The global steel industry is grappling with its most protracted downturn in two decades, according to Yuriy Ryzhenkov, CEO of Metinvest Group. Speaking at the Siderweb 2024 forum in Vicenza, Italy, Ryzhenkov painted a sobering picture of the current market conditions, highlighting the complex interplay of geopolitical tensions, economic uncertainties, and industry-specific challenges that have led to this prolonged slump.
The steel market's current predicament can be traced back to late 2021 and early 2022 when it reached its cyclical peak. However, this upward trajectory was abruptly halted by a perfect storm of adverse events. The outbreak of war in Ukraine sent shockwaves through global supply chains, exacerbating an already brewing energy crisis. These factors, combined with widespread economic uncertainty, plunged the steel industry into a downturn that has persisted for over three years, a duration unprecedented in recent memory.
Ryzhenkov's analysis underscores the exceptional nature of this slump. Previous downturns, such as those in the early 2000s and 2008-2009, were relatively short-lived, lasting less than 18 months and a few months, respectively. The current situation, however, shows no immediate signs of abating. The European steel market, in particular, has experienced significant volatility, with imports now accounting for more than 27% of apparent steel consumption in the region. This influx of foreign steel has put additional pressure on domestic producers, who are already contending with high energy prices and the ripple effects of ongoing conflicts.
Despite these challenges, Metinvest has shown resilience and adaptability. The company reported improved financial results in 2024 compared to a low base in 2023, a testament to its efforts in rebuilding logistics networks and forging new partnerships. In the first half of 2024, Metinvest managed to increase its steel production by 1% year-on-year, reaching 1.04 million metric tons. The company also saw a significant 87% increase in iron ore concentrate production, totaling 8.89 million metric tons. However, other segments experienced declines, with coal concentrate production dropping by 31% and pig iron and coke production decreasing by 4% and 13%, respectively.
Looking ahead, Ryzhenkov sees potential for a market turnaround in 2025. He points to two key factors that could catalyze this recovery: the anticipated reduction in interest rates by the U.S. government and the recent stimulus package introduced by the Chinese government. These macroeconomic interventions could potentially reinvigorate global steel demand and consumption, providing much-needed relief to the industry.
