GENERAL NEWS / 19-09-2024
Over the course of this interview, Iñigo del Pozo uses the same word several times to refer to the partnership between Lamincer Precision Steel and the Arania Group: ‘synergy’. Technological consulting, knowledge transfer, raw material price reduction, production complementarity, customer diversification, logistical involvement... The Managing Director of the Mungia plant delves into the numerous advantages this operation will bring about for both parties, while also defending the autonomy and personality of each of the companies in their operations and setting a medium and long-term goal: “Once again saturate” the production capacity of the Mungia and Amorebieta plants, i.e. reach 35,000 and 120,000 tonnes per year, respectively.
Question. What does the inclusion of Lamincer in the Arania Group mean in terms of competitiveness?
Answer. Above all, this partnership allows us to join a group that already understands the technology and has the know-how about what we do at Lamincer. Up until now, we have been working within an international group in which we were the only re-rollers. That made us feel a bit isolated in terms of technology and know-how and now, since we joined the Arania Group, which already offered re-rolling, we know we won’t have that feeling. We're going to be able to share technologies, leverage the Group’s innovative capacity, the investments it has made... And that’s going to go both ways because Lamincer also has know-how that it can provide the Amorebieta plant so both parties will benefit. This aspect of sharing know-how is the most intangible, the most difficult to measure, but then there are other more straight-forward advantages: for instance, we will enjoy logistical synergies because we are operating in similar markets, and we will be able to share transport. There is also a warehouse project the Arania Group is promoting that we will also be joining. On the procurement side, we will also benefit because we are going to add our raw material purchasing volume to the one the Group already negotiated. Although we are now acting independently, in the medium and long term we are analysing synergies for us to be able to work together.
Q. What about in terms of turnover? What are the projections?
A. The objectives for both plants are being maintained as set at the beginning of the year: we have a budget of 28,000 tonnes and Arania has a bit more than 80,000. The sum of both of these amounts would make us the third largest steel rolling company in Europe. That’s the plan for this year, which projects growth of 7% compared to last year. Over the second half of the year, we will be working together on the 2025 budgets for the first time.
‘Our market share and the Arania Group's market share will allow us to become one of the top three steel re-rollers in Europe and will set us at the top of Southern Europe’
Q. Have other corporate movements taken place in the sector?
A. Yes, the third steel re-roller left on the Iberian Peninsula was Tata Layde, but a few weeks ago it announced it will be closing its rolling operation at the end of this year to focus on the other part of its business: the service centre.
Q. Is this decision an opportunity for Lamincer and the Arania Group?
A. Indeed, this decision leaves a hole in the market of around 5,000 tonnes to be divided up. New players are also appearing in Southern Europe, the market is low and that is making everyone much more commercially active, but we need to try to cover this hole.
Q. You spoke about a strategic partnership. Will it be ambitious when looking for new markets?
A. The idea for the medium and long term is to once again saturate the production capacity of both plants: the market situation has been lower for the last several years, especially in the auto industry, and the market is in a stand-by period where we're talking about decreases of around 18%, compared to pre-pandemic. What the partnership will do is work to situate Lamincer at 35,000 tonnes per year, compared to our current 28,000, and get Arania rising up to its max, which is around 120,000 tonnes, i.e. saturating production at both plants.
‘Lamincer will remain as a brand and maintain its operational independence and its personality on the market’
Q. How will Lamincer Precision Steel operations work within the Group? Will it maintain its own personality?
A. Lamincer has its own cost structure, organisation and machinery, and it needs to go out into the market based on that structure. Lamincer will remain as a brand and maintain its operational independence and its personality on the market. We are going to compete with Arania Group on the market as an equal.
Q. So, what is the value proposition of the Lamincer-Arania Group partnership?
A.The machinery we have and the sizes we handle allow us to work on a minimum order block under the Arania Group's. On the one hand, the Group will be opening a new door to be able to work with three tonne minimum batches, when its minimum was previously batches of 10 tonnes. That opens a new market niche through Lamincer. On the other hand, Lamincer is in other markets in some cases, and that is going to allow us to have a presence in other areas where we previously had no operations.
‘Our strategic goal is to grow in high carbon in the auto industry. We need to continue committing to high added value materials with special characteristics’
Q. What are Lamincer Precision Steel's strategic goals?
A. Strategically our idea is still to continue growing in high carbon within the families in the world of steel rolling, i.e. in the auto industry. Although this sector is really growing, we need to continue committing to high added value materials with special characteristics and high carbon fits with that. We remain committed to growing in that regard, where there is added value and where materials and the characteristics of the material are complex.
Q. What is the current situation of the re-rolled steel market after the complex panorama that has been shocking it over the last few years?
A. We have gone through various cycles very quickly because the auto industry already began to slow its production volumes in the so-called ‘diesel crisis’ pre-pandemic. This crisis refers to people facing the dilemma of what type of vehicle to purchase and doubts about the evolution of combustion engines. Everything slowed down drastically during the pandemic and post-pandemic there was a ‘peak’ in volume. We are now experiencing the ‘valley’, a situation in which not just the auto industry, but consumption in general has slowed down much more. We are experiencing a situation in which we are working on optimising costs and operations and making things as flexible as possible. The current market demands very quick reactions and great flexibility because there is a great deal of uncertainty. At any given time, there is no need and then suddenly there are rush orders, others get delayed... We need to operate with greater efficiency and flexibility.
Q. Are supply issues behind us?
A. Yes, there were major tensions on the raw materials market in the post-pandemic period which caused prices to rise, but that is over. In any case, although there are currently no issues with raw materials, we are going to experience new situations due to regulatory issues: new rules on EU tariffs for materials coming from Asia will likely trigger tensions in the coming months.
‘The changing European conditions on imports are going to remove 1.6 tonnes of hot-rolled material and that will trigger tensions’
Q. Is the change in European conditions for imports from other continents already having an impact?
A. This is something that was announced very recently. There is still a two-year extension on the quotas for countries outside of the EU, but it has put further pressure on those conditions and a maximum for quarterly consumption has been set at 15% of the overall quota per country. A common purse used to be calculated. In this system, a country could import more material into Europe than the rest while what mattered was the sum total of all countries, and now there is an individual limit of 15% per country. This will remove nearly 1.6 million tonnes of hot-rolled material from the market, essentially the basis of the entire steel supply chain. Despite the steel market being in a plateau situation with no major growth, this may potentially cause tensions.
Q. How can the Lamincer-Arania Group partnership respond to this situation?
A. Being in the Arania Group helps us tremendously because it has major purchasing power, and we are already working on synergies for common materials that we can use at various plants. This way, we can have an exchange and general stock to use in a much more flexible way than if we were alone. The world is concentrating power and, in the end, a partnered business has a greater chance of survival than one taking on these situations alone.
