Business relations
Export
Transformation of the economy of the Czech Republic to market economy conditions increased extremely the importance of export of steel products like in all Central- and East-European countries. This was the first-rate interest and practically the only possible way for survival of steel manufacturers but it also helped in the macroeconomy - most of all in the trade and exchange balance of the state. The most important sales area of the Czech steel industry became the EU and, therein, especially Germany. Application of market economy mechanisms is manifested by increasing the volume of import of steel products. As to iron-ore charge, the variant of iron ores imports from the countries of the Commonwealth of Independent States whose metallurgical utilisability increases and whose supplier’s interest in these deliveries is manifested appears always practicable. Coal for the production of metallurgical coke of domestic origin encounters hard competition from Polish coal. As to electric energy, there will be even in the future no problem of volume - further development of prices may considerably affect the cost rate of steel production. Another critical factor - this time volume and cost factor - may be scrap. Large export volumes of steel products will affect the sources of re-use of scrap just later, and adrop in domestic consumption already now affects, however, the volumes of occurrence of scrap to be processed. Scrap will be the strategic raw material No 1 for production economy and ecology and will affect both direct relations at its purchase and other ways leading to providing it in necessary quantity and quality. Steelmaking has not yet achieved capital interlocking with scrap collection, processing and trade. This is partly solved by Hutnictví zeleza, a.s. in another way owing to the contacts and common consultations of steel manufacturers and scrap entrepreneurial subjects. A marked drop in steel production in comparison with the high level of its domestic consumption in the past forms a natural and relatively rich reservoir of depreciation and old scrap, respectively.
Domestic demand
The business strategy as to sales has been since the very beginning dictated by the large attenuation of inland demand on steel already described and disintegration of the traditional East-European market. It is necessary to emphasise here that present as well as prospective sales strategy is based on recovery of the domestic demand. Intensification of the steel import influence should be considered in the future and export cannot be abandoned. The sales strategy must not only take notice of the steel market globalisation but it also must, primarily, look for optimum forms of engaging the steelmaking of the Czech Republic in conditions of this market. More pronounced capital interconnection between the manufacturers and wholesale has not yet occured. An organisation like an association of steel dealers is missing what makes it easy to monitor important segment of sales towards the broad range of customers from big steel stockholders, as well as smaller sale organisations and obviously also formation of service centres. Ferona, a.s. is a member of the Hutnictví zeleza, a.s. Co-operation of steel manufacturers with steel distributors is still under the influence of priorities in privatisation from the very beginning. This makes it difficult to perform marketing in the broader conception because information about material stock flow both in wholesale and at steel processors is missing.
