Markets in Europe remain uncertain and volatile. Global demand for building materials, such as steel and zinc, and transportation services in Europe showed a downward trend in 2023. Order intake and sales volumes fluctuate depending on the Business Unit, but generally a decrease in volumes is observed. Fluctuations in steel and zinc prices, higher energy costs and wage increases affect our margins and require that we remain agile in our pricing models.
Zinc prices
Developments in zinc markets in 2023 first showed a steep upward trend with a peak at the end of January to a level of about US$ 3,500 per tonne, followed by a steady decline to levels around US$ 2,200 per tonne in June and fluctuations between US$ 2,200 and US$ 2,600 per tonne for the remainder of the year. In the first two months of 2024, the zinc price fluctuated around levels of US$ 2,500 per tonne.
The zinc price has an opposite effect on the figures of our Business Units Rotocoat, Prestia and Rezinal. On the one hand, a declining zinc price positively impacts the cost of sales due to the lower purchase price for zinc. On the other hand, stock values and sales are also negatively affected by the lower zinc prices. The zinc price on the London Metal Exchange (LME) is closely monitored following a fixed purchase strategy.
LME zinc price per tonne 2023
Source: LME
Steel prices
In 2023, steel prices initially showed an upward trend, followed by a steep decline towards October 2023 and slight recovery towards the end of 2023, at price levels more equal to those at the beginning of the year. Steel price fluctuations have a direct financial effect on De Boer Staal and Staco, and it remains difficult to determine the right moment to buy steel: in tight sales markets with lower volumes, competitors tend to react immediately to decreases in steel prices, whereas it takes a while to adapt to new increases in markets where overcapacity is a driving force.
Market price development steel - quarto and hot rolled coils
Source: NovioStaal – Steel Journal
Energy prices
As the graphs show, energy prices fell in 2023 after the sharp fluctuations in 2022. However, they remain at higher levels than in the past. ROTO remains intrinsically motivated to accelerate the energy transformation in all Business Units. However, hampered by a lack of available infrastructure, especially in the Netherlands, ROTO has to look for roads less travelled and be more creative in finding solutions. Otherwise, we will not be able to realise our ambitious goals: in some cases, sufficient electrical network capacity will not be available before 2030. ROTO will continue its ambitious energy transformation journey to reduce consumption and switch to energy from more sustainable resources.
TTF Natural Gas Prices Natural Gas
Source: Schneider Electric
Dutch Power Prices Carbon & Electric Power
Source: Schneider Electric
De Boer Staal
De Boer Staal worked on implementing its strategic plan, changing the focus from steel trade to steel cutting for newly defined product market combinations (PMCs). Although market demand decreased, De Boer Staal was able to gain some volume, but given the fluctuations in the steel market and competition, this was not always at the desired price. Under these circumstances, the result for 2023 was below budget and not fully aligned with the strategic plan. De Boer Staal continues its strategic journey in 2024.
The new drill press is an excellent machine capable of drilling holes quickly. Safe and tailored to fit. Ideal for all types of holes. Thanks to the teamwork between sales and operations, we have successfully integrated drilling into our proposition.
Amer Hafian – engineer De Boer Staal
Staco
For Staco, sales in the strategic ‘Create and Inspire’ services, like façade applications, remained stable and generally with good margins. Total volume fell short of expectations. In Germany and Poland, the market for more standard gratings was dominated by low prices and short delivery times. Competition that was formerly focused on the Russian market is now seeking alternatives in the European market. Activities in the Belgium and Dutch building and construction market declined. In Germany, there is severe price competition for all types of gratings. On the UK market, Staco Gratings UK won some larger orders.
In this light, the result for 2023 was below expectations. Staco focuses on reforming its strategy in 2024. With the new AP3 machine for perforated gratings fully implemented, good opportunities have arisen to regain volumes and markets.
We always focus on our customers.
David Keymeulen - sales Staco Belgium
Prestia
Prestia was severely hit by high energy prices but managed to pass these costs on to customers (excluding the costs covered by energy-price related government grants), resulting in the loss of some of the volumes but still ending with results above the budget for 2023 and in alignment with Prestia's strategic plan ‘Ensemble 2030’. While working on its strategic plan, Prestia sees good opportunities for further sustainable growth and will start the complete refurbishment of the galvanising plant of Prestia GK in Carpiquet in 2024, making it the first CO2 neutral (scope 1 and 2) galvanising plant in France.
Communication allows us to build strong relationships with clients and understand and respond to their needs, creating lasting loyalty and invaluable trust.
Vincent Lamour - technical sales representative Prestia G29, CRC and SBG
Rotocoat
Rotocoat continued to execute projects to implement the strategic plan. Although market conditions led to declining volumes in the first half of 2023, there was some recovery in the second half, and Rotocoat was able to realise a result that was just below budget. Rotocoat has set itself an ambitious budget for 2024. Management will continue to work on subgoals and actions following the strategic plan.
Rezinal
Due to the sharp decrease in zinc prices, coupled with LME (London Metal Exchange) zinc price developments and operational challenges in production, Rezinal had an unsatisfactory financial year. The focus for Rezinal is on living up to its ‘sustainable excellence’ in zinc recycling by boosting its volumes and efficiency.
