In 2014, crude steel production in Europe grew by 2% compared to the previous year; growth occurred primarily in the first half of the year, while the second half of the year tended to be dominated by a lateral movement in line with general economic trends. This development was driven by increased demand for steel of around 4%, which, however, was met largely by significantly higher imports, especially from China, so that it did not impact the order books of European steel manufacturers.
Deflationary developments with respect to raw materials, especially falling iron ore and coking coal prices, exerted pressure on the prices for steel on the European markets throughout the business year thus far.
The Steel Division was able to hold its own comparatively well, due primarily to its strategic focus on technologically sophisticated market segments. Because demand in these segments has remained positive, the division was able to fully utilize its production facilities during the entire business year 2014/15 thus far.
Once again, the main driver of this full capacity utilization was the European automobile industry, which was able to grow its sales and production numbers throughout the entire course of the business year. While the premium manufacturers again increased their already very high sales and production numbers, due in part to continuing success in exports, the European markets demonstrated a recovery trend for the first time in quite a while, which led to rising production figures by other automobile manufacturers as well.
As a result of weakened demand in China and the developments in Russia, the mechanical engineering industry in Europe was marked by a high degree of volatility over much of the current business year. A certain stabilization of incoming orders from this market segment only occurred toward the end of the calendar year.
During the business year thus far, the white goods and consumer goods industries had a satisfactory level of demand all in all, including in the last quarter of 2014.
After a very mediocre business year 2013/14, the award of projects in the energy segment increased sharply this year (in particular, for steel plates for pipelines) and remained positive until the fall of 2014. Towards the end of the calendar year, the currently largest European pipeline project “South Stream” was stopped as a result of increasing tensions between the EU and Russia. However, because the level of orders in the heavy plate segment was high, by shifting projects around and moving some projects up, it was possible to largely avoid negative economic and operational effects. However, in the course of the business year 2014/15, a more challenging situation in this market segment should be anticipated, especially against the backdrop of the dramatic decline of oil prices.