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Market environment
and business development

In the first nine months of the business year 2013/14, the market environment was very challenging for the Special Steel Division, especially due to the dramatic seasonal effects in the summer and toward the end of the calendar year. Furthermore, individual product segments experienced marked price pressure due to competitors’ capacity utilization problems.

From a regional perspective, Europe continues to be difficult, especially because there has not been any substantial increase in demand in Germany, the division’s most important market. While the automotive and consumer goods segments still tended to remain at a more or less stable level, the situation in the heavy mechanical engineering industry was definitely subdued and the energy engineering industry (power stations) came to a virtual standstill. There was a certain stabilization of the situation in Southern Europe, albeit at a modest level. In the USA, the debate about the debt ceiling in the fall of 2013 slowed down development, but subsequently, the situation became increasingly positive. Brazil was characterized by restrained consumer behavior and a cautious level of investment. However, there have recently been positive signals from the oil and natural gas exploration industries. In Asia, with the exception of India, the economic situation was generally at a solid level during the past calendar year.

The High Performance Metals business segment, especially tool steel and high-speed steel, profited from customers’ low inventories. The situation in the heavy mechanical engineering industry and the energy engineering industry with regard to open die forging products remained challenging. In contrast, the oil and natural gas exploration industries as well as the aviation sector developed at a solid level, with a correspondingly positive effect on the demand for special steels. All in all, the European consumer goods industry performed satisfactorily.

The acquisition of Eifeler France (see section “Acquisitions”), which was completed in the third quarter of 2013/14, following the acquisition of a total of nine companies of the Eifeler Group toward the end of the 2012 calendar year, represented another step in the development of sales and service activities. The consistent extension of the customer-specific value chain by expanding activities in processing, coating, and heat treatment contributed to the satisfactory development of the tool steel segment in the course of the business year thus far.

The situation in the Special Forgings business segment remained unchanged during the third quarter of 2013/14 as compared to previous quarters. The momentum in the aviation industry was the primary driver of demand for special steel forgings. Compared to the previous year, there was a certain upward trend in the commercial vehicle industry, however, the energy engineering industry’s market has shown no indication of a recovery.

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