“But
if we insert the short-term view into the long-term
perspective then we have many reasons to be reasonably
optimistic.”
“2008 and 2009 will compare with a dramatically
positive 2007,” he continued. “Despite
a couple of years of recession the long term
growth trend remains sizeable.”
And the industry should look to the past when
examining the current economic crisis and its
effect on the flow of steel through the world,
Marcegaglia advised.
“Big and sudden swings in prices are not
new, even in recent years when most of the players
in the steel industry have managed to be very
profitable,” he told the conference, going
on to say that this performance has positioned
European steelmakers well to weather the storm.
“The steel mills have performed very well,
strengthening their balance sheets and are thus
equipped to sustain a recession. Most players
are equipped to [survive] the storm,” he
said. “Mills are reacting promptly to a
demand slowdown, which has been immediately counterbalanced
by a significant cut in production of around
25% globally.”
And, at the same time, projected reductions
in the cost of raw materials are likely to provide
further aid to these producers, said Marcegaglia,
estimating that the cost of production will be
reduced by $150-250 per tonne next year.
The landscape of the industry has also changed,
he added.
“Many European players are now part of global
powerful groups,” he said. “Others
are developing upstream – we believe that
the EU and USA are well equipped to compete globally
because of consolidation.”
And imports of low-cost steel products from overseas
are less of a threat than they once were, he said.
“Chinese mills are not competitive and are
domestically focussed [while] India will enjoy
long-term domestic growth,” he told delegates. “Russian
and Brazilian producers will see the cost of production
rise and will also have domestic demand to supply.” |
