The Hungarian Iron and Steel Industrial Association held its usual year closing meeting on December 15, where - beyond a presentation of today's steel industrial situation -, medal were given over.

All indicators confirm that world economy will be characterised by decreasing growth perspectives in 2012 and steel industry has nothing good to expect. This could be the summary of the speech of Lukács Péter PhD, Chairman of the Hungarian Iron and Steel Industrial Association, Deputy CEO of Strategic Technical Affairs of ISD Dunaferr Zrt. presented at the meeting. According to December data of OECD the world economical growth is 3.8% in 2011, while only 3.4% is expected to be next year. However, the world economy growth is lead by the developing countries; GDP growth in China will drop from 9.3% in 2011 to 8.5% next year, which still shows quite a high growth. Within the Euro Zone this year's 1.6% growth will be replaced by 0.2% stagnation next year.

During the last ten years significant rearrangement took place in the geographical distribution of steel production and the loser of this process is Europe and Japan, while China is the winner. The Far-Eastern country only had 15% of the world production in 2000, while in 2010 the figures show more than 44%. Meanwhile, the EU share decreased by 10 percentage point to 12%. As the European steel industrial production volume practically stagnates since the beginning of the '70s the percentual drop is generated by the extending world production volume.

World production will have new record figures in 2011, it is expected to be 1,518 million tons, but the decreasing growth can be traced even here, because last year's growth of 15.3% is expected to be only 9.1% this year. What is more staggering that Chinese steel consumption per capita has become comparable to the German consumption, and during the deepest crisis it even exceeded it. Looking at these indicators Hungarian figures exceed only the figures of Romania and the Ukraine in this region.

Despite the outstanding production results steel industrial capacity utilisation still does not reach 80%. Significant differences are to be found between the regions in this field as well. It is interesting enough that steel mills, using the most state-of-art technology in China, sometimes have a standstill period, because the government strictly observes keeping the raw material and energy quotas, set forth for the given field of the industry, cooling down the economy this way and decreasing the import dependency of the country by these measures.

As far as the raw materials are concerned, the prices in this sector are set by the Chinese demand and by the high-level consolidation of the important mining industrial companies. Despite the fact that some price fall was experienced at the spot market (in case of ad hoc contracts), the steel industrial companies have to fight with the fact that demand and prices decrease to a larger extent than the prices of raw materials; this way the companies are forced to decrease their costs, however it has a limitation as well. The emission quota system is deemed to be a new cost increasing factor in Europe, where the companies receive free quotas based on benchmark data (depending on the best available technology), starting in the new period in 2013; in case of emission above these limits quotas have to be bought for extremely large amounts. Moreover, the benchmark data have been set in such a way that the companies, using the most state-of-art technology, cannot even meet the requirements. This burden will place the European producers in a very difficult situation; this is the reason why the Association of the European Steel Producers, the Eurofer is desperately fighting for raising the quotas. At the same time the effect of the system is questionable, because the continent with 20% of the world's carbon-dioxide emission, cannot guarantee a lot of results with a unilateral decision. This question can be solved by global co-operation only, not by individually undertaken steps, explained Lukács Péter.

In Hungary the crude steel production is way behind the level prior to the crisis. Additionally, production was stopped in Diósgyőr, and the concrete steels are produced with using only half the capacity in Ózd due to the recession of the construction industry. Survival of the domestic producers is ensured by the export, which has increased more than the import and that is a very welcoming development.

At the year closing meeting of the Hungarian Iron and Steel Industrial Association awards were given over after the presentation. This year the "Commemorative medal for Metallurgy" was received by Kroó Iván, Chairman of the Board of Directors of Dutrade Zrt. and Csermák Pál, Sales Director of Feferrum Kft. The same award was also received by Valeriy Naumenko, Chief Executive Officer of ISD Dunaferr Zrt., who could not participate in the event; Lukács Péter, as the Chairman of the Hungarian Iron and Steel Industrial Association, will give him the medal.