Metallurgy has its cycles, good years alternate with worse ones

Ing. Vladimír Soták, Sales
Ing. Vladimír Soták, jr. a member of the Board of Directors and Sales Manager

The summer season tends to be problematic when it comes to the flow of products, as many warehouses in southern Europe are closed for long periods. However, our dealers had to intensify their activities already in June, when the drop in consumption became fully apparent and the sales of our products dropped, too. What was the first half of the year like in our company and what does the situation look like today? We talked about this and more with Vladimír Soták, jr. a member of the Board of Directors and Sales Manager of ŽP a.s.

We are halfway through a year that has been different in many areas from previous one. What was it like for ŽP a.s. from a business perspective?

The situation was stable during the first five months of the year, with orders and shipments of finished products at 2022 levels. However, this does not mean that all production facilities were fully occupied. In the precision tubes segment, we already saw a decline in sales in the Q4 of the previous year, and this slightly downward trend has continued this year as well. The drop in demand for finished products across the whole spectrum of industries became fully evident in June, which resulted in a drop in sales not only of precision tubes but also of steel and rolled tubes. The situation in the segment of tube elbows remains stable, the volume of orders has not changed.

What do you think are the main reasons for this situation, compared to last year’s successful period?

First of all, I have to say that last year’s results were the best ever and will certainly not be repeated in the forthcoming years. Thanks to them, we were able to increase our investments in technology by more than double compared to previous years and to prepare a reserve for higher electricity and gas prices. Based on our experience we know that the economy, and the metals sector in particular, has its cycles, where good years alternate with worse ones. That is why we do our best to prepare our company for such periods by investing own resources to increase labour productivity and thus competitiveness in the global context. The causes themselves are of a global character and always involve a combination of different factors. The rapid rise in inflation and interest rates in the past year has had a significant impact in most countries around the world leading to a reduction in consumption and production.

What is the mood among dealers today?

Our dealers, our subsidiaries abroad and our customers almost all over the world are experiencing a decline in demand for metallurgical products, which is also caused by the summer season and holidays. Therefore, it is realistic to expect a slight recovery at the beginning of September, but we do not anticipate a return to full production capacity for the time being.

Is the current situation forcing us to change our price lists?

We adjust the prices of our products on a monthly basis, depending on the price of scrap steel, other raw materials and market development in terms of demand and competition. The most recent adjustments to our price lists have been prepared for September, and I expect the prices to be stabilized in Q4.

Article written by: Podbrezovan

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