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Metallurgy: A proven sector

The metallurgy sector has not finished crossing the dessert. After the soaring prices of its raw materials due to the Covid-19 crisis, here it is faced with the same situation with the Russian-Ukrainian crisis.

The players in the metallurgical sector still have to fasten their belts. Indeed, strongly impacted by the Covid-19 crisis reflected in the rise in the price of raw materials and the cost of transport, the sector is far from out of the inn, with the outbreak of the Russian-Ukrainian conflict. It must be said that steel, the main production component for the sector, continued to soar during the year 2021, thus reaching historic levels. And the crisis between Ukraine and Russia does not help matters.

Before the start of it, the Federation of Metallurgical, Mechanical and Electronic Industries (FIMME) declared that operators in the sector did not yet have visibility, with a disruption in their order book. She added that it is very difficult to draw up an estimate with an approximate estimate, because the situation has led to a significant increase in prices for customers. “Nothing suggests that the situation will improve in the months to come. The most optimistic forecasts expect a return to normal only in 2023“, she specified.

To date, the situation is the same, but some players remain optimistic. “Given the geopolitical context between Russia and Ukraine, 2 major players in the steel industry in the world, the 1is quarter was marked by a historic rise in the price of raw materials, their scarcity and an unprecedented increase in energy costs. From 2nd quarter, we saw an easing in the prices of steel products and better supply conditions despite the persistence of high dollar volatility. The national steel sector was able to react quickly to this exceptional situation and ensure market supply under good conditions.“, explained Ismail Akalay, Managing Director (DG) of the SONASID Group.

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Energy crisis, an author weakening factor

Apart from the impacts linked to the rise in the price of raw materials and the cost of maritime freight, another factor weakening the sector must be considered. This is the energy crisis. “At the market level, the difficulties were linked on the one hand to the supply of raw materials. On the other hand, the global energy crisis has also had an impact on the development of the sector in the region and has made many inputs more expensive. We also experienced a tense situation on the logistics level with the increase in maritime freight, which is decisive in the supply chains of steelmakers both in terms of imports and exports.», an indication of Ismail Akalay.

In view of the elements developed, and taking into account the continuation of the conflict, the sector will continue to be tested, even if its players have been able to adapt to maintain their activities. This is the place to recall that the Mechanical and Metallurgical Industries (IMM) field represents an essential link in the manufacturing supply chain, due to its role as a supplier and subcontractor for various application markets, such as construction and public works, energy, transport and agriculture.

Mohamed.F

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