Over long stretches of the business year 2013/14, the market environment of the Special Steel Division was characterized by a recessive macroeconomic environment in Europe, volatile developments in North America, and overall growth momentum in the emerging markets that was subdued. A stabilization did not occur until the end of the 2013 calendar year, which then had a commensurately positive effect on the development of the last quarter of the business year 2013/14.
After a difficult 2013 calendar year, it has been primarily Europe that has shown a somewhat positive development since the beginning of 2014. While most of the business year was marked by high volatility due to scheduling by customers with extremely short turnaround times and additional price pressure stemming from the poor capacity utilization of voestalpine’s competition, most recently, however, demand—especially in the automobile sector—was clearly positive. The demand situation in the mechanical engineering sector was also stable to slightly rising, particularly in Germany and Italy. Both the heavy mechanical engineering industry and the energy engineering industry (power plant construction) remained weak throughout Europe.
The signs of an economic recovery were already visible in the USA by the beginning of the business year and were far more positive than any signals in Europe. Nevertheless, recovery was sluggish and additionally eclipsed by political discussions about raising the debt ceiling. Toward the end of the calendar year, the economy gained momentum and demand, especially in the segment of tool steel, stabilized at a satisfactory level. In contrast, the economic climate in Canada remained cautious throughout the entire business year.
In the first half of the business year, the Brazilian market demonstrated barely any momentum with regard to demand for both general consumer goods and special materials for the oil and natural gas industries. A return to modest growth, driven by the domestic market, was not observed until the end of 2013/14.
At the beginning of the business year, Asia was characterized by increasing uncertainty regarding the speed of China’s economic expansion, however, in the course of the year, the economy became more stable. Most recently, political unrest in Thailand and Indonesia had an adverse affect on the region’s economic development, however, of all global regions, the Asian region has shown the greatest momentum with regard to demand for the products manufactured by the Special Steel Division.
The High Performance Metals business segment saw a very stable development in the tool steel and high-speed steel product segments, as there was a very good level of demand from the consumer goods sector throughout the business year and increasing momentum from the automobile and mechanical engineering sectors in the latter part of the reporting period. The special materials segment also picked up toward the end of the business year as the oil and natural gas sectors gained some momentum. The Special Forgings business segment profited from the positive trend in the aviation sector, which has been ongoing for the last several years, while demand from the energy engineering industry remained weak with no appreciable uptick expected for the near future.
The Value Added Services business segment received a significant boost due to the on-schedule integration of acquisitions in the areas of special coating, heat treatment, and mechanical processing. The global expansion of this business segment, with start-up of operations of new capacities in China and Europe, has been very successful and represents one of the main drivers of growth in the Special Steel Division under the voestalpine Group’s Strategy 2020.