Market Monitor Metals and Steel Poland 2019

Market Monitor

  • Poland
  • Metals,
  • Steel

26th November 2019

Competitive price pressure has led to deteriorationg profit margins for steel producers as well as steel and metals distributors over the past 12 months.

Polish metals and steel sectors' growth over the years

Performance forecast along Polish metals and steel subsectors

The direct impact of US import tariffs has been low so far, given the limited share of exports to the US (5% of total Polish steel exports). However, the indirect impact on the domestic steel market has been high, due to a sharp increase in (cheap) steel imports from non-EU producers (mainly from East Asia, Russia Ukraine and Turkey), redirected from the US. This has led to a significant price decrease for many steel products (mainly hot rolled coils and sheets, HEB profile and ribbed bars).

The competitive price pressure has led to deteriorationg profit margins for Polish steel producers and the steel and metals distribution segment over the past 12 months, and a further deterioration in the coming months is expected. Higher emission trading and electrity prices have a visible impact on Polish metals and steel producers since H2 of 2018. According to the World Steel Association, steel production in Poland decreased 6% year-on-year in H1 of 2019. Currently it seems that EU measures to protect the common market from large volumes of cheap steel imports from overseas are still inadequate.

Despite those issues there are still good bussiness opportunities for Polish metal and steel businesses, as domestic demand remains robust. Demand for building office spaces and residential buildings remains high, while elevated public spending on infrastructure (roads, rail) and the energy sector (powerplants) is ongoing, strongly supported by EU funding.

Another issue for Polish businesses remains the split payment scheme aimed at reducing VAT fraud, which has raised concerns about deteriorating liquidity due to the freezing of business funds related to VAT on a dedicated account. Failure to comply with the provisions may result in sanctions on both the supplier and the buyer.

Payment experience in the metals and steel sectors has been good over the past two years, and steel and metals business insolvencies have not increased so far in 2019. The current slowdown in the automotive industry has not yet led to deterioriation in the payment experiences of metals and steel suppliers. However, with the new split payment tax regulation delays in payments to smaller companies are expected to increase.   

Our current underwriting approach remains neutral due to the satisfactory performance seen in 2018, when businesses were able to accumulate capital and increase their financial resilience. However, we continue to monitor the impact of cheap steel imports from outside the EU. The key factor of success for Polish metals and steel distributors is a proper stock policy and prudent anticipation of price trends.

Related documents

Disclaimer, no warranties and exclusion of liability

Atradius disclaims any representations or warranties of any kind, whether expressed or implied, including but not limited to implied warranties of merchantability and fitness for a particular purpose of (INCLUDING BUT NOT LIMITED TO) any information contained on or provided via this Web Site and/or any service described or promoted on this Web Site, including warranties with respect to infringement of any patent, copyright, or other rights of third parties. Atradius shall not be liable for any injury, loss, damage or expense arising out of any access to or use of this Web Site or any site linked to or from this Web Site, including, without limitation, any loss of profit, indirect, incidental or consequential loss. Atradius furthermore shall not be liable for persons, property damage or especially direct, indirect, incidental, consequential, immediate or subsequent (pecuniary) loss. While Atradius has used reasonable efforts in maintaining a virus-free Web Site, it declines any liability for persons, property damage or especially direct, indirect, incidental, consequential, immediate or subsequent (pecuniary) loss which may result from transmission or downloading of computer viruses. Atradius cannot be held liable for hardware damage, loss of data, alteration of data, or downtime.