This article presents an attempt to analyze the impact of global conditions on the functionality of the steel industry country – member of the European Union. The paper presents data describing trends and phenomena occurring in the global steel industry, and selected economic indicators describing the economic situation, which allowed the comparison of local changes with the trends disclosed in European and global scale

C. Kolmasiak

R. Prusak

Z. Skuza

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413METALURGIJA 52 (2013) 3, 413-416Z. SKUZA, R. PRUSAK, C. KOLMASIAKCHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP IN THE EUROPEAN UNIONReceived – Prispjelo: 2012-09-20Accepted – Prihvaćeno: 2012-12-25Review Paper – Pregledni rad ISSN 0543-5846METABK 52(3) 413-416 (2013)UDC – UDK 669.1:061.1(4-67):339.923:327.39UE=111Z. Skuza, R. Prusak, C. Kolmasiak, Czestochowa, University of Technol-ogy, Czestochowa, PolandThis article presents an attempt to analyze the impact of global conditions on the functionality of the steel industry country – member of the European Union. The paper presents data describing trends and phenomena occurring in the global steel industry, and selected economic indicators describing the economic situation, which allowed the comparison of local changes with the trends disclosed in European and global scale.Keywords: steelwork production, European Union, market analysisINTRODUCTIONSince the 1st of May 2004 Poland has become a full member of the European Union. Among the greatest benefi ts gained by Poland thanks to its EU membership, the most often mentioned ones include the participation in making economic and political decisions on the Eu-ropean level and the transfer of fi nancial resources that have already netted over 100 billion Euros of non-re-payable aid. It is estimated that the EU support of in-vestments has contributed to an increase in GNP (Gross National Product) by over one percentage point in re-cent years. [1]Aside from creating chances for development, the integration has also involve a number of challenges. In employers’ view, the most important of them include a higher competition in the domestic market, the outfl ow of skilled workers abroad and the need for adjusting companies to the EU quality requirements. Another im-pediment is the delay in introducing the euro (the obli-gation under the Accession Treaty) that hampers the infl ow of direct investments due to the risk associated with the exchange rate. The ongoing global crisis will probably further delay this process [2].The economic crisis has signifi cantly affected the volume of production of metallurgical companies across Europe. From the data presented in Figure 1, a consider-able reduction in the number of tons of steel can be ob-served in leading steel manufacturers in Europe. Since 1010, however, a growing trend has been noted.A similar phenomenon can also be observed in the Polish metallurgy (Figure 2). First, a distinct change has occurred in the manufacturing structure, within which a signifi cant increase in the role of the electric process can be clearly seen. Secondly, the level of explicit steel consumption has increased, which, unfortunately, has been refl ected in a worsening of the indicator describing the import to export relationship, not only in the product line dimension, but also in the economic one (the export includes low-processed products, whereas the import concerns largely highly processed products).An element indicating good prospects in the steel industry are also changes in the value of the SWIP (Steel Weighted Industrial Production) index that relates the level of production activity in sectors consuming steel products to the domestic steel consumption. In 2011, the SWIP index increased by nearly 15 % (the highest value since 2007). From this perspective, the changes in the power engineering and in the railway are gaining strategic importance, which, as a result of the increased demand for specialized products and structures may signifi cantly contribute to an increase in demand for steel products. Of key importance to the shaping of the size of demand in the Polish market is also the house-hold appliance industry.Figure 1  Changes in the volume of steel production in selected European countries in the years 2000 – 2011 [3]414  METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...THE INFLUENCE OF THE EUROPEAN ENVIRONMENTAL PACKAGES ON THE CAPABILITY TO CONDUCT ACTIVITY IN A METALLURGICAL ENTERPRISEA real threat for the metallurgical industry are the increasingly high environmental protection require-ments. An energy and climatic package was negotiated in the European Parliament in 2008, which is to come into force from 2013. In the Commission’s view, the EU economy may cost effectively reduce CO2 emissions by 20 % by 2020. The current proposals (vetoed by Po-land) establish a roadmap for CO2 reduction by 2050 by as much as 80 % (relative to the year 1990) [5].Steel manufacturers point out to the fact, however, that the EU is only responsible for 11 % of the world’s CO2 emissions, and therefore any, even the most restric-tive actions implemented solely in Europe will not bring about a measurable environmental effect [6, 7].Since the beginning of the 90’s, the Polish metallurgi-cal industry has reduced the CO2 emission volume by over 60 %, chiefl y thanks to the application of modern technology, and currently it is the source of only 4 % of the overall carbon dioxide emissions. Further limiting is extremely capital intensive and is only possible to a lim-ited extent and, as is estimated based on benchmarks and the KE methodology, the shortage of allowances for this sector of industry will amount to about 12 percent (the cost of one ton of CO2 to amount to 14,5 Euros in the years 2013-14 and 20 Euros in the period 2015-20 [2]). The climatic package is applicable to the entire economy, and the metallurgical industry is only one of the sectors whom the State allocates the allowances. In the conditions of the Polish economy, the main benefi ci-ary of the imposed limits is the power industry. Relying as much as in 94 % on coal [7], this branch of industry will particularly acutely feel the necessity of adjusting itself to the EU requirements. Electricity has increased in price in Poland, and this process is likely to continue over the next decade (it is estimated that the price will have risen by 60% by 2020) [2]. So, the CO2 emission reduction process will not re-main without effect on the future of the Polish and the European metallurgical industries – both directly, through the purchases of allowances by steel mills, and indirectly, through the additional emission allowance cost included in the prices of purchased primary raw materials (chiefl y coke) and electrical energy (the elec-trical energy costs account for 20 % of the product price). These facts and the Community Directive intro-ducing the excise duty on coal and gas (that previously were not burdened with this levy), which has been in force since 2012, may all have a signifi cant effect on the profi tability and price competitiveness of steel manu-facturers. It is estimated that the implementation of the energy and climatic package will lower the competi-tiveness of the Polish metallurgical industry by approx. 25 % by 2025 [8, 9]. The European Commission’s policy, which is geared towards promoting Europe to become the world’s leader in the struggle with the emissions of gases, might result in a situation where EU-located steel mills will lose their competition for orders with manufacturers from, e.g., the countries of the BRIC (Brasilia, Russia, India, China) group. The above-mentioned countries are cov-ered by the environmental restrictions to a lesser extent or these are not applicable to them at all; in addition, they enjoy lower labour costs and have state-of-the-art technological lines available.  International concerns (such as ArcelorMittal, Celsa, CMC – The Commercial Metals Company, or ISD - The Industrial Society of Donbas) are not attached to any particular country and are guided by profi t. Thus, steel production can be trans-located to other places; on the other hand, however, the transport costs must be taken into account, which has ultimately translated into the end prices with all associ-ated consequences for the purchasers. It should also be noted that the purchase cost of CO2 emission allowances is not the only element differenti-ating the steel production costs between EU countries and the rest of the world. Because of the lack of signifi -cant local raw-material sources or the high labour costs, European steel manufacturers already in the past had to try hard (e.g. by investing in the improvement of pro-duction effectiveness, improvement of product quality, or specialization) to remain competitive to, e.g., Far East manufacturers. Outlays that have been made and are still being made (since 2004, ArcelorMittal has in-vested in Poland about 1,3 billion Euros [2]) and the increasing pressure by steel concerns (e.g. the European Confederation of Iron and Steel Industries) will contrib-ute to discerning the problems of this sector or, for in-stance, assuring that Russia, which has recently ac-cessed the World Trade Organization (2011), be subject to the same rules [2].Figure 2  Changes in the steel production volume and the explicit consumption of steel products in the years 2002-2011 together with a forecast up to 2018 [4]415METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...TRENDS IN THE DEVELOPMENT OF THE METALLURGICAL SECTORThe metallurgical sector in the EU is dominated by large international concerns that concentrate over 60 % of production. In Poland, six investors are active in the metallurgical industry, whose market shares are as fol-lows: ArcelorMittal – 67 %, CMC – 13 %, Celsa – 8 %, ISD – 7 % and Złomrex – 4 % [10]. The present market structure has formed as a result of restructuring and pri-vatization processes going on since 1990.These activities manifest themselves in vertical and horizontal consolidation. The growing raw-material prices make more and more companies become inter-ested in assuring constant supplies of raw materials to meet a possible future increase in demand. In the iron ore market, 75 % of the world’s resources are controlled by three concerns (BHP Billiton, Vale, Rio Tinto), so it’s no wonder that manufacturers, such as ArcelorMi-tall, intend to attain by 2016 a state in which 75 % of the iron ores used within the group would originate from their own resources (e.g. the Krivoy Rog ore deposits) [2]. Similar trends occur in the scrap market (in Europe, about 65 % steel mills used scrap for steel production), coal (coke), or distribution. In Poland, ArcelorMittal Poland has long maintained the intention to participate in the privatization of the Polish mining industry.A revival can also be observed in the area of distri-bution. On the one hand, foreign concerns active in the Polish market use their own distribution channels, and, on the other hand, they more and more extensively enter areas previously occupied by local distributors.  In con-trast to the European distribution model being concen-trated and dominated by enterprises associated with steel mills, there are several hundred distribution com-panies active in the Polish market (with annual sales from 10 K  Mg to 150 K  Mg). By purchasing Złomeks from the Cognor Group, ArcelorMittal has become re-cently one of the main market players. On a slightly smaller scale, consolidation phenomena are also occur-ring in the building reinforcement manufacture area or in the tube industry [2].An important issue in the Polish metallurgical indus-try was for years an excessive employment level which reached 153 thousand people in 1989. A particular prob-lem was an ineffi cient employment structure manifest-ing itself in overstaffi ng on non-production work posts. The reduction of employment took place predominantly based on non-competence criteria, by focusing prima-rily on the age aspects (early retirements, social pack-ages). As a result, the basic goal was successfully achieved by reducing the number of employees to a level of about 27 thousand people; however, a situation was brought about at the same time, in which employ-ees with high skills and great professional experience departed from the steel mills.  A distinct effect of the employment level reduction was an increase in produc-tivity from 92,5 K Mg per employee in 1990 to 314 K Mg per employee in 2010. So, it is rather the quality aspect and the generation gap that are currently a human resource issue for metallurgical enterprises. Nearly 40 % of people employed in the metallurgical industry are at the age of 41 – 50 years, and about 30 %, 51 – 60 years. Considering the fact that the share of persons at the age below 30 years does not exceed 70 %, it is nec-essary to undertake intensive actions aimed at prevent-ing the occurrence of a competence gap (part of the en-terprises have already taken such actions). This problem is urgent, insomuch as, according to forecasts, the aver-age age of a worker employed in Poland’s industry in 2050 will be 50 years. Positive changes can also be per-ceived in the area of education structure, in which per-sons with higher and secondary education (with a share of 12 % and 76 %, respectively) play an increasingly important role [4, 10]. The prerequisite for the development of the metal-lurgical industry are therefore further investments and innovations which enable a more processed production and allow purchasers to be provided with special prod-ucts (e.g. highly processes ones or those with unique parameters). Investments, the development of modern technologies or cooperation with research institutions are not subsidized in any way.The metallurgical industry has been treated so far differently from other branches of the economy, as it would use public aid for restructuring. The process of adjusting the steel industry to the EU requirements (Protocol no. 8 of the Treaty of Accession of Poland to the EU) has been formally completed, therefore there are no longer any reasons for which this sector could apply for EU resources on general principles – e.g. for funds intended for ecological, innovative or research & development projects. In spite of the fact that the metal-lurgical industry is today deprived of this possibility, a number of initiatives can be observed, which aim at maintaining the cooperation between industry and sci-ence. Scientifi c centres continue conducting research work related to this area [11,12].The current market situation and the UE Directives carry a lot of risk to the future activity of steel mills. First of all, it is necessary to point out to the increasing threat on the part of Chinese manufacturers and EU environ-mental regulations that reduce the CO2 emission limits. From the items of a local nature, the greatest threats re-sult from the collapse of the shipbuilding industry, the growing prices of utilities and raw materials, and the un-stable exchange rate of the Polish currency. Regardless of the still severe crisis, a number of chances for the metal-lurgical industry can be indicated. The fi rst one results from the obvious fact of lack of subsidies for steel, and steel products are indispensable for carrying out a number of tasks. Moreover, the Polish economy and infrastruc-ture require many investment activities, within which steel products will play a substantial role. In addition, forecasts indicate good outlooks for the entire economy and a stable development path for the whole industry.416  METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...SUMMARYIn polish metallurgicalindustry privatization and or-ganizational and technological restructuring proceeded in parallel with the processes of adjusting the sector to the EU accession requirements. The production capaci-ties have been permanently reduced, the employment has been curtailed, and the majority of steel mills have become part of transnational concerns. On the one hand, these changes have reinforced Poland’s presence in the international metallurgical market, but, on the other hand, the UE membership of Poland and the worldwide globalization processes stifl e the local perception of the steel market needs.Each European Union member acting on the single market seeks to maintain and make use his of own cir-cumstances. The Community legal regulations may not, therefore, exclude those industry sectors that are impor-tant to a given country. This fact gains particular impor-tance to new member and those, who have not attained yet the development level of the old EU members. An example can be the Polish economy that traditionally relies on mineable resources, including primarily coal, whose rapid adjustment to, for instance, ecological re-quirements of the EU would signifi cantly slow down or even inhibit its growth.REFERENCES[1] http://www.strefabiznesu.pomorska.pl – May 2012[2] www.wnp.pl – May 2012[3] http://worldsteel.org/statistics/statistics-archive.html – May 2012[4] http://www.hiph.org/ANALIZY_RAPORTY/pliki/pps2012.pdf – May 2012[5] http://www.money.pl – May 2012[6] ec.europa.eu – 15 May 2012[7] energetyka.wnp.pl – May 2012[8] lubczasopismo.salon24.p – May 2012[9] Dyrektywa Rady 2003/96/WE[10] http://sekretariatmetalowcow.pl – Raport końcowy Kwali-fi kacje zawodowe dziś i jutro – May 2012[11] M.˝Knapiński: FEM 3D Analysis of Roll Defl ection Du-ring Plate Rolling. Metalurgija 44(2005)3, 161-240.[12] A. Kawałek, H. Dyja, S. Mróz, M. Knapiński: Effect of pla-te asymmetric rolling parameters on the change of the total unit pressure of roll. Metalurgija 50(2011)3, 163-166.Note:  The professional translator for English language is C. Grochowi-na, Studio – Tekst, Poland

English

Characteristic of iron and steel industry in terms of membership in the European Union

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413 METALURGIJA 52 (2013) 3, 413-416Z. SKUZA, R. PRUSAK, C. KOLMASIAKCHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP IN THE EUROPEAN UNIONReceived – Prispjelo: 2012-09-20Accepted – Prihvaćeno: 2012-12-25Review Paper – Pregledni rad ISSN 0543-5846METABK 52(3) 413-416 (2013)UDC – UDK 669.1:061.1(4-67):339.923:327.39UE=111Z. Skuza, R. Prusak, C. Kolmasiak, Czestochowa, University of Technol-ogy, Czestochowa, PolandThis article presents an attempt to analyze the impact of global conditions on the functionality of the steel industry country – member of the European Union. The paper presents data describing trends and phenomena occurring in the global steel industry, and selected economic indicators describing the economic situation, which allowed the comparison of local changes with the trends disclosed in European and global scale.Keywords: steelwork production, European Union, market analysisINTRODUCTIONSince the 1st of May 2004 Poland has become a full member of the European Union. Among the greatest beneﬁ  ts gained by Poland thanks to its EU membership, the most often mentioned ones include the participation in making economic and political decisions on the Eu-ropean level and the transfer of ﬁ  nancial resources that have already netted over 100 billion Euros of non-re-payable aid. It is estimated that the EU support of in-vestments has contributed to an increase in GNP (Gross National Product) by over one percentage point in re-cent years. [1]Aside from creating chances for development, the integration has also involve a number of challenges. In employers’ view, the most important of them include a higher competition in the domestic market, the outﬂ  ow of skilled workers abroad and the need for adjusting companies to the EU quality requirements. Another im-pediment is the delay in introducing the euro (the obli-gation under the Accession Treaty) that hampers the inﬂ  ow of direct investments due to the risk associated with the exchange rate. The ongoing global crisis will probably further delay this process [2].The economic crisis has signiﬁ  cantly affected the volume of production of metallurgical companies across Europe. From the data presented in Figure 1, a consider-able reduction in the number of tons of steel can be ob-served in leading steel manufacturers in Europe. Since 1010, however, a growing trend has been noted.A similar phenomenon can also be observed in the Polish metallurgy (Figure 2). First, a distinct change has occurred in the manufacturing structure, within which a signiﬁ  cant increase in the role of the electric process can be clearly seen. Secondly, the level of explicit steel consumption has increased, which, unfortunately, has been reﬂ  ected in a worsening of the indicator describing the import to export relationship, not only in the product line dimension, but also in the economic one (the export includes low-processed products, whereas the import concerns largely highly processed products).An element indicating good prospects in the steel industry are also changes in the value of the SWIP (Steel Weighted Industrial Production) index that relates the level of production activity in sectors consuming steel products to the domestic steel consumption. In 2011, the SWIP index increased by nearly 15 % (the highest value since 2007). From this perspective, the changes in the power engineering and in the railway are gaining strategic importance, which, as a result of the increased demand for specialized products and structures may signiﬁ  cantly contribute to an increase in demand for steel products. Of key importance to the shaping of the size of demand in the Polish market is also the house-hold appliance industry.Figure 1  Changes in the volume of steel production in selected European countries in the years 2000 – 2011 [3]414   METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...THE INFLUENCE OF THE EUROPEAN ENVIRONMENTAL PACKAGES ON THE CAPABILITY TO CONDUCT ACTIVITY IN A METALLURGICAL ENTERPRISEA real threat for the metallurgical industry are the increasingly high environmental protection require-ments. An energy and climatic package was negotiated in the European Parliament in 2008, which is to come into force from 2013. In the Commission’s view, the EU economy may cost effectively reduce CO2 emissions by 20 % by 2020. The current proposals (vetoed by Po-land) establish a roadmap for CO2 reduction by 2050 by as much as 80 % (relative to the year 1990) [5].Steel manufacturers point out to the fact, however, that the EU is only responsible for 11 % of the world’s CO2 emissions, and therefore any, even the most restric-tive actions implemented solely in Europe will not bring about a measurable environmental effect [6, 7].Since the beginning of the 90’s, the Polish metallurgi-cal industry has reduced the CO2 emission volume by over 60 %, chieﬂ  y thanks to the application of modern technology, and currently it is the source of only 4 % of the overall carbon dioxide emissions. Further limiting is extremely capital intensive and is only possible to a lim-ited extent and, as is estimated based on benchmarks and the KE methodology, the shortage of allowances for this sector of industry will amount to about 12 percent (the cost of one ton of CO2 to amount to 14,5 Euros in the years 2013-14 and 20 Euros in the period 2015-20 [2]). The climatic package is applicable to the entire economy, and the metallurgical industry is only one of the sectors whom the State allocates the allowances. In the conditions of the Polish economy, the main beneﬁ  ci-ary of the imposed limits is the power industry. Relying as much as in 94 % on coal [7], this branch of industry will particularly acutely feel the necessity of adjusting itself to the EU requirements. Electricity has increased in price in Poland, and this process is likely to continue over the next decade (it is estimated that the price will have risen by 60% by 2020) [2]. So, the CO2 emission reduction process will not re-main without effect on the future of the Polish and the European metallurgical industries – both directly, through the purchases of allowances by steel mills, and indirectly, through the additional emission allowance cost included in the prices of purchased primary raw materials (chieﬂ  y coke) and electrical energy (the elec-trical energy costs account for 20 % of the product price). These facts and the Community Directive intro-ducing the excise duty on coal and gas (that previously were not burdened with this levy), which has been in force since 2012, may all have a signiﬁ  cant effect on the proﬁ  tability and price competitiveness of steel manu-facturers. It is estimated that the implementation of the energy and climatic package will lower the competi-tiveness of the Polish metallurgical industry by approx. 25 % by 2025 [8, 9]. The European Commission’s policy, which is geared towards promoting Europe to become the world’s leader in the struggle with the emissions of gases, might result in a situation where EU-located steel mills will lose their competition for orders with manufacturers from, e.g., the countries of the BRIC (Brasilia, Russia, India, China) group. The above-mentioned countries are cov-ered by the environmental restrictions to a lesser extent or these are not applicable to them at all; in addition, they enjoy lower labour costs and have state-of-the-art technological lines available.  International concerns (such as ArcelorMittal, Celsa, CMC – The Commercial Metals Company, or ISD - The Industrial Society of Donbas) are not attached to any particular country and are guided by proﬁ  t. Thus, steel production can be trans-located to other places; on the other hand, however, the transport costs must be taken into account, which has ultimately translated into the end prices with all associ-ated consequences for the purchasers. It should also be noted that the purchase cost of CO2 emission allowances is not the only element differenti-ating the steel production costs between EU countries and the rest of the world. Because of the lack of signiﬁ  -cant local raw-material sources or the high labour costs, European steel manufacturers already in the past had to try hard (e.g. by investing in the improvement of pro-duction effectiveness, improvement of product quality, or specialization) to remain competitive to, e.g., Far East manufacturers. Outlays that have been made and are still being made (since 2004, ArcelorMittal has in-vested in Poland about 1,3 billion Euros [2]) and the increasing pressure by steel concerns (e.g. the European Confederation of Iron and Steel Industries) will contrib-ute to discerning the problems of this sector or, for in-stance, assuring that Russia, which has recently ac-cessed the World Trade Organization (2011), be subject to the same rules [2].Figure 2   Changes in the steel production volume and the explicit consumption of steel products in the years 2002-2011 together with a forecast up to 2018 [4]415 METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...TRENDS IN THE DEVELOPMENT OF THE METALLURGICAL SECTORThe metallurgical sector in the EU is dominated by large international concerns that concentrate over 60 % of production. In Poland, six investors are active in the metallurgical industry, whose market shares are as fol-lows: ArcelorMittal – 67 %, CMC – 13 %, Celsa – 8 %, ISD – 7 % and Złomrex – 4 % [10]. The present market structure has formed as a result of restructuring and pri-vatization processes going on since 1990.These activities manifest themselves in vertical and horizontal consolidation. The growing raw-material prices make more and more companies become inter-ested in assuring constant supplies of raw materials to meet a possible future increase in demand. In the iron ore market, 75 % of the world’s resources are controlled by three concerns (BHP Billiton, Vale, Rio Tinto), so it’s no wonder that manufacturers, such as ArcelorMi-tall, intend to attain by 2016 a state in which 75 % of the iron ores used within the group would originate from their own resources (e.g. the Krivoy Rog ore deposits) [2]. Similar trends occur in the scrap market (in Europe, about 65 % steel mills used scrap for steel production), coal (coke), or distribution. In Poland, ArcelorMittal Poland has long maintained the intention to participate in the privatization of the Polish mining industry.A revival can also be observed in the area of distri-bution. On the one hand, foreign concerns active in the Polish market use their own distribution channels, and, on the other hand, they more and more extensively enter areas previously occupied by local distributors.  In con-trast to the European distribution model being concen-trated and dominated by enterprises associated with steel mills, there are several hundred distribution com-panies active in the Polish market (with annual sales from 10 K  Mg to 150 K  Mg). By purchasing Złomeks from the Cognor Group, ArcelorMittal has become re-cently one of the main market players. On a slightly smaller scale, consolidation phenomena are also occur-ring in the building reinforcement manufacture area or in the tube industry [2].An important issue in the Polish metallurgical indus-try was for years an excessive employment level which reached 153 thousand people in 1989. A particular prob-lem was an inefﬁ  cient employment structure manifest-ing itself in overstafﬁ  ng on non-production work posts. The reduction of employment took place predominantly based on non-competence criteria, by focusing prima-rily on the age aspects (early retirements, social pack-ages). As a result, the basic goal was successfully achieved by reducing the number of employees to a level of about 27 thousand people; however, a situation was brought about at the same time, in which employ-ees with high skills and great professional experience departed from the steel mills.  A distinct effect of the employment level reduction was an increase in produc-tivity from 92,5 K Mg per employee in 1990 to 314 K Mg per employee in 2010. So, it is rather the quality aspect and the generation gap that are currently a human resource issue for metallurgical enterprises. Nearly 40 % of people employed in the metallurgical industry are at the age of 41 – 50 years, and about 30 %, 51 – 60 years. Considering the fact that the share of persons at the age below 30 years does not exceed 70 %, it is nec-essary to undertake intensive actions aimed at prevent-ing the occurrence of a competence gap (part of the en-terprises have already taken such actions). This problem is urgent, insomuch as, according to forecasts, the aver-age age of a worker employed in Poland’s industry in 2050 will be 50 years. Positive changes can also be per-ceived in the area of education structure, in which per-sons with higher and secondary education (with a share of 12 % and 76 %, respectively) play an increasingly important role [4, 10]. The prerequisite for the development of the metal-lurgical industry are therefore further investments and innovations which enable a more processed production and allow purchasers to be provided with special prod-ucts (e.g. highly processes ones or those with unique parameters). Investments, the development of modern technologies or cooperation with research institutions are not subsidized in any way.The metallurgical industry has been treated so far differently from other branches of the economy, as it would use public aid for restructuring. The process of adjusting the steel industry to the EU requirements (Protocol no. 8 of the Treaty of Accession of Poland to the EU) has been formally completed, therefore there are no longer any reasons for which this sector could apply for EU resources on general principles – e.g. for funds intended for ecological, innovative or research & development projects. In spite of the fact that the metal-lurgical industry is today deprived of this possibility, a number of initiatives can be observed, which aim at maintaining the cooperation between industry and sci-ence. Scientiﬁ  c centres continue conducting research work related to this area [11,12].The current market situation and the UE Directives carry a lot of risk to the future activity of steel mills. First of all, it is necessary to point out to the increasing threat on the part of Chinese manufacturers and EU environ-mental regulations that reduce the CO2 emission limits. From the items of a local nature, the greatest threats re-sult from the collapse of the shipbuilding industry, the growing prices of utilities and raw materials, and the un-stable exchange rate of the Polish currency. Regardless of the still severe crisis, a number of chances for the metal-lurgical industry can be indicated. The ﬁ  rst one results from the obvious fact of lack of subsidies for steel, and steel products are indispensable for carrying out a number of tasks. Moreover, the Polish economy and infrastruc-ture require many investment activities, within which steel products will play a substantial role. In addition, forecasts indicate good outlooks for the entire economy and a stable development path for the whole industry.416   METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...SUMMARYIn polish metallurgicalindustry privatization and or-ganizational and technological restructuring proceeded in parallel with the processes of adjusting the sector to the EU accession requirements. The production capaci-ties have been permanently reduced, the employment has been curtailed, and the majority of steel mills have become part of transnational concerns. On the one hand, these changes have reinforced Poland’s presence in the international metallurgical market, but, on the other hand, the UE membership of Poland and the worldwide globalization processes stiﬂ  e the local perception of the steel market needs.Each European Union member acting on the single market seeks to maintain and make use his of own cir-cumstances. The Community legal regulations may not, therefore, exclude those industry sectors that are impor-tant to a given country. This fact gains particular impor-tance to new member and those, who have not attained yet the development level of the old EU members. An example can be the Polish economy that traditionally relies on mineable resources, including primarily coal, whose rapid adjustment to, for instance, ecological re-quirements of the EU would signiﬁ  cantly slow down or even inhibit its growth.REFERENCES[1]  http://www.strefabiznesu.pomorska.pl – May 2012[2]  www.wnp.pl – May 2012[3] http://worldsteel.org/statistics/statistics-archive.html  – May 2012[4] http://www.hiph.org/ANALIZY_RAPORTY/pliki/pps2012.pdf – May 2012[5]  http://www.money.pl – May 2012[6]  ec.europa.eu – 15 May 2012[7]  energetyka.wnp.pl – May 2012[8]  lubczasopismo.salon24.p – May 2012[9]  Dyrektywa Rady 2003/96/WE[10]  http://sekretariatmetalowcow.pl – Raport końcowy Kwali-ﬁ  kacje zawodowe dziś i jutro – May 2012[11]  M.˝Knapiński: FEM 3D Analysis of Roll Deﬂ  ection Du-ring Plate Rolling. Metalurgija 44(2005)3, 161-240.[12]  A. Kawałek, H. Dyja, S. Mróz, M. Knapiński: Effect of pla-te asymmetric rolling parameters on the change of the total unit pressure of roll. Metalurgija 50(2011)3, 163-166.Note:   The professional translator for English language is C. Grochowi-na, Studio – Tekst, Poland

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413METALURGIJA 52 (2013) 3, 413-416Z. SKUZA, R. PRUSAK, C. KOLMASIAKCHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP IN THE EUROPEAN UNIONReceived – Prispjelo: 2012-09-20Accepted – Prihvaćeno: 2012-12-25Review Paper – Pregledni rad ISSN 0543-5846METABK 52(3) 413-416 (2013)UDC – UDK 669.1:061.1(4-67):339.923:327.39UE=111Z. Skuza, R. Prusak, C. Kolmasiak, Czestochowa, University of Technol-ogy, Czestochowa, PolandThis article presents an attempt to analyze the impact of global conditions on the functionality of the steel industry country – member of the European Union. The paper presents data describing trends and phenomena occurring in the global steel industry, and selected economic indicators describing the economic situation, which allowed the comparison of local changes with the trends disclosed in European and global scale.Keywords: steelwork production, European Union, market analysisINTRODUCTIONSince the 1st of May 2004 Poland has become a full member of the European Union. Among the greatest beneﬁ ts gained by Poland thanks to its EU membership, the most often mentioned ones include the participation in making economic and political decisions on the Eu-ropean level and the transfer of ﬁ nancial resources that have already netted over 100 billion Euros of non-re-payable aid. It is estimated that the EU support of in-vestments has contributed to an increase in GNP (Gross National Product) by over one percentage point in re-cent years. [1]Aside from creating chances for development, the integration has also involve a number of challenges. In employers’ view, the most important of them include a higher competition in the domestic market, the outﬂ ow of skilled workers abroad and the need for adjusting companies to the EU quality requirements. Another im-pediment is the delay in introducing the euro (the obli-gation under the Accession Treaty) that hampers the inﬂ ow of direct investments due to the risk associated with the exchange rate. The ongoing global crisis will probably further delay this process [2].The economic crisis has signiﬁ cantly affected the volume of production of metallurgical companies across Europe. From the data presented in Figure 1, a consider-able reduction in the number of tons of steel can be ob-served in leading steel manufacturers in Europe. Since 1010, however, a growing trend has been noted.A similar phenomenon can also be observed in the Polish metallurgy (Figure 2). First, a distinct change has occurred in the manufacturing structure, within which a signiﬁ cant increase in the role of the electric process can be clearly seen. Secondly, the level of explicit steel consumption has increased, which, unfortunately, has been reﬂ ected in a worsening of the indicator describing the import to export relationship, not only in the product line dimension, but also in the economic one (the export includes low-processed products, whereas the import concerns largely highly processed products).An element indicating good prospects in the steel industry are also changes in the value of the SWIP (Steel Weighted Industrial Production) index that relates the level of production activity in sectors consuming steel products to the domestic steel consumption. In 2011, the SWIP index increased by nearly 15 % (the highest value since 2007). From this perspective, the changes in the power engineering and in the railway are gaining strategic importance, which, as a result of the increased demand for specialized products and structures may signiﬁ cantly contribute to an increase in demand for steel products. Of key importance to the shaping of the size of demand in the Polish market is also the house-hold appliance industry.Figure 1  Changes in the volume of steel production in selected European countries in the years 2000 – 2011 [3]414  METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...THE INFLUENCE OF THE EUROPEAN ENVIRONMENTAL PACKAGES ON THE CAPABILITY TO CONDUCT ACTIVITY IN A METALLURGICAL ENTERPRISEA real threat for the metallurgical industry are the increasingly high environmental protection require-ments. An energy and climatic package was negotiated in the European Parliament in 2008, which is to come into force from 2013. In the Commission’s view, the EU economy may cost effectively reduce CO2 emissions by 20 % by 2020. The current proposals (vetoed by Po-land) establish a roadmap for CO2 reduction by 2050 by as much as 80 % (relative to the year 1990) [5].Steel manufacturers point out to the fact, however, that the EU is only responsible for 11 % of the world’s CO2 emissions, and therefore any, even the most restric-tive actions implemented solely in Europe will not bring about a measurable environmental effect [6, 7].Since the beginning of the 90’s, the Polish metallurgi-cal industry has reduced the CO2 emission volume by over 60 %, chieﬂ y thanks to the application of modern technology, and currently it is the source of only 4 % of the overall carbon dioxide emissions. Further limiting is extremely capital intensive and is only possible to a lim-ited extent and, as is estimated based on benchmarks and the KE methodology, the shortage of allowances for this sector of industry will amount to about 12 percent (the cost of one ton of CO2 to amount to 14,5 Euros in the years 2013-14 and 20 Euros in the period 2015-20 [2]). The climatic package is applicable to the entire economy, and the metallurgical industry is only one of the sectors whom the State allocates the allowances. In the conditions of the Polish economy, the main beneﬁ ci-ary of the imposed limits is the power industry. Relying as much as in 94 % on coal [7], this branch of industry will particularly acutely feel the necessity of adjusting itself to the EU requirements. Electricity has increased in price in Poland, and this process is likely to continue over the next decade (it is estimated that the price will have risen by 60% by 2020) [2]. So, the CO2 emission reduction process will not re-main without effect on the future of the Polish and the European metallurgical industries – both directly, through the purchases of allowances by steel mills, and indirectly, through the additional emission allowance cost included in the prices of purchased primary raw materials (chieﬂ y coke) and electrical energy (the elec-trical energy costs account for 20 % of the product price). These facts and the Community Directive intro-ducing the excise duty on coal and gas (that previously were not burdened with this levy), which has been in force since 2012, may all have a signiﬁ cant effect on the proﬁ tability and price competitiveness of steel manu-facturers. It is estimated that the implementation of the energy and climatic package will lower the competi-tiveness of the Polish metallurgical industry by approx. 25 % by 2025 [8, 9]. The European Commission’s policy, which is geared towards promoting Europe to become the world’s leader in the struggle with the emissions of gases, might result in a situation where EU-located steel mills will lose their competition for orders with manufacturers from, e.g., the countries of the BRIC (Brasilia, Russia, India, China) group. The above-mentioned countries are cov-ered by the environmental restrictions to a lesser extent or these are not applicable to them at all; in addition, they enjoy lower labour costs and have state-of-the-art technological lines available.  International concerns (such as ArcelorMittal, Celsa, CMC – The Commercial Metals Company, or ISD - The Industrial Society of Donbas) are not attached to any particular country and are guided by proﬁ t. Thus, steel production can be trans-located to other places; on the other hand, however, the transport costs must be taken into account, which has ultimately translated into the end prices with all associ-ated consequences for the purchasers. It should also be noted that the purchase cost of CO2 emission allowances is not the only element differenti-ating the steel production costs between EU countries and the rest of the world. Because of the lack of signiﬁ -cant local raw-material sources or the high labour costs, European steel manufacturers already in the past had to try hard (e.g. by investing in the improvement of pro-duction effectiveness, improvement of product quality, or specialization) to remain competitive to, e.g., Far East manufacturers. Outlays that have been made and are still being made (since 2004, ArcelorMittal has in-vested in Poland about 1,3 billion Euros [2]) and the increasing pressure by steel concerns (e.g. the European Confederation of Iron and Steel Industries) will contrib-ute to discerning the problems of this sector or, for in-stance, assuring that Russia, which has recently ac-cessed the World Trade Organization (2011), be subject to the same rules [2].Figure 2  Changes in the steel production volume and the explicit consumption of steel products in the years 2002-2011 together with a forecast up to 2018 [4]415METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...TRENDS IN THE DEVELOPMENT OF THE METALLURGICAL SECTORThe metallurgical sector in the EU is dominated by large international concerns that concentrate over 60 % of production. In Poland, six investors are active in the metallurgical industry, whose market shares are as fol-lows: ArcelorMittal – 67 %, CMC – 13 %, Celsa – 8 %, ISD – 7 % and Złomrex – 4 % [10]. The present market structure has formed as a result of restructuring and pri-vatization processes going on since 1990.These activities manifest themselves in vertical and horizontal consolidation. The growing raw-material prices make more and more companies become inter-ested in assuring constant supplies of raw materials to meet a possible future increase in demand. In the iron ore market, 75 % of the world’s resources are controlled by three concerns (BHP Billiton, Vale, Rio Tinto), so it’s no wonder that manufacturers, such as ArcelorMi-tall, intend to attain by 2016 a state in which 75 % of the iron ores used within the group would originate from their own resources (e.g. the Krivoy Rog ore deposits) [2]. Similar trends occur in the scrap market (in Europe, about 65 % steel mills used scrap for steel production), coal (coke), or distribution. In Poland, ArcelorMittal Poland has long maintained the intention to participate in the privatization of the Polish mining industry.A revival can also be observed in the area of distri-bution. On the one hand, foreign concerns active in the Polish market use their own distribution channels, and, on the other hand, they more and more extensively enter areas previously occupied by local distributors.  In con-trast to the European distribution model being concen-trated and dominated by enterprises associated with steel mills, there are several hundred distribution com-panies active in the Polish market (with annual sales from 10 K  Mg to 150 K  Mg). By purchasing Złomeks from the Cognor Group, ArcelorMittal has become re-cently one of the main market players. On a slightly smaller scale, consolidation phenomena are also occur-ring in the building reinforcement manufacture area or in the tube industry [2].An important issue in the Polish metallurgical indus-try was for years an excessive employment level which reached 153 thousand people in 1989. A particular prob-lem was an inefﬁ cient employment structure manifest-ing itself in overstafﬁ ng on non-production work posts. The reduction of employment took place predominantly based on non-competence criteria, by focusing prima-rily on the age aspects (early retirements, social pack-ages). As a result, the basic goal was successfully achieved by reducing the number of employees to a level of about 27 thousand people; however, a situation was brought about at the same time, in which employ-ees with high skills and great professional experience departed from the steel mills.  A distinct effect of the employment level reduction was an increase in produc-tivity from 92,5 K Mg per employee in 1990 to 314 K Mg per employee in 2010. So, it is rather the quality aspect and the generation gap that are currently a human resource issue for metallurgical enterprises. Nearly 40 % of people employed in the metallurgical industry are at the age of 41 – 50 years, and about 30 %, 51 – 60 years. Considering the fact that the share of persons at the age below 30 years does not exceed 70 %, it is nec-essary to undertake intensive actions aimed at prevent-ing the occurrence of a competence gap (part of the en-terprises have already taken such actions). This problem is urgent, insomuch as, according to forecasts, the aver-age age of a worker employed in Poland’s industry in 2050 will be 50 years. Positive changes can also be per-ceived in the area of education structure, in which per-sons with higher and secondary education (with a share of 12 % and 76 %, respectively) play an increasingly important role [4, 10]. The prerequisite for the development of the metal-lurgical industry are therefore further investments and innovations which enable a more processed production and allow purchasers to be provided with special prod-ucts (e.g. highly processes ones or those with unique parameters). Investments, the development of modern technologies or cooperation with research institutions are not subsidized in any way.The metallurgical industry has been treated so far differently from other branches of the economy, as it would use public aid for restructuring. The process of adjusting the steel industry to the EU requirements (Protocol no. 8 of the Treaty of Accession of Poland to the EU) has been formally completed, therefore there are no longer any reasons for which this sector could apply for EU resources on general principles – e.g. for funds intended for ecological, innovative or research & development projects. In spite of the fact that the metal-lurgical industry is today deprived of this possibility, a number of initiatives can be observed, which aim at maintaining the cooperation between industry and sci-ence. Scientiﬁ c centres continue conducting research work related to this area [11,12].The current market situation and the UE Directives carry a lot of risk to the future activity of steel mills. First of all, it is necessary to point out to the increasing threat on the part of Chinese manufacturers and EU environ-mental regulations that reduce the CO2 emission limits. From the items of a local nature, the greatest threats re-sult from the collapse of the shipbuilding industry, the growing prices of utilities and raw materials, and the un-stable exchange rate of the Polish currency. Regardless of the still severe crisis, a number of chances for the metal-lurgical industry can be indicated. The ﬁ rst one results from the obvious fact of lack of subsidies for steel, and steel products are indispensable for carrying out a number of tasks. Moreover, the Polish economy and infrastruc-ture require many investment activities, within which steel products will play a substantial role. In addition, forecasts indicate good outlooks for the entire economy and a stable development path for the whole industry.416  METALURGIJA 52 (2013) 3, 413-416Z. SKUZA et al.: CHARACTERISTIC OF IRON AND STEEL INDUSTRY IN TERMS OF MEMBERSHIP...SUMMARYIn polish metallurgicalindustry privatization and or-ganizational and technological restructuring proceeded in parallel with the processes of adjusting the sector to the EU accession requirements. The production capaci-ties have been permanently reduced, the employment has been curtailed, and the majority of steel mills have become part of transnational concerns. On the one hand, these changes have reinforced Poland’s presence in the international metallurgical market, but, on the other hand, the UE membership of Poland and the worldwide globalization processes stiﬂ e the local perception of the steel market needs.Each European Union member acting on the single market seeks to maintain and make use his of own cir-cumstances. The Community legal regulations may not, therefore, exclude those industry sectors that are impor-tant to a given country. This fact gains particular impor-tance to new member and those, who have not attained yet the development level of the old EU members. An example can be the Polish economy that traditionally relies on mineable resources, including primarily coal, whose rapid adjustment to, for instance, ecological re-quirements of the EU would signiﬁ cantly slow down or even inhibit its growth.REFERENCES[1] http://www.strefabiznesu.pomorska.pl – May 2012[2] www.wnp.pl – May 2012[3] http://worldsteel.org/statistics/statistics-archive.html – May 2012[4] http://www.hiph.org/ANALIZY_RAPORTY/pliki/pps2012.pdf – May 2012[5] http://www.money.pl – May 2012[6] ec.europa.eu – 15 May 2012[7] energetyka.wnp.pl – May 2012[8] lubczasopismo.salon24.p – May 2012[9] Dyrektywa Rady 2003/96/WE[10] http://sekretariatmetalowcow.pl – Raport końcowy Kwali-ﬁ kacje zawodowe dziś i jutro – May 2012[11] M.˝Knapiński: FEM 3D Analysis of Roll Deﬂ ection Du-ring Plate Rolling. Metalurgija 44(2005)3, 161-240.[12] A. Kawałek, H. Dyja, S. Mróz, M. Knapiński: Effect of pla-te asymmetric rolling parameters on the change of the total unit pressure of roll. Metalurgija 50(2011)3, 163-166.Note:  The professional translator for English language is C. Grochowi-na, Studio – Tekst, Poland

Characteristic of iron and steel industry in terms of membership in the European Union

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