Steel is scarce and expensive. Material bottlenecks are putting suppliers under extreme pressure and supply chains are at risk of breaking. At the same time, prices are climbing to historic highs. "Such a catastrophic supply situation is irresponsible. We expect the steel industry in its oligopolistic structure to live up to its responsibility - and thus ensure market supply," demanded the Industrial Association for Sheet Metal Forming (IBU), the Industrial Association for Massive Forming (IMU) and the German Screws Association (DSV) in a joint statement.
3.5 million jobs are at risk across Europe
The procurement crisis has been worsening since autumn 2020 and is putting the production of steel processors at risk. Across Europe, 3.5 million jobs are affected. At the same time, a steel giant is raising its forecast for 2021 due to the high price, according to recent media reports.
Further shortages feared
As a key industry, the steel sector is extremely important for the value chains of various processing industries. The future should belong to green steel, which is why the industry expects subsidies for the introduction of hydrogen technology. "We believe that the steel industry must meet its associated supply obligations. There must be no further shortages," says IBU Managing Director Bernhard Jacobs. This is also the view of the IMU and DSV. IMU Managing Director Tobias Hain: "The German forging industry is also affected by the shortage. According to our survey, two thirds of companies are reporting supply bottlenecks, 50 percent of them even for agreed quantities."
No increase in steel production in February - production lower than in October
The associations underline their demand with facts: The urgently needed expansion in steel production did not take place: In February, production at electric steel mills was actually 17 percent lower than in October 2020, while blast furnace-based production fell by five percent. This has further exacerbated the shortage. High growth rates were only recorded in March.
Steel shortage further calls import duties into question
The steel shortage also calls into question the EU Commission's plans in Brussels to extend the import duties that have been in place since 2018. When purchasing materials, the Steel Safeguard Measure severely restricts the possibility of switching to third countries. Industry associations have long spoken out against this, as the WTO-compliant requirements - including increased import figures from third countries - are lacking. The European organization ORGALIM also doubts the "significant" diversion of steel flows from China and other third countries to the EU. However, this would be a prerequisite for an extension of the safeguards.
"Must stop the growing danger since the fall"
The IBU, IMU and DSV are appealing to all sides in view of the supply bottlenecks: "Steel processing companies should discuss price increases with their customers, as everyone in the supply chain is in the same boat. At the same time, the state should have a moderating effect on energy prices in order to ease the burden on steel producers and reduce production costs." Discussions with their members show that suppliers' current production is at risk: "Half of the companies surveyed already see a threat from a lack of material supply," explains Tobias Hain. And Bernhard Jacobs emphasizes: "We have to stop the growing danger now. Any shortage will torpedo the economic recovery of medium-sized suppliers, who provide significantly more jobs than the steel industry".
