Steel market Poland: Optimistic expectations

| Editor: Franziska Breunig

Highest steel use since 1989 along with a slight simultaneous decrease in production of this material – this was the last year in Polish steel market in times of quite poor economic conditions, stagnation in investments, and influx of cheap steep from eastern markets. This year, however, is forecasted to be way more optimistic, although the dangers that the steel industry will have to face haven't disappeared.

This year in Polish steel market is forecasted to be record-breaking
This year in Polish steel market is forecasted to be record-breaking
(Source: ArcelorMittal)

Stagnation in construction industry, which is the largest consumer of steel in Poland with shares up to 455, must have been especially difficult for Polish steel industry. Constrains in public investments financed from EU’s budget and private investments, as well as increasing costs, caused a decrease in construction and assembly production by 14% in 2016. What is more, in major sectors of the construction industry, such decreases were even more significant.

Decreases in construction and slowing down in EU investments have been, to a large extent, compensated by the remaining major branches which are consumers of steel products, that is the automotive, metal works, and home appliance industries. All of them noted increase in steel consumption by several percent. In total use of steel, Poland has become European Union’s third largest economy, following only Germany and Italy.

Slight decreases, increasing production

Throughout 2016, steel works operating on the Polish market manufactured slightly over 9 million tons of raw steel in total. The result is, taking Polish and global economic situation into consideration, quite good, because it is only slightly poorer (by 2%) from 2015 production levels. Simultaneously, production is still higher than it had been earlier. Converter steel still has a slightly larger share in the total production. In 2016, 5.1 million tons of converter steel was manufactured and made up c. 57% of total production, while 3.9 million of tones of electric steel were manufactured.

An increase in production was noted also within the ready-made steel products sector. Among hot-pressed products, long products dominate with the highest production rate for rods. Among flat hot-pressed products, the largest share in total production belongs to steel strips. Within cold-pressed flat products, an increase in production of all products has been noted, yet, cold-pressed sheets and strips have been dominating in this sector of the market for a while now.

This year is forecasted to be record-breaking. In the first half of the year, c. 5.2 million tons of raw steel was manufactured – a result better by almost 16% in comparison to 2016 YTY. In the same period, the sector of hot-pressed products increased by over 9%, while thin sheets and zinc-coated strips by 37%.

Import exceeds export

An increase in steel consumption and a simultaneous decrease in steel production caused further deterioration of the trade exchange balance. Both in terms of amounts and value, the result was negative – 4.5 million tons and 32 billion euro respectively. Last year’s revenue in international trade increased in amount by 6%, but decreased in value by 3% in comparison to 2015.

In total, in 2016, Poland exported 5.2 million tons of steel products and this result was better than in 2015 by 6%. A great majority of consumers of Polish steel, that is 91%, constitute EU member states, mostly Germany, the Czech Republic, and Slovakia, where 60% of steel products manufactured in Poland were shipped. However, export to third-party countries increases way faster. The largest consumers - Ukraine, Russia, and Turkey - make up for a total share of 50%.

The increase in import of steel and steel products was slightly faster (8%) last year. Throughout 2016, 9.7 million tons of steel products were shipped to Poland, almost 75% of which from the European Union. Just like in the case of expert, import from non-EU countries increased at faster rates (12%). Major supplier include Germany and the Czech Republic as well as such third-party countries as Ukraine, Russia, and China.

Polish economy import mostly flat products (69%), while a large share of long products (47%) and flat products (30%) was maintained in export.

Optimistic future

Polish steel market faces a Chance for rapid development, but it will have to face a number of dangers as well. First of all, Europe is being flooded by cheap steel from Asia and former USSR countries and will continue to be so. Considerable surplus in production in these countries forced them to implement aggressive export policies characterized by much lower prices in comparison to EU products. High prices of electric energy and natural gas also jeopardize Polish steel industry. What is more, domestic manufacturers don’t keep up with the changing market of ready-made products. For example, domestic supplies of flat products do not meet the demand for these products, the share of highly-processed steel products and steel alloys, stainless steel included, is always insufficient.

However, over the next period, we shall witness increases in the domestic steel market as a result of accelerating economy, also within Europe. A visible market recovery within public and private investments and access to EU financing should translate into a higher demand for steel products.

For more news visit our facebook page or twitter.

(ID:44933944)