Uncertainty, competition & sustainability in the wire market: a dialogue with P. Spina, Steelgroup

The wire and steel sector is experiencing a period of significant uncertainty and change. We spoke with Pietro Spina, Sales Manager at ITA S.p.A. (Steelgroup), to better understand the current market situation, the challenges of competition, and the impact of the collective rush towards sustainability on wire drawing companies.

Let's take a step back a few months. Firstly, how was the wire fair for Steelgroup?

The fair went very well in terms of relationships. There was great anticipation for a market recovery afterward, but unfortunately, this has not materialized. Our most struggling end market is construction, which negatively impacts the demand for strands and ropes used in traction and overhead cranes. The automotive sector saw stable numbers until April/May, then began to decline, while the electrical industry is doing reasonably well thanks to the push towards modernizing networks.

What is the current competitive situation in the wire drawing market?

With declining volumes for everyone, there is fierce competition among wire drawing companies to secure the minimum production needed to cover structural costs. Non-EU countries exert strong pressure through unfair practices like trade triangulations and evasion of barriers. The situation is tense; at the EU level, we risk losing a significant portion of our local production. Although there is a quota system, the quotas are very broad. The only solution would be serious local safeguard barriers, not to close markets, but to defend the EU's role in the global steel industry. Unfortunately, Europe is very disunited. In some forums, discussing stricter duties on countries like Turkey or India is far from unanimous.

What about prices?

Our customers, working less, expect discounts and rebates, but we find it very difficult to grant them. Our supplier steel mills have faced significant volume losses and need to finance their sustainability conversions, so they can't lower our raw material prices. This creates a boomerang effect.

Speaking of sustainability, how does Steelgroup manage this aspect?

Being a wire drawing company, our emissions are already low compared to a steel mill. Sustainability and circularity have always been important to us for social responsibility reasons: we have implemented operations to reduce our carbon footprint, such as internal heat recovery solutions. Regarding certifications, one of the companies in Steelgroup is currently certified for CO2, but we have slowed down certification processes for the others due to the lack of unified standards. Instead, we are conducting internal evaluations with a consultant's support, combining our consumption data with that of our certified suppliers. Our larger customers increasingly demand this information. 
Overall, it remains a very painful process.

What do you mean by painful?

For steel mills, sustainability efforts entail heavy investments that may involve production stops. Politically, there is no help. This push for conversion results in costs largely borne by end consumers, leading to inflation and higher prices.

What are the expectations for the future?

Unfortunately, the numbers do not predict any changes until next year.

What is your current export share?

Today, our export percentage is about 80%, slightly higher than in the past. Among all, the countries of the American continent are still giving us some satisfaction.

Given all these premises, has your investment plan experienced a setback?

A slowdown, I would say, but it is still ongoing. The Beri family's foresight, reinvesting profits into the company rather than distributing them, has been crucial, allowing us to continue investing, albeit at a reduced pace, even in this complicated phase.