Market environment
and business development

In the first six months of the business year, the performance of the Special Steel Division was satisfactory, even though in comparison with the first half of 2011/12, the level of demand was lower overall. On one hand, this was due to the strong momentum of a sustained inventory-building cycle during the previous year and on the other, to a weaker economic trend. In the early part of the current business year, demand in the most important sectors and—with the exception of Southern Europe—the major sales regions was still at a satisfactory level. During the second quarter, momentum slowed due to the customary seasonal fluctuations during the summer months. However, even after the summer, there was no economic uptick that normally occurs during the last months of the year. There was a sustained cooling of demand, especially from the European and South American automobile industry. This trend was even more noticeable in the commercial vehicle sector so that, as a result, capacity adjustments had to be made in selected production areas in Germany for the first time since 2008/09.

Especially in Europe, the field of toolmaking, which is so important for the High Performance Metals (tool steel) business unit, was weaker over the summer; more recently the order situation became more stable, albeit at a somewhat subdued level. Demand from the oil and gas segments and from the aerospace industry retained its strong momentum.

Viewed overall, up to the summer months, Europe’s economic environment was at a relatively stable level, however, since July, unmistakable signs of an economic downturn have been apparent and, most recently, they have become even more evident. Now, for the first time, voestalpine’s core market of Germany, which had defied the problems other European countries were having, has been showing declining momentum. Brazil has not been able to maintain the high growth of recent years and has been showing a broadly-based cooling of demand for some time. In the first six months of the business year 2012/13, North America, especially the USA, experienced comparatively solid demand in practically all market segments. However, it is difficult to make any reliable prognoses for the economy after the presidential election due to the extremely high levels of sovereign debt. Markets in Asia continue to grow, although the growth rate is lower than in recent years. Despite growing economic fears in China, we are still anticipating annual growth of 5% to 6% in the special steel and special alloy segments, although competition in these areas is expected to intensify.

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