Metallurgical market in Poland

Metallurgical and steel market in Poland

The metallurgical market in Poland has a long tradition in the industrial sector. Its vast majority is the private market (approx. 97% of companies), and it is based on the production and processing of steel. According to the World Steel Association forecasts, the demand for steel will increase by 50% by 2050. Still, changes in the business and legal area have made steel production in the European Union unprofitable, which causes the so-called escape of metallurgical production.

Experts point out that the metallurgical market in Poland is mainly dependent not on market demand but on external factors which are currently not favorable for enterprises. After two years of decline in the consumption of steel products, a relative improvement and stabilization of the industry are forecasted in 2021.

Value and size of the metallurgical and steel market in Poland

Following the terms of the arrangements with the European Commission, the production capacity of the steel industry in Poland until November 2020 was 12.6 million tons per year. Since November last year, it is 10.6 million tons because the raw material part in Krakow has been phased out. The value of sold metals production in the Polish industry has a share of 5.9%.

The steel industry is an important link in the recycling process for other industries, producing 6.5 million tons of scrap annually. It is a decarbonised raw material, and the recovery of which Poland makes a significant contribution. Annually, the European Union exports approx. 20 million tons of scrap metal, of which approx. 1.5-2 million tons of this raw material is exported from Poland.

The undisputed leader of the world steel market is China, responsible for 51% of the share of raw steel production. Poland is in 20th place among the largest steel producers globally (7.9 million tons in 2020). However, it still has low consumption per capita (13 million tons) compared to many European Union countries and is the largest net importer of steel in the EU.

According to the president of the Polish Metallurgical Chamber of Industry and Commerce (Hutnicza Izba Przemysłowo-Handlowa), thanks to the stabilisation in steel-consuming sectors (mainly the automotive and construction industries), in 2021, consumption will return to the pre-pandemic level and the end of 2019, and may even reach 16 million tons per year.

Leaders of the metallurgical and steel market in Poland

According to data from the Central Statistical Office of Poland, there are 2,200 metal production companies operating in Poland. At the beginning of 2021, 19 new entities were registered, including HUTMEN, with a share capital of PLN 256 million. The market situation of steel companies in Poland is monitored regularly by the Polish Metallurgical Chamber of Industry and Commerce (Hutnicza Izba Przemysłowo-Handlowa – HIPH).

The largest producer of raw steel in the world also has its assets in Poland – ArcelorMittal, which brings together approx. 70% of the national production potential, which includes branches in Dąbrowa Górnicza, Chorzów, Sosnowiec, Świętochłowice, Zdzieszowice and Kraków. Two years ago, the concern decided to close the raw material part in the Krakow branch temporarily. The blast furnace was planned to restart in the second half of March 2020, but because of the COVID-19 pandemic, it was first postponed, and the company announced a definitive shutdown in October. Thus, Poland irreversibly lost 2 million tons of production capacity. To compensate for organisational losses, the company invested in the Kraków processing part by modernising the pickling line in the cold rolling mill.

Environmental and legal aspects in metallurgy and steel

Many changes implemented on the steel market result from regulations introduced to achieve climate neutrality. Despite deep technical and technological restructuring in the first decade of the 21st century, the steel industry is still one of the three most energy-intensive industries in processing – only 1 terajoule per year of final energy consumption comes from renewable sources (solid biofuels).

Higher prices of electricity and carbon dioxide emission allowances (EU ETS) and the lack of effective measures to protect the European market – these factors make Polish steel companies uncompetitive in relation to producers from third countries. To return to the broad market requires costly investment in decarbonisation and an attempt to mass-scale certified production of „green steel”.

In February 2021, the Polish Ministry of Development, Labor and Technology published the „White Book of Industry Development” with proposals for solutions to problems observed in the industry. A broad section was devoted to considerations about the metallurgical market. It presents ideas for changes such as:

  • amendment of the provisions of the act on the compensation system for energy-intensive sectors and subsectors,
  • introduction of statutory solutions and measures to reduce wholesale electricity prices,
  • maintaining discounts on regulatory fees and extending the catalogue of expenses for which it is possible to grant discounts,
  • setting rational benchmarks and supporting the reduction of CO2 emissions, taking into account the competitiveness of the industry in relation to countries outside the EU,
  • inclusion of potential investments in the steel sector in the Polish National Reconstruction Plan.

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Author: Kamila Nowak

Sources:

Wartość produkcji sprzedanej wyrobów przemysłowych (Value of sold production of industrial products), GUS.

Zmiany strukturalne grup podmiotów gospodarki narodowej w rejestrze REGON (Structural changes of companies’ groups in the national REGON register), GUS.

Rocznik statystyczny przemysłu (Statistical yearbook of the industry), GUS.

Bilanse energii w sekcji “Przetwórstwo przemysłowe” (Energy balances in the section „Industrial processing”), GUS.

Energia 2020 (Energy 2020), GUS.

Biała Księga Rozwoju Przemysłu (White Book of Industry Development), Ministerstwo Rozwoju, Pracy i Technologii (Ministry of Development, Labor and Technology).

Hutnicza Izba Przemysłowo-Handlowa (Metallurgical Chamber of Industry and Commerce), www.hiph.org.

World Steel Association, www.worldsteel.org.

Monitoring branżowy – Analiza rynku stali (Industry monitoring – Steel market analysis).

Te technologie mogą całkowicie zmienić świat – energetyka (These technologies can completely change the world – power engineering).

ArcelorMittal Poland zakończył inwestycję na linii wytrawiania w krakowskiej walcowni zimnej (ArcelorMittal Poland has completed the investment on the pickling line in the cold rolling mill in Krakow).

ArcelorMittal Poland na stałe zamknie część surowcową krakowskiej huty (ArcelorMittal Poland will permanently close the raw material part of the Krakow steelworks).