Shrunken Czech steel sector sees rebound in sales and profit but still fears cheap imports

The Czech steel industry this week permitted itself a bit of navel gazing with a conference dedicated to its present and future hosted by the Ministry of Industry and Trade. The event followed on the heels of mixed 2016 results for the sector.

Photo: Payton Chung, CC BY 2.0Photo: Payton Chung, CC BY 2.0 The raw statistics showed a slimmed down but still highly profitable steel sector, though not one that is perhaps fully convinced that it holds its future in its own hands. Last year, the turnover of the Czech steel sector slipped to 79.5 billion crowns, down 5.4 percent on 2015 and a low point in recent years. But profits before tax climbed to 2.7 billion crowns, up 1 percent compared with 2015.

Czech steel companies managed to boost their exports with a 7.9 percent increase last year to reach around 5 million tonnes. That outstripped the rise in imports, up 5.8 percent, to 6.6 million tonnes. With the country producing 5.3 million tonnes, there is therefore a net shortfall of around one million tonnes.

The predictions of the biggest Czech steel producers is for the Czech market to bounce back this year with turnover rising to 82 billion crowns and pre-tax profits boosted to 5.0 billion. The trend of rising sales and profits is predicted to hold good through to 2020.

The biggest Czech export markets, where 92 percent of steel production is directed, are in the rest of the European Union. The biggest markets are Germany, Poland, Slovakia, Italy, and Hungary. With an eye on both their own domestic and those key exports markets, Czech steel producers have been following closely the arguments over whether China should be given recognition as a market economy, making EU protective measures against low priced or dumped steel very difficult in the future.

The outcome of that was a partial victory for the steel makers with Brussels sidestepping the market economy distinction to maintain its ability to protect European markets from dumped steel. But the worries about foreign penetration of the EU steel market, especially from the world’s biggest producer, China, still continue. Last year imports grabbed a record 24 percent of the total EU steel market, up from 17 percent a year earlier.

And the Brussels battle has now shifted to some degree with the focus now on Europe’s future climate change measures and the extent to which the continent’s steel companies can cushion the extra costs of buying carbon pollution permits and taking specific measures after 2020. The steel companies argue that they are now and could increasingly face heavy costs which foreign steel makers avoid although they could be producing steel with a carbon footprint half as high again as their European rivals.

The Czech Ministry of Industry and Trade for its part has promised to help the Czech steel industry adapt to new techniques, in particular the so-called 4.0 industrial revolution, with some funding projects cast specifically for the sector to benefit from.