Steel production

Recovery of the sector is possible in 2024-2025

Last year was a difficult one for Polish steelmakers, and the sector may recover in 2024-2025, but local steelmakers are under pressure from high supply from Asian competitors. These trends were noted by PKO Bank Polski analysts in the latest industry review, interia Biznes reports.

Last year, steel producers across Europe experienced problems, and Poland is no exception. Negative factors included the energy crisis and the high cost of investment, which was supported by higher interest rates.

The end of 2023 was a period of slight recovery, which may continue in the first quarter of 2024, analysts say. However, this trend may be short-lived. The report says that the current year should be only slightly better for the industry. This is because real steel consumption in the EU is expected to be close to last year’s level this year. The recovery in industrial and construction activity, which would help the sector, will probably have to wait until 2025, experts say.

One of the problems of the Polish steel industry, analysts say, is the high intensity of emissions compared to competitors from Western Europe. Electric steel mills have an advantage in this regard. However, in Poland, their carbon intensity is less than a ton of CO2 per ton of steel, while in Germany it is 0.8 tons per ton of steel and in France it is 0.3 tons.

Overall, analysts at Poland’s largest bank say the mood in the steel industry is still negative. Polish steelmakers point to insufficient demand and competition from imports.

A factor that could improve the situation for local steel producers would be investments in the country under the National Reconstruction Plan (KPO). The sector could also be spurred by a revival in the real estate market. According to PKO BP economists, this will be facilitated by lower interest rates and support for demand for apartments. However, this may not be enough to overcome the current low.

«The oversupply of steel in Asian markets and the rebuilding of Chinese stocks amid high prices for iron ore and coking coal are putting strong pressure on margins,» the report says.

This means that Polish producers are forced to cut margins to compete with Asian exporters.

As GMK Center reported earlier, in January 2024, Polish steelmakers increased steel production by 13.2% compared to the previous month, up to 590 thousand tons. Thus, the country was ranked 22nd in the global ranking of steel-producing countries (71) by the WorldSteel Association.

Also, in 2023, Poland reduced steel production by 13.1% compared to 2022, to 6.44 million tons. Last year, the country’s average monthly steel production amounted to 536.42 thousand tons, while in 2022 the figure was 617.25 thousand tons (-13.09% y/y).