Antonio Marcegaglia: Europe is facing trade isolation, prices are close to recovery
Flat-plate rental prices are expected to reach their lowest levels this summer and then begin to recover in the fourth quarter. According to Antonio Marcegaglia, this will be due to a review of protective measures by the European Commission, existing quota systems and a mechanism for regulating carbon emission limits (CBAM).
"Demand in Europe is structurally declining – by at least 15 million tons over the past six to eight years – last year we reached only 130 million tons," Marcegaglia said in an interview with Kallanish at a conference dedicated to the 75th anniversary of EUROMETAL, which took place this week in Luxembourg. This decline, he added, comes amid a broader global economic downturn. "We should not underestimate the need to support European demand before talking about decarbonization and trade."
While manufacturers emphasize overcapacity and call for increased border security, Marcegaglia doubts the real scale of overcapacity in the global market. "Talking to my Chinese commercial partners, I see and expect a capacity reduction of 300 million tons in the next five to eight years or even earlier, and[their]export-oriented model no longer works," he said.
Marcegaglia recognizes the need for Europe to protect its industry from unfair competition, but stresses that protectionism alone cannot be a solution to the problem. "We need protection to a certain extent, but I really believe that the EU, due to its nature as a re-exporting economy, should remain active in the global supply chain, rather than isolated," he said.
Keeping in mind the ongoing tensions in global trade created by US President Donald Trump, Marcegaglia acknowledged that chaos can work as a negotiating tool, but even the United States cannot afford to turn its back on global trade.
Europe has a structural competitive advantage over Asian countries due to high energy costs, shortages of raw materials, and the highest labor costs due to a developed economy and more developed social security. This gap will remain.
However, the European supply chain has an increasingly complex market that needs to be developed. "The company has the best steel production technologies, a culture of innovation, the availability of scrap that is not yet fully utilized, a stable, capillary and well-organized supply chain, as well as social and political stability," Marcegaglia continued. With proper management, the transition