtwerke Feralpi GmbH), the situation is a little different thanks to a geographical area with large scrap resources and an export market which is less vulnerable. Moreover, it helps us to have monthly contracts that contribute to a much more stable price for scrap,” Pasini stated. He added that problems in scrap supply have been felt particularly in the past month. “Today, the difference between the costs of scrap for our Italian establishment and the costs for our German facilities is €30/mt,” he said. To solve the problems in the Italian steel sector, Pasini continued, “We need to stick together and find new sources of supply, and to buy as a team in order to bring a great volume of scrap into the Italian market… there are structural problems that are difficult to overcome—primarily a huge infrastructure deficit compared to competitors, but unity gives strength.” “A review of our strategy is the first change of approach we need to implement,” said Pezzotti, who, just like Pasini, said he also favors monthly contracts that would increase stability in the market. He went on to say, “ere is a worrying lack of scheduling, especially for producers, but also for scrap
rebar, wire rod and other long products dropped below 40 percent between 2008 and 2012. Meanwhile, Schroeder said, capacity utilization rate has remained relatively low and further capacity expansions are expected in China, India and MENA region at least until 2015. According to data reported by Schroeder, in 2012 global excess capacity was 545 million mt and it will be even higher in 2013—it will take years to work off surplus without idling capacities. At the same time prices have decreased dramatically in all core representative regions. In 2012 all steel related industries suffered significant financial losses and mining companies were hit the most. In recent years tight competitive environment in the steel industry in general and in steel distribution in particular was fueled by the high fragmentation of the steel industry (especially in the distribution sector) and led to a further erosion of profit margins. Schroeder also focused on demand, saying that demand in mature markets is stagnating amid slowdown of the growth observed in 2013 in the former growth area like India and
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