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A key vision: ISMR interviews Antonio Marcegaglia

Marcegaglia’s Chairman and CEO, Antonio Marcegaglia, outlines his vision and strategy in the flat products, tube and coil sectors to ISMR What are the key qualities for any player who wishes to operate on a global level in the steel industry? Certainly, the ability to anticipate market trends as well as to react quickly and positively to market shifts are crucial qualities for any company. But, says Marcegaglia’s Chairman and CEO Antonio Marcegaglia, the real differentiator is the strategy, the overall vision, that directs the group’s future. Today, Marcegaglia is considered to be one of the most important steel service centre players in the steel industry - from carbon steel tube production (with an extremely wide range of products) to the stainless steel tube sector (with a leading position in terms of global production) as well as in carbon and stainless steel flat products and heavy (quarto) plates. Marcegaglia started an expansion programme about 15 years ago, pursuing a successful strategy followed in the tube sector, to create a diversified network of sourcing-production-distribution with horizontal, downstream and upstream growth. “As a result, the group is now a unique player in the European and global steel industry, guided by key values such as synergies (raw material purchasing, processing, logistics, market), economies of scale, production flexibility and diversification of products and markets,” Antonio Marcegaglia told ISMR. New capacity for flats “This vision is translated into flat production where the group is active in carbon and stainless steel coils, sheet and narrow strip, but also in colour-coated steel production and heavy (quarto) plates. Marcegaglia is an independent player that can supply other service centres as well as specialized customers, offering an increasing range of products in terms of steel grades and typical applications, a unique mix of services and quick response times with stock availability in standard sizes,” explained Enrico Paladini, global commercial manager of carbon steel coils. This strategy has led the Italy-based group to develop new high-grade quality and niche products, based on new capacity at its Ravenna and S. Giorgio di Nogaro (Italy) plants. The set-up and revamping of new lines have expanded production capacity, especially in terms of range and grade feasibility, with better control of production processes and the capability to supply more and more specialized products. “This has enabled the consolidation of historical markets, while we have also entered new application sectors. For example, among others, hot-rolled, high yield strength steel for cold forming can now be supplied up to S600MC (EN 10149-2) as well as cold rolled products with high yield strength for cold forming in grades such as HC420LA, HC180Y, HC220Y, HC260Y (according to EN 10268) but also special quality steels for radiators and drum packaging are maintained as production standards,” explained Enrico Paladini. Thanks to the latest process upgrade on several of its galvanizing lines, Marcegaglia has also increased its flexibility in zinc coating so that coating weight may be defined from Z50 up to Z800 (allowing for different coating between sides), but new grades have also been developed such as dual phase DP600, DP800 and DP1000. For surface finishes, Ecorsteel anti-fingerprint organic coated steel is a permanent, ecological and anti-oxidant coating, transparent or colour-hued, that combines aesthetic values with high forming and drawing capabilities for applications in the building sector, household appliances and metal furniture. “The coil colour-coating units are constantly increasing their efficiency and output, with more than 20 standard painting cycles that can be combined for specific surface requirements. The production programme for heavy plates has also been improved and a wide array of end uses are now covered, with specific certifications for boilers, pressure vessels and naval construction among others,” concluded Enrico Paladini. Strategic focus and market trends “Globally, I see a slowdown of emerging countries’ economies that have been driving global consumption of steel over the last few years. I am talking mainly about China and Brazil, here. There is a question mark over Russia at the moment because of the political situation. So, I am not expecting significant increases in the European economy although there might be slight improvements in eastern Europe,” Antonio Marcegaglia explained. “On the other hand, I believe that more steel and steel-derived products and machinery will be exported to dollar economies in the next year or so as the dollar gains in strength. So, in summary, domestic and European steel consumption will remain as it is or even slightly improve.” As far as Marcegaglia is concerned, he confirmed that Europe is its main market but he is keeping an eye on various export opportunities outside Europe from the strong dollar. “We will probably consolidate by +5% of volume growth which should translate to a similar growth in sales volume for Marcegaglia (last year it was over 4.1 billion euros). This is because average prices have come down slightly so we have compensated by increasing our volumes. We believe, by doing this, that we have gained some market share on flat coated products and stainless steel products,” Antonio Marcegaglia explained. He intends to focus even more on Marcegaglia’s core business of steel processing. He also intends to develop its product range and simplify its product portfolio, focusing on the three main families (stainless steel and special products, welded tubes and flat carbon steels). “We will invest more in product development versus end-user project business and high value-add in all these three main areas,” Antonio Marcegaglia outlined. “We think that competition from emerging countries, like China, Russia and India, on downstream cold rolled and coated products into Europe will become even more significant and we need to respond to that to grow/maintain our market share. We will also take advantage of selected opportunities to grow in other markets. For example, stainless steel markets in Turkey. We will also strengthen our international presence. I believe that we will see also more potential consolidation and restructuring in most of the value chain segments of the industry, particularly in the service centre distribution sector and welded tubes sector. So, we may take advantage of that – we are open to potential acquisition opportunities. Finally, we are working on a restructuring and re-launching project with ArcelorMittal on the potential development of ILVA (the Italian steel mill with current issues in terms of production output and supply)”. An eye on logistics Another focus of Marcegaglia expansion strategy is logistics: the efficiency of its distribution network connecting manufacturing plants with each other and with customers has always been among its top priorities, and the group has supported and sustained activities to improve performance in this field. Here, especially in the flat products sector, Marcegaglia has been able to establish its presence on new areas through the use of intermodal terminals (hubs) strategically located in harbours on the Mediterranean Sea, but also on the Atlantic Ocean, the North Sea and the Baltic Sea, as well as storage areas near important railway connections. This has significantly cut delivery times as well as carbon emissions: a network of more than 10 logistics hubs across Europe to enhance flexibility and just-in-time service. At the heart of this network, Marcegaglia’s Ravenna plant (Italy) operates as the main production and shipping centre for the group’s flat product chain, with its handling capacity (now 500 trucks per day) also significantly upgraded thanks to the completion of new internal railway tracks and the expansion of the harbour docks area (220m added for a total length of 800m, 9.5m draught) for ship access. The plant in San Giorgio di Nogaro, specialising in heavy plate production, is also conveniently located with easy access to sea and rail freight along the same Eastern coast of Italy. In Ravenna the group has completed a massive ten-year investment plan that has strongly enhanced Marcegaglia’s role as a flat steel producer, increasing its overall capacity of cold rolled material and doubling its production of hot dip galvanized and colour-coated steel. “Our Italian and European-based factories are supplying mainly to the European market. Eastern European countries like Poland also still exhibit interesting growth patterns. The strength of the dollar is allowing us to export competitively into Mediterranean markets and the US which has opened a window of opportunity for us. The third element of growth will be the ramping-up of our plants outside Europe i.e. China, Russia, Brazil and the US plant. We are also considering a project in Turkey for stainless steel tube for the Turkish, Middle Eastern and North African markets,” confirmed Antonio Marcegaglia. The stainless challenge Marcegaglia’s stainless steel business has already been recently expanded with new lines for flat production (coils and cut-to-length industrial sheet) at the Gazoldo degli Ippoliti plant which is now operating at full capacity. New upgrades on the first pickling line will be designed to improve quality and productivity, focusing mainly on ferritic steels. Marcegaglia’s headquarters today is equipped with two annealing and pickling lines and two cold-rolling and skin-passing lines capable of processing hot rolled steel (1D finish) from 2 to 6mm thickness and cold rolled steel (2B finish). These coil processing lines can also supply in-line edge slitting. Downstream, Marcegaglia can count on the integrated production of stainless sheet and strip as well as flat and angle bars. The new cut-to-length line can work hot rolled and cold rolled materials with optional polishing (220-240-320 grit), scotch-brite brushing and paper or laser film protection on each sheet. The automated packaging system assembles standard packages weighing from 1500kg. All production conforms to main manufacturing standards, such as EN 10088-4 for structural, building and construction applications with CE marking and EN 10028-7 for all pressure purpose applications certified by TÜV: AD 2000-W2 (pressure equipment) and W10 (low temperature pressure equipment). “The group’s investments in this area have further reinforced our role as one of the world’s leading manufacturer of stainless steel welded tubes, supported by production plants in Brazil, USA, China, Russia and Italy,” Antonio Marcegaglia told ISMR.

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