Market environment
and business development

In the third quarter of 2012/13, also the core markets of the Special Steel Division also showed strong signs of cooling off. While demand from the energy engineering segment has already been modest for several quarters and no recovery is on the horizon, in the course of the business year thus far, demand from the automobile, mechanical engineering, and consumer goods industries also fell somewhat. Demand from the commercial vehicle industry has also gone down considerably since the beginning of the business year, and this made it necessary in the last few months to make capacity adjustments at the production site in Wetzlar, Germany.

On the other hand, the aerospace industry and the oil and gas exploration sectors have demonstrated a stable performance at a satisfactory level so that demand for special steels has remained quite robust in the business year thus far.

In the tool steel and special engineering steel segments, the overall weak economy and the accelerated reduction of inventory by customers had a negative effect on the business performance. Generally speaking, customers’ order patterns are becoming increasingly cautious and characterized by short-term decision-making.

The Special Forgings business segment has shown a stable performance at a good level, due primarily to continuing solid demand from the aviation industry.

Viewed from a regional level, the picture is quite varied. The situation has been trending downward in the major European export markets since the summer of 2012. Particularly in Germany, the division’s most important market, consumer reticence has most recently increased in a number of industrial sectors. While the political wrangling in the USA surrounding the “fiscal cliff” has temporarily quieted down, the overall economic situation is still not showing a clear upwards trend. Additionally, growth momentum in the markets of the threshold countries has been slowing down significantly. For example, declining automobile production, generally falling consumer spending, and delays in the oil and gas industry’s major projects are typical for the current trend in Brazil. In Asia, especially in China, the economic environment is still more robust overall, however, growth slowed considerably in the course of 2012.

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