Poland becomes important dependent, price volatility unprecedented: PUDS
Poland’s steel market has become highly import dependent, with distributors no longer able to rely on the stability of guaranteed local mill supply. Price volatility has intensified significantly, making buyers ultra cautious, while Italy has substantially increased traded volumes with Poland. So summarised Polish Union of Steel Distributors (PUDS) president Iwona Dybal at Eurometal’s Central Europe regional meeting in Krakow on Thursday.
Steel price volatility has exploded since 2020, after 14 years of price fluctuations within a range of PLN 1,000/tonne. Product values have been decoupled from costs.
Poland and Czech Republic are the largest importers in the region, with intake of 12 million tonnes and 7mt respectively in 2022, also making them ninth and 19th largest importers globally. Since 2019, Poland has been strongly dependent on steel imports, whose share in consumption has exceeded 60%, Dybal observed at the event attended by Kallanish.
For Polish distributors, local mills have traditionally been a stabilising factor, guaranteeing supply and independence from external markets, as well as price stability. But this is changing following the impact of the Covid pandemic and Ukraine war. Producers are now much more likely to idle furnaces and limit production in response to the market situation, thereby shaping the market through volume of supply.
The next challenge for Poland’s industry is the structure of production. The industry produces twice as much long products as flats, but consumes 50% more flats. This imbalance creates a large dependency on flats imports. In 2022, Polish longs production exceeded consumption by 300,000 tonnes, while flats output was 5.3 million tonnes short of consumption.
Last December, stock levels and sales at Polish distributors fell to critical levels. Distributors did not rebuild their stocks after the middle of 2022, which bottomed in January 2023 when sales started to pick up. Sales have been increasing month-on-month since the beginning of this year, along with an uncertain rise in stock levels, which shows the market is still very cautious about the future, Dybal commented. Price drops in recent months have justified this caution, she added.
Polish exports have been the most stable factor in the market. Only at the end of 2022 did they drop below 300,000 tonnes/month for the first time since 2019. Germany is the largest trading partner.
2022 saw a significant change in trading patterns, with Italy becoming the second-largest steel supplier to Poland, and also increasing intake from Poland by 27% on-year. Supply from Ukraine and Russia dropped significantly, while intake from East and Southeast Asia ballooned, although volumes remained small.
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Anonymous
Very good overview of the weekly steel market.
Anonymous