During the last nine months, the general development of the steel industry in Europe was characterized by continued falls in demand. Only toward the end of the 2013 calendar year were there signs of increased demand. Nevertheless, 2013 was the third consecutive year that there was a decrease in steel consumption in Europe. In a market environment characterized by significant structural overcapacity, the manufacturers again did not deviate from traditional, well-established practices of reactivating temporarily idling capacity every time there was a revival of demand. This resulted in permanent price pressure on the spot markets.
This market environment also created a challenging competitive situation for the Steel Division, even though, due to the division’s sophisticated product portfolio, stable, full utilization of its facilities was possible throughout the entire business year 2013/14 to date, and at a structurally significantly higher level of revenue. With regard to the most important customer industries, the situation for the division in the first three quarters of 2013/14 was as follows: During this time period, demand in the European automotive and automotive supply industries has recovered somewhat. The premium segment has been demonstrating excellent development for quite some time due to its strong export performance; now, in the second half of 2013, the market for the mass market manufacturers also picked up, albeit starting from a very low level.
After years of existential challenges, the construction and construction supply industries in Southern and Eastern Europe appear to be facing a turnaround, even though initial signs of a recovery are only tentative. The situation is better in the German-speaking countries, where there has been an uptick in investment activity in the construction sector.
The conventional energy sector (oil, natural gas), and above all its pipeline projects, which is of crucial significance for the heavy plate business segment, was the most problematic market segment by far in 2013. Competition for the few still remaining projects resulted in dramatically falling prices in the course of the year and—because the network of suppliers is global—massive changes in the rates of exchange led to distortions of competition and heated up the situation still further. However, the award of the first installment of the South Stream project in late January 2014 seems to have signaled the turning point in this deflationary spiral.
The mechanical engineering industry showed a significantly weaker trend toward the end of the year, while movement in the white goods and electrical industries was more lateral.