Speaking at the SteelOrbis Italy Forum 2024 being held in Milan on October 8, Antonio Gozzi, president of Federacciai, the Italian federation representing steel companies, began his speech highlighting the critical issues that the Italian and European steel industries are facing, pointing out that, since the steel industry is a cyclical sector, the slowing demand - caused by several factors including geopolitical uncertainties and rising interest rates - has brought about oversupply.
These two issues are also affecting the decarbonization issue in the European steel industry, Gozzi commented. Disagreeing with the earlier statements made by Paolo Sangoi, president of the steel section of Assofermet, Gozzi said, “I think we all have to work for climate change, but the way the green deal is being applied to Europe deserves further analysis. In particular, the measures that have been taken did not consider impact analysis and cost-benefit analysis. In this way, decarbonization risks becoming deindustrialization, and that would be a débacle for Europe.”
This is because the closure of integrated steel mills will lead, according to Gozzi, to the interruption of the production of a particular type of flat steel that is essential to the automotive industry, which cannot be manufactured through EAF technology. This forces the suffering European automotive sector to import this product from outside Europe, mainly from Asia, Japan, China and South Korea, i.e., from competing countries in the automobile sector.
According to Gozzi, there will be no major investments in European steelmaking from a structural point of view in the next five to 10 years, because steelmaking is a long-term looking industry, and for now it is hard to make predictions. A key issue, however, is definitely the scrap industry, because as decarbonization of steel production is a global issue, there is a shift of production from electric furnaces from 25 percent to 43 percent around 2030, which will make scrap even a more strategic and critical material. More than 60 countries have already taken measures to curb exports, and that is why Federacciai is calling for it to become a critical raw material which needs to be protected.
Another issue is that domestic scrap in Italy is more expensive than imported scrap, and one wonders how these many electric furnaces will be fueled. The way seems to be DRI, but the issue is controversial in Europe, as it requires particularly large investments. The plant investment must be accompanied by an investment in carbon capture technologies, because DRI is not neutral, even if it halves the blast furnace's carbon footprint. Added to this is the cost of gas, which is the main power source for DRI.
Gozzi said he believes instead that as of today the priority is to concentrate all resources in the recovery of Taranto, so that it can return to being a plant that produces at least 6 to 7 million tons, which is the breakeven point.
The last topic addressed by Gozzi was trade policies. He said he believes that Europe made a mistake in not joining the US proposal for free trade through NAFTA (North American Free Trade Agreement), thus closing off a possible profitable market for exports.