Politics boosts sentiment in Europe, energy remains critically important: Primetals opinion
Recent policy changes are improving sentiment in Europe, but the lack of energy at competitive prices remains a fundamental problem, and a potential solution is the use of domestic natural gas resources. At the same time, Europe is likely to import most of its consumed low-emission iron in the future, while restrictions on increased production may deter the construction of electric smelters.
These conclusions were reached by Jan Friedemann Plaul, head of Primetals Technologies' pig iron, steel and environmental solutions division, in an exclusive interview with Kallanish at the technology supplier's main facility in Linz.
Politics boosts sentiment in the EU, potentially attracting investment
The uncertainty surrounding the final cost per tonne of imports under CBAM means that the impact of the new measure on pricing is unclear, but the new EU trade regime, due to take effect from July, should boost prices. Political measures have significantly improved the mood in Europe, which is reflected in the stock prices of listed steel companies, which have increased over the past six months.
"The stock market usually predicts pretty well if something positive happens. I think the shareholders are positive about this. We expect an increase in profits, and I think the investment climate is also improving," Plaul said in an interview with Kallanish.
Cheap and predictable energy supply remains critically important
However, the policy measures are only "protecting the uncompetitive situation in Europe," he added, while cheap electricity remains the main problem. In the long term, "I don't see much improvement in Europe," Plaul said. Despite a significant increase in renewable energy capacity, Europe remains dependent on fossil fuel imports, and energy prices remain high.
Steel producers also largely meet their electricity needs on the spot market – unlike long-term contracts of the past - which makes them more susceptible to price volatility and thus reduces investment confidence.
Electricity taxes and network charges also lead to higher electricity prices and, therefore, must be addressed by the governments of the EU member States.
As for electricity, "predicting for a ten-year period what you need to make an investment decision is very difficult - and I think this is a big uncertainty. … Here are the main driving factors: good information