Eastern European steelworks and foundries resume operations

The European steel and metals industry, which suffered a severe market slump in the spring, is showing signs of a beginning recovery from the COVID 19 crisis. Much of the activity of the main metal consumers, such as the automotive and construction industries, had come to a standstill for the time being. Steel producers as well as most foundries in the Czech Republic, Hungary, Poland and Slovenia - the most important centres of metallurgy in Central Europe - were confronted with a considerable decline in demand for rolled steel.

The Eastern European steel and metal industries play an important role in the European metallurgy mix. According to Worldsteel, they represent around 12% (around 16 million tonnes) of total carbon steel production within the EU27 economic area. Steel producers and steel foundries in Central Europe are particularly closely integrated in the production chains in Germany, Italy, Austria and France. The sudden drop in demand and the closure of production throughout Western Europe, forced by quarantine measures, dealt a severe blow to the metals sector in Central Europe. In the first quarter, steel production in this region fell by 13%, while total production in the EU27 region fell by 11%.

The countries with the largest impact were Poland and Hungary, where steel production fell by 19% and 18% respectively in the whole first quarter. The fall in Poland was largely due to the fact that production here is concentrated on flat rolled products for local automobile manufacture. The Hungarian foundries also experienced weaker demand for automotive components, on which they rely heavily. The discontinuation of automotive production in Germany therefore led to the closure of foundries in Poland and Hungary in mid-April.

Other Eastern European neighbours, such as the Czech Republic and Slovenia, felt less impact on carbon steel production. Here, relatively high domestic steel consumption made steel producers less dependent on demand from Germany and Italy, which led to a small drop in production of 2% and 0.5% respectively. During this period, procurement and sales of metal products were so affected by plant closures and absenteeism that it was difficult to coordinate operational activities.

Digital technologies proved to be a useful remedy to support work in the home office as well as in the procurement area. A contact in the foundry industry in the Czech Republic during the quarantine period commented: "Metalshub was one of the few digital tools that really helped us get through the situation smoothly".
There are clear signs that the situation for consumption of rolled and cast products has improved since the beginning of May. Car manufacturers in Germany have restarted production, and metalworking industries in Italy are also allowed to resume operations, provided they comply with the strict health and safety regulations regarding COVID-19.

Metalshub knows first hand that Slovenian foundries have resumed operations with full capacity utilisation since the first week of May. In response to the expected increase in demand from Italian plants, sources in Poland also confirm the reactivation of the purchase of raw materials and ferroalloys. Polish suppliers are preparing to offer material for export again - this has so far been made more difficult by the interruption in transport due to the closure of the border.

Source: Metalshub, Photo: Fotolia