Italian steel production may slow if the price of electricity and gas continues to increase, Italian steel producers’ association Federacciai president Alessandro Banzato said at a conference attended by Kallanish during Wednesday’s Made in Steel trade show in Milan.

“The recent hikes in gas and electricity costs could slow down or compromise the positive trend of the Italian and European economy,” he observed.

Steelmakers and re-rollers are currently monitoring the peaks of electricity consumption. The energy crisis is a European issue and a matter of future tension, they say. If the increase of energy prices continues, steelmakers will have to review their production costs. One possible action is to decrease CO2 costs and reduce CO2 quotas.

Italian industrial association Confindustria is currently taking this issue to the government and the European Commission, Banzato pointed out.

In the first eight months of 2021, Italian crude steel output stood at 16.3 million tonnes, up 27.5% year-on-year and up 6.1% from the same period in 2019. In 2020 all end-user sectors were heavily impacted by the Covid-19 pandemic. In the first half of 2021 most sectors improved, but only construction and appliances have returned to pre-pandemic levels, Federacciai says.

The association has noticed a strong rebound from the pandemic despite the looming clouds of energy pricing.

"The increase in [sales] volumes was accompanied by a strong growth in revenue, driven by the tenacity of demand and the sharp increase in the cost of raw materials,” Banzato commented. “This effervescence in demand has led to an apparent shortage of material that, combined with the renewal in July of EU safeguard measures, has unleashed inevitable controversy between producers, steel processors and traders.”

“First of all, it is good to remember that the European safeguard measures are the consequence of duties on most steel products by the US administration in 2018,” he continued. “Although reflections and discussions have been initiated by the new Biden administration on softening tariffs, at the moment, the so-called Section 232 is still active and therefore, as recently expressed by the EU, the safeguard measures remain in place.” In case US restrictions are lifted, the association will be open to possible relaxation of safeguards, he added.

The strong rebound of the steel sector from the pandemic is an expansive cycle on a European scale destined to last for a few years, Banzato said. This is a positive trend that will strengthen further when the investments from the European recovery fund boost infrastructure.