After years of declining demand, the steel industry in Europe seems to have no choice but to come to terms with permanently lower capacity utilization levels. Since the beginning of 2013, European steel production fell yet again in comparison to the already low level of the previous year, although demand stabilized somewhat over the course of the summer. Due to unutilized capacity and in anticipation of lower raw materials prices, price negotiations for the third calendar quarter were difficult from the outset. As, at the same time, contrary to expectations, costs for ore rose beginning in July 2013 due to increasing demand for raw materials in China, the steel industry came under greater cost pressure in the course of the summer.
Despite a slight economic recovery of some of the major customer industries, however, an easing of the situation should not be expected for the fourth calendar quarter. Only the quarterly contract business is feeling slight price effects arising from spot price increases in the previous quarter.
Against this backdrop, the order situation for the Steel Division in the business year thus far has been mostly satisfactory, with customers placing more orders over the course of several weeks after the summer pause to fill up empty warehouses. This applies primarily to the premium segment of the automobile industry, whose production figures continue to be stable at a high level. Demand for compact and sub-compact cars has stabilized at a low level for the time being.
In the first half of the current business year, the situation of the European mechanical engineering industry has been slightly weaker, due particularly to the lackluster development in the emerging markets. Demand in the white goods industry continues to be solid. Demand from the construction and construction supply industries has remained unchanged at a very low level. However, there are expectations that there will be a slight uptrend in this customer segment in Eastern Europe in the next year—the first improvement in a long time. In Southern Europe, construction has practically come to a standstill. Germany, Austria, and Northern Europe are in better shape, although here, growth remains modest too. Heavy plate production is geared primarily to the energy segment, where—after a long phase of reduced activity—the first projects were contracted, which are, however, comparatively small in scope. A substantial revival of the market will probably not be possible until the first months of the 2014 calendar year, when large line pipe orders are expected to be placed.