Balaz: European Steel Industry Doomed to Demise

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Professor Peter Balaz from the University of Economics in Bratislava. (Photo by TABLET.TV)

Bratislava, February 18 (TASR) – The European steel industry is heading towards demise, as it can’t compete with cheaper producers from other parts of the world, Peter Balaz from the University of Economics in Bratislava stated on TABLET.TV on Thursday.

“Steel from the EU is too expensive. The Union can’t compete with cheaper rivals in such sectors. EU’s advantages lie elsewhere – in quality science and research,” said Balaz, mentioning Chinese steel in particular. He added that 1.6 billion tonnes of steel is produced worldwide annually, of which half comes from China. Meanwhile, EU’s share makes only 10 percent, so it isn’t a very prominent global player, he noted.

According to Balaz, the EU has failed to draw necessary lessons from the 2007-9 economic crisis and it hasn’t adapted to recent changes on global commodity markets following a slowdown in China’s economic growth.

“A fall in demand for coal has resulted in a drop in production cost for countries importing coal for steel production. Meanwhile, China is the top coal importer. At the same time, demand for Chinese steel went down throughout Asia, so the country began looking for new markets. They’ve been found in Europe, where the steel prices are much higher, as they’re related to high subsidies on coal, higher wages and the high demand of the car industry,” said Balaz.

The professor of economics doesn’t believe that this situation should necessarily result in a disastrous scenario for U.S. Steel in Kosice, however.

“Slovakia is in a specific situation, with comparative advantages playing on U.S. Steel’s behalf. The company supplies steel to the local car industry in the necessary quality ‘just in time’, with China unable to compete with this,” said Balaz.

Several thousands of people active in the steel industry gathered on Monday in Brussels to demand EU’s support for fair steel trade and growth of new jobs and to protest against Chinese steel dumping. The protest, organised by AEGIS Europe, also featured around 100 steelworkers from Kosice.