The general market conditions for the European steel industry have been difficult since the fall of 2011 and they deteriorated even further after the summer months of 2012, reaching a low point around mid-November. Toward the end of the 2012 calendar year, there was a slight uptick in demand on the spot market due to inventory cycle effects with some isolated price increases, although visibility continues to be low. Due to the long-term contracts that dominate in the Steel Division, there will be a time lag before price increases take effect in the voestalpine Group.
The market environment in the last quarters was strongly affected by the ore prices, which have been characterized by a hitherto unprecedented short-term volatility that has increasingly resulted in erratic order patterns on the part of customers. Orders coming from the European automobile industry, the division’s most important customer sector, did stabilize to some degree in the second half of the year. Overall, the market briefly became more dynamic in the spring of 2012, but it quickly lost its momentum in the course of the business year 2012/13. This applies not only to the automobile and automotive supply industries, but especially to the energy sector as well. Delays in major linepipe projects, both in Europe and overseas, resulted in a decline of order volumes in the heavy plate segment. The alternative energy segment also experienced continued weak demand.
The European, particularly the German, mechanical engineering industry, however, performed solidly throughout the entire 2012 calendar year, albeit incoming orders, especially in the second half of the year, were characterized by significant volatility. In the past months, the tubes and sections industries tended to exhibit a lateral movement, while demand in the white goods, consumer goods, and electrical industries revived somewhat.
Due to its longstanding customer relationships on one hand and its focus on high-quality products on the other, the Steel Division still was able to continue to utilize 100% of its capacity during the first three quarters of the current business year despite the market environment that continued to be challenging overall.