European steelmakers with record profits – already at the beginning of January 2021 we had pointed out the record figures from the Q4 2020 of the EU mills. Which of course were distributed loud and clear by all industry media. After all, you have to make shareholders happy.

EU steelmakers: caught between record profits and doom
EU steelmakers: caught between record profits and doom

EUROFER: “Steelmakers facing the end if not…”

In the same breath, the lobby organization of EU mills, EUROFER, declares the demise of European steel. Like a hypnosis to which the European Commission is only too willing to listen.

European economy suffers from massive steel shortage

Meanwhile, the downstream industry in the European Union is suffering from acute steel and stainless steel shortages. Lack of availability in aluminum, wood, concrete, gypsum and many other key raw materials (including chips for automotive manufacturing) join the plaintive cry of the beleaguered economy. EUROFER even confirms that EU mills are unable to meet demand.

EU hampers its own economy

The steel-consuming downstream industry is already managing on its own to rise from the depths of the Corona pandemic and trigger an economic miracle – after all, there has been no economic aid from the EU so far. And it is not expected before summer 2021, because the member states are blocking each other everywhere. Germany in particular has excelled at throwing major stumbling blocks in the way – and is being blocked by its own economic area and the steel manufacturers from enlarging this miracle and finally taking on a pioneering role in the world again.

Downstream industry complains of shortages for months

It’s not as if downstream consumers haven’t pointed out how they’re doing and what the problem is. But one might think that the European Commission, the European Parliament and the member states have allowed themselves to be held hostage by a few steelmakers.

EU steelmakers with record profits

And while the EU steelmakers are jubilantly announcing their record profits for the first quarter of 2021 – first and foremost the world’s largest steel group outside China ArcelorMittal – EUROFER is coming around the corner with its “Economic and steel market outlook 2021-2022, second quarter“. And demands that the Safeguard be extended.

Is the EUROFER actively damaging the EU economy?

Didn’t the lobbyists just get a new provisional anti-dumping measure on stainless steel from India and Indonesia? The supply problem of steel and stainless steel in the EU should be well known to EUROFER.

EUROFER says EU steel orders not yet back to pre-pandemic levels

According to EUROFER, EU steelmakers are doing badly. They are still not back to pre-pandemic steel orders (Source).

The purchasing market says otherwise

However, as market sources keep reporting, most steelmakers are not even accepting orders anymore, have completely stopped active sales, are only supplying automotive and white goods manufacturers, or have lead times that have now reached January 2022.

So it’s impossible to arrive at the same order volumes as before the pandemic. Or what’s going on with the numbers there?

Stainless steelmaker Outokumpu beats first-quarter forecasts

Stainless steelmaker Outokumpu has more than doubled its operating profit in the first quarter of 2021 compared with last year (Source).

What’s more, Outokumpu’s Q4 2020 production of 523,000 tons is already back up from Q4 2019’s 458,000 tons. And the decline at the world’s largest stainless steel producer amounted to just 75,000 tons in 2020 compared to 2019. With a total annual production volume of 2.1 million tons, those don’t really matter.

ArcelorMittal doubles its net income compared to Q4 2020

If ArcelorMittal had already talked about a great year-end at the end of 2020, they got off to a rocket start in the first quarter of 2021. A look at the first quarter 2021 reports quickly makes this clear (Source).

With a net income of 2.285 billion USD in Q1 2021, ArcelorMittal has almost doubled the result compared to Q4 2020.

Second quarter 2021 to be even stronger

Incidentally, ArcelorMittal expects an even better result for the second quarter of 2021 (Source) than for the first three months. And a further increase in steel demand in Europe of up to 9.5%.

ArcelorMittal urges action on costs to help Europe’s steelmakers

While the European economy still has no inkling of an EU aid package on the distant horizon, steelmakers never tire of stressing over and over again how badly off they are and how much they need EU help to master the transformation to green steel (Source). And who gets money from the EU and the member states?

Commodity prices up significantly

While commodity prices are skyrocketing worldwide and steel prices are following suit – in the EU, hot-rolled coil prices have increased by over 130%, while in the United States they have tripled from $460 in 2020 to $1,500 (Source) in 2021 – and steelmakers are still significantly increasing their profits, the question is whether the European Commission is not setting the wrong priorities.

Like maggots in a steel vault: EU steelmakers overprotected

One steel action plan follows the next. The German government has one, the European Union has one, and of course EUROFER and the steelmakers has one too. Reading these plans, one might think that they all come from one and the same pen. Who had their fingers in the pie remains speculative. Just as with the large corporate law firms, which at one time save taxes for large corporations and then advise governments on tax laws.

A look at the EU’s “Carbon Border Adjustment Mechanism” or the update to the “2020 Industrial Strategy: Building a stronger Single Market for Europe’s recovery” with the Staff Working Document “Towards competitive and clean European steel” also quickly makes it clear where the data that the EC likes to quote comes from.

EU downstream industry is disadvantaged

If you take all the data that appears in the EU documents into consideration, something is particularly striking. Real economic data are not taken into consideration. One also looks in vain for the annual results of steel manufacturers. Tax investigators or auditors make no contribution to the decision-making basis of the European Commission.

The EC relies heavily and almost exclusively on data provided by the steel producers’ trade associations – like The World Steel Association or EUROFER. In its working documents, the EC even admits that it has only consulted with the lobby organizations of the steel producers on these issues.

The EU downstream industry does not appear in it.

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