Bouncing back from a sharp fall in early spring, the European steel and metal industries are at the start of a path to recovery from the COVID-19 crisis, since the halt of the majority of activity within the main metal-consuming industries - automotive, construction and others. All major car manufacturers in the EU have stopped their conveyors. In their turn, steel producers, as well as most foundries in the Czech Republic, Hungary, Poland, and Slovenia - the main centres of metallurgy in Central Europe - faced a significant drop in demand for rolled steel.
The East European steel and metal industries play an important part in the European metallurgy mix. According to Worldsteel, they represent 12% (about 16 million tons) of total carbon steel production within the EU-27 economic area. The steel producers and steel foundries in central Europe are closely integrated into production chains in Germany, Italy, Austria and France. The sudden decline in demand and the forced quarantine shutdown of production across Western Europe hit the industry dealt a severe blow to the metals sector in Central Europe. In Q1, steel production in this region fell by 13%,while overall production in the EU-27 region dropped by 11%.
The countries with the most significant effect were Poland and Hungary, where steel production fell by 19% and 18% throughout Q1. The decline in Poland was characterized largely by their focus towards production of flat-rolled products for car manufacturing by local producers. Hungarian foundries on the other hand, saw a weaker demand for the automotive components which they heavily rely on. The mid-April the halt to car production in Germany therefore brought about a shutdown of foundries in Poland and Hungary.
Other Eastern European neighbours, such as the Czech Republic and Slovenia suffered a reduced impact on carbon steel production. Here, a higher domestic steel consumption pattern made steel producers less reliant on demand from Germany and Italy, thus leading to a more modest fall in production by a mere 2% and 0.5% respectively. During this period, metal procurement and sales remained challenging due to shutdown of many businesses and key staff working off-site, making it difficult to co-ordinate operations. Digital technologies proved to be a useful remedy for this situation: supporting work from home and managing procurement. One key user in the Czech Republic, noted that during the quarantine period: ´Metalshub was one of the few digital tools that really helped us getting through the situation smoothly.´.
There are clear signs that the situation for steel consumption of rolled and casted products is starting to improve since early May. Car manufacturers in Germany have resumed operations while in Italy metallurgists have been allowed to resume operations, provided they comply with strict Covid-19 health and safety rules.
Metalshub has learned that Slovenian foundries that they are resuming operations with 100% capacity utilisation from the first week of May, through direct communication. In response to expectations of growing demand from Italian factories, sources in Poland are confirming an initial recovery of activity with local metallurgists, who are resuming purchasing of raw materials and ferroalloys. Polish suppliers of ferroalloys are preparing to offer material for export, which was hampered by transport interruption from border closure.