Tadeusz Pajak - CEO of Nova Trading SA:
Enterprises that utilize stainless steel as a material for production are still cautious in their purchases – they do not stock up, only buy for immediate needs. There is market stagnation. However, the opportunity to purchase stainless steel at relatively low prices has already ended.
Since the beginning of February, there has been a strike at one of the European mills, resulting in the suspension of all shipments from that mill. Delays in production will occur, leading to shortages in the market, especially severe because this producer had a very well-filled order book for the first quarter of 2024.
European stainless steel producers, despite incurring losses, have so far pursued a cautious policy regarding price increases due to weak demand. However, they will now use the supply constraint to introduce necessary price hikes.
The import of flat stainless steel products from Asia, currently unprofitable, may balance the market situation, but it will take some time before that happens. An additional factor that hampers the profitability of imports, besides tariffs, is the crisis in the Red Sea and the associated need for ships to take a longer route around Africa. Thus, the costs of both transportation and freight insurance are increasing.
So, we are waiting for further developments…
Regarding stainless steel tubes, the situation is clear – European manufacturers have already implemented price increases of 8-10% since mid-February. Therefore, it will not be cheaper.
All Polish companies that have so far grown through exports to EU countries, both stainless steel distributors and end customers, unfortunately face the problem of stagnating economies in those countries. Restrictive monetary and fiscal policies aimed at curbing inflation unfortunately offer no hope for a rapid recovery in demand and production growth.
The market situation is therefore very uncertain, both present and future. A huge challenge for our industry will also be CBAM, a carbon tax on steel and aluminum products imported from outside the EU, as well as mandatory reporting in the ESG scope, i.e., sustainable development of companies in terms of E – environment, S – social responsibility, and G – corporate governance.
As for investments in Nova Trading and Nova Metale, we are slowly completing them. In 2023, we supplemented our machinery park with a new CTL line for cutting coils into sheets, a line for grinding and brushing of sheets, lasers, and edge presses. Thanks to these investments, among others, we established MCM / METAL COMPONENTS MANUFACTURER – a division dealing with the production of components and finished products from stainless steel and aluminum for various industries. We are also reorganizing our central warehouse in Torun/PL to facilitate the work of machine operators and warehouse workers on one hand and to meet the challenges related to environmental protection, such as reducing the amount of packaging, limiting energy consumption, etc.
