God betalingsevne og faldende konkursniveau over de sidste to år, og udsigt til stabil udvikling for 2017 og 2018.
- Polish steel production amounted to 8.9 million tons in 2016, which makes Poland the fifth largest manufacturer in Europe and the 18th largest globally. Domestic steel production is dominated by large global players like ArcelorMittal. Along the value chain between mills and final consumers of steel there are a lot of specialised manufacturers and distributors.
- According to the World Steel Association, Polish steel production rebounded in H2 of 2016 growing 19.1% year-on-year between January and August 2017. Growth was driven by robust domestic demand (mainly construction and infrastructure projects linked to EU funds).
- Competition in the Polish market is fierce, especially in the steel and metals distribution segment, due to increased imports from Eastern Europe and Asia. This affects profit margins of Polish businesses. The costs of complying with high EU environmental standards put Polish producers at a disadvantage to non-EU producers. While higher sales prices have improved businesses’ profitability in H2 of 2016 and early 2017, profit margins are expected to decrease slightly in the coming six months due to a lower sales outlook.
- Payment experience has been good over the past two years, and steel and metals business insolvencies have decreased in 2016, with a stable outlook for 2017 and 2018. Access to bank financing has further improved over the last 12 months, and banks are generally willing to provide loans to the industry. Weaker players left the market in previous crisis years, and it seems that the surviving businesses are financially more resilient.
- Our current underwriting approach is positive to neutral due to improving margins and growing demand. However, due to new tax regulations regarding the reverse charge mechanism for construction businesses, we have monitored increased concerns among steel and metals distributors dependent on the building industry. Additionally, a new (still voluntary) mechanism of split payment scheme aimed at reducing VAT fraud, has raised concerns about deteriorating liquidity due to the freezing of businesses’ funds related to VAT on an dedicated account.