Italian Steel Production Sees Notable Decline in 2024
Italian steel production in 2024 fell by 5% compared to the previous year, reaching 20 million metric tons. This decline, reported by the Italian Federation of Steelworkers Federacciai, highlights the challenges faced by the country’s steel industry amid weaker global demand, rising energy costs, and a fluctuating domestic market.
The production downturn primarily impacted the flat products sector, which saw a notable 9.7% decline, while long products output remained relatively stable, dropping only by 0.2%. The results reflect a mixed performance across different steel product categories, as steelmakers navigated varying conditions in their key markets.
Long Products Hold Steady, Boosted by Construction Activity
In 2024, Italian steelmakers produced 11.7 million metric tons of long products. This marks a modest reduction of just 0.2% from the previous year, indicating that this segment of the steel market remained more resilient than flat products. Long products, including steel bars and beams, are widely used in construction, and the sector’s relative stability was supported by strong demand in Italy’s construction industry, which was active throughout the year.
However, despite this resilience, production of long products still faced challenges due to seasonal demand fluctuations, with a particular slowdown in late 2024. These fluctuations typically occur during colder months when construction activities tend to slow, affecting steel production rates.
Flat Products Struggle with Weak Demand and Imports
The production of flat products, which includes items like steel coils and plates used in automotive manufacturing and other industrial applications, faced much greater challenges. Italian steelmakers produced 8.6 million metric tons of flat products in 2024, a significant 9.7% decrease compared to 2023.
The decrease in flat steel production was mainly attributed to two key factors:
1. Weak Automotive Sector: The automotive sector, which is a major consumer of flat steel products, struggled in 2024 due to low demand and reduced production. This trend, largely seen in European markets, had a substantial negative impact on the steel industry.
2. Increased Imports: High volumes of competitive imports, amounting to 5.58 million metric tons in the first ten months of 2024, further exacerbated the situation. These imports came primarily from countries with lower production costs, putting additional pressure on Italian manufacturers.
Despite these challenges, Italy's steelmakers continued to meet demand for flat products in industries where domestic steel had a competitive edge. However, the ongoing competition from cheaper imports remains a significant hurdle.
December 2024 Steel Production Declines Sharply
In December 2024, Italy’s steel production experienced a sharp decline, falling by 8.8% compared to December 2023, and 33.4% from the previous month. The total output for December was 1.199 million metric tons, with long products and flat products both seeing reduced production.
• Long Products: Long products production amounted to 682 thousand metric tons in December, down 4.7% year-on-year and 38% month-on-month. This significant drop in production is indicative of the seasonal slowdown in construction activities, as demand for long steel products is closely tied to building projects.
• Flat Products: Flat products production showed a more mixed performance, reaching 639 thousand metric tons. While this was a 3.2% increase compared to December 2023, it represented a 14.4% drop from the previous month, reflecting the broader downturn in steel demand in late 2024.
This December performance underlined the ongoing pressures on the steel industry, with the slowdown in construction and automotive sectors impacting production and overall steel consumption.
Factors Behind the Decline in Italian Steel Production
The broader decline in Italian steel production in 2024 can be traced to a combination of domestic and global factors:
1. Global Steel Demand: The worldwide demand for steel products continued to soften in 2024, driven by slower industrial activity in key markets like Asia and Europe. This global slowdown impacted Italy's steel exports, especially to regions where demand for construction and automotive products was subdued.
2. Energy Costs: High energy costs remained a significant challenge for Italian steelmakers. The steel production process is energy-intensive, and rising costs for electricity and raw materials have made it more expensive to produce steel domestically, further eroding the competitiveness of Italian products in global markets.
3. Competitive Imports: The surge in low-cost steel imports, particularly from countries outside the EU, posed a significant threat to domestic producers. Italian steelmakers faced stiff competition from regions with lower labor and production costs, making it harder for them to maintain market share.
Comparison with 2023 Steel Production
In 2023, Italy's steelmakers faced a similar set of challenges, which resulted in a 2.5% reduction in production compared to 2022, bringing total production down to 21.06 million metric tons. The factors driving the decline in 2023 were similar to those in 2024: global demand for steel products weakened, energy costs increased, and competition from low-cost imports remained fierce.
Outlook for 2025
Looking forward to 2025, Italian steelmakers will likely continue to navigate these headwinds, with global steel demand expected to remain sluggish in key markets. Efforts to mitigate energy costs through technology advancements and increased efficiency will be crucial for maintaining competitiveness. Additionally, boosting the production of higher-value steel products that cater to niche markets could help Italian steelmakers offset some of the challenges posed by weaker demand in traditional sectors like automotive and construction.
