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Slovenia Business Week no. 05/2005: Bright Outlook for Steel Industry

The Slovenian steel industry does not expect any major changes in the next two years

The Slovenian steel industry does not expect any major changes in the next two years, as the current buoyant market conditions are expected to last also in 2006, the manager of a major Slovenian steel company has told STA.  

The global steel industry can expect good business conditions this year, with demand for steel expected to rise by 5%, and by 10.7% in China alone, was the view voiced by industry and government officials who met in January at a Paris conference. The event was organised by the OECD and the International Iron and Steel Institute.

Vasilij Preseren, the manager of Acroni, the biggest steel company in Slovenia, says he agrees with the forecasts on the growth in the steel industry. He believes growth will continue until 2008 or even 2010, at least in China and that part of the world. This, he believes, will have a positive impact on other parts of the world.

According to Preseren, estimates show the upturn is fairly strong. While all Slovenian steel companies have enough orders, Preseren highlighted that the steel industry was still facing rather high prices of raw materials. However, the producers have managed to create a system in which the high price of raw materials can be transferred to the prices of products.

Moreover, the plants have specialised their production. "The fact that in 2004 the steel industry saw record earnings in the past 15 years speaks for that as well," Preseren said.

The Slovenian steel industry also benefits from a favourable dollar-euro exchange rate. "Most strategic raw materials are sold in US dollars, while Slovenian steel companies sell their products predominantly in euros," Preseren explained.

Preseren could not rule out negative surprises, but expects the companies of the Slovenian Steel Industry to continue to operate successfully until 2010. "We have all the opportunity to work even more successfully on investment," he said.

Acroni has mapped out its investments in a mid-term development plan until 2010. The company has an ambitious plan to become the second biggest producer of stainless steel heavy plates in Europe by the end of the year.

Last year Acroni saw the value added per employee at over EUR 30,000. The company plans to raise the figure from EUR 45,000 to 50,000 until 2008. "These figures are comparable with those of most steel companies in Western Europe," Preseren explained.

His company generated SIT 700m (EUR 2.9m) of net profit last year, selling 267,000 tonnes of products worth SIT 60bn (EUR 250m). Acroni exported as much as 67 percent of its products, most of them to Italy, Germany and France.

Source: Slovene Press Agency STA

Author: STA