[ferro-alloys.com]Italian steel production will drop around 15% in 2020 on the slump in demand, particularly from the automotive sector, caused by the coronavirus pandemic and low output at ArcelorMittal Italia, Italian steel federation Federacciai President Alessandro Banzato told S&P Global Platts July 28.

"This is our estimate, it is not an easy one considering the times in which we are living, but if we look at the recovery in demand we've been seeing since June this is our forecast," Banzato said. He added that even if there were more lockdowns they were expected to be localized and less economically disruptive than the first one. "In Italy we reacted quickly and did a proper lockdown. The situation has improved, and this is helping the economy and therefore the steel industry, but we can't say we're out of the woods yet," he added.

In 2019, Italian steel production fell 5.3% year on year to 23.192 million mt, below the EU average of a 4.9% drop to 159.4 million mt.

According to the latest worldsteel data in the first half of this year the EU produced 68.3 million mt of crude steel, 18.7% less than a year earlier. H1 production in Italy, the second largest EU producer, fell 9.7% to 10.08 million mt.

Italy shut all its steel plants with the exception of ArcelorMittal Italia and Arvedi for nearly two months from mid-March as it was the first country in Europe to be hit by the new virus. The Italian economy, brought to its knees by the coronavirus, is expected to contract by around 9.5% this year, according to the latest data released by the Bank of Italy, revising down a forecast of a 9.2% contraction made last month.

"The Italian steel industry has been very badly hit since February/March. It is fair to say that since the end of last year we registered a slowdown, but since June, a minor recovery has started, sustained by the construction sector as we are seeing a picking up in some infrastructure spending, but also in the car sector the government incentives -- not only for the electric car industry but also for hybrids -- are helping," he said.

ArcelorMittal Italia challenges

"In Italy we have also the peculiar situation of ArcelorMittal Italia, Italy's largest flat steel producer which, at the moment, is working at its lowest historical output. So this will weigh on overall Italian output," he said. ArcelorMittal Italia expected to produce around 3.5 million mt of crude steel this year compared with around 5 million mt in 2019 out of an installed capacity of around 11 million mt a year.

"We all know the challenges ArcelorMittal Italia, the former Ilva, mill has. Personally I think at this point we should expect the Italian government to take a stake in the company," he said. "Maybe ArcelorMittal Italia will manage to use part of the Just Transition Mechanism funds to make ArcelorMittal Italia greener, but at the moment it is not clear how much not only the former Ilva will be able to use the money but also the Italian steel industry as a whole," Banzato said.

EU leaders agreed in June to launch the Just Transition Mechanism to ensure that the transition towards a climate-neutral economy happens in a fair way. It provides targeted support to help mobilize at least Eur150 billion ($176 billion) over 2021-27 in the most affected regions, to alleviate the socio-economic impact of the energy transition.

Banzato took the helm at Federacciai in 2018. He is also CEO of Acciairie Venete. The company is one of the main engineering, or SBQ, steel producers in Italy. Acciairie Venete is not listed, meaning the latest figures available are for 2019 when it produced 1.41 million mt of steel products, up from 1.25 million mt in 2018 and compared with a capacity of 2 million mt/year.

(S&P Global Platts)

• [Editor:王可]