At 1,665 billion tons, global crude steel production in the 2014 calendar year again reached an all-time high, although the increase of 1.0% was very modest in comparison to previous years because crude steel production in China, which is responsible for about half of all production worldwide, stagnated at the previous year’s level in the 2014 calendar year after years of extremely high growth rates. In comparison, after two years of declining numbers, production in the European Union in 2014 rose by 2.2% to 169.3 million tons, although this is still far below the pre-crisis level. In the EU, all of the growth took place in the first half of the year, while the second half saw production rates go down again. In contrast to the overall positive development of demand, steel prices softened significantly in the course of the business year, driven by the falling prices for ore that plunged by around 50%.
The automotive industry, the most important customer segment for the Steel Division, was once again the driver for the outstanding capacity utilization of all production facilities throughout the entire business year 2014/15. Particularly the manufacturers of premium vehicles profited from brisk demand in North America and Asia; China has now become the most important market for this segment. In addition, the European market has experienced a revival in the past twelve months, resulting in growing production and sales figures for manufacturers of small and mid-size cars. More recently, the Steel Division has increasingly supplied high quality steel grades to manufacturers of premium brands located in North America and China, not just in Europe.
In the past business year, the mechanical engineering industry faced a volatile business environment due especially to the collapse of exports to Russia, but also weaker demand from China. Toward the end of the 2014 calendar year, it was able, however, to return to a trajectory of growth, in part as the result of an improvement of its global competitive position in the wake of a weaker European currency. Manufacturers of industrial and commercial vehicles are increasingly adopting a global presence, and due to its excellent market position relative to high-strength and wear-and-tear-resistant steel products, the Steel Division is often an important component in their expansion strategy.
After reviving somewhat in the early part of the 2014 calendar year, the expected recovery of the construction industry did not occur over the course of the year. The white goods industry is facing a market in Europe that is largely saturated so that its order activity is more or less unremarkable. The electrical industry, on the other hand, continues to face a rather challenging competitive environment, not least due to the fact that electromobility is establishing itself only very tentatively.
At the beginning of the 2014 calendar year, the energy sector, which is especially important for the heavy plate business segment, ensured solid capacity utilization due to the award of the Russian South Stream I gas pipeline and subsequently other international pipeline projects, e.g., in Brazil, Africa, and India. Additional orders came in as a result of attractive contracts for cladded special plates for pipes. Toward the end of 2014, however, the suspension of follow-up South Stream projects and the sharp decline of the oil price, led to a marked trend reversal and a broad-based slump in demand from the pipeline segment. Existing orders ensured solid capacity utilization of the heavy plate production into the spring of 2015, but international competition for new projects is fierce so that currently, production of strip products is being increasingly substituted for heavy plate as far as this is technically possible.
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