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Crisis also offers opportunities

Michael Allexi in an interview

22.01.2021

In the latest issue of the trade journal "Stahlmarkt" companies were asked for their assessment of the latest developments in their market segment. Speaking on behalf of rff, managing director Michael Allexi comments on these and other issues currently affecting the steel market. 

What are the latest developments in the steel trading market in your view?
For some time now we have been observing a trend towards increasingly large units in steel trading. From our viewpoint, the crisis has lent even greater dynamism to this development. The reasons for this lie on the one hand in the steadily increasing sense of urgency, on the other a growing need for liquidity and capital.

Nonetheless, we have noticed the weakness evident in a number of the big players, presenting opportunities for specialists. Ultimately, for the end customer this means that bigger is not necessarily better.

What personal lessons have you learned from the corona crisis?
Firstly, the crisis has shown that when we work together - including in the company - we can achieve and change many things if the will to do so is there.

Secondly, that companies with a good strategic model and customer centricity are in a position to deal with crises more successfully.

Thirdly, that company and management culture - including internal communication - have assumed an even greater role in crisis management than was previously the case.

Fourthly, the VUCA world is and remains the new constant. This is why it is important to be prepared at all times!

What issues are of particular importance to you at this time?
There are three issues in particular. One of these is the long-term reliability of supply. Which plants will survive? Also important for us is optimal volume planning.
When will the market begin to pick up again and at what time will orders of long leads be triggered, and in what quantities?

One thing that we are also focused on at this time is avoiding overburdening the organisations and their staff with too many projects.

How do you assess the market in the coming months?
The slump in demand for pipes and pipe fittings since the summer means that the typical end-of-year storage cycle failed to occur, together with the subsequent build-up of inventory at the beginning of the year. The warehouses are full and significantly over-stocked in some cases. Many pipe and pipe fittings plants will be faced with insufficient capacity utilization deep into the year 2021. In times of crisis, liquidity is everything, and some companies have reached a critical point regarding this. On the customer side, this can also result in a lack of capital required for pre-financing.

It is to be assumed that we will see further waves of infection deep into this year. By the middle of the year at the latest there should be a marked improvement in demand in the areas of maintenance and projects. The question is how strong this upturn will be and whether the dramatic shortage of shipping containers results in prices overheating.

What are your plans for 2021?
A better question would be: “What are your plans for 2022?”. Because the pandemic will still have a major effect on us this year. As a result, 2021 will see a continuation of the organisational and hygiene challenges that we have been dealing with for so many months. Implementing measures to improve efficiency and effectiveness and moving towards digitalisation take time. Implementation places stress on the capacities of the employees as well as the organisation. Nevertheless, 2021 will see us take a significant step forwards in these areas. We will use this year to plan and prepare forthcoming expansions and investments in detail.

Link to homepage: https://www.stahleisen.de/

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