The framework conditions in the European steel industry in the first half of the business year 2015/16 were characterized on one hand by a positive situation with regard to demand but on the other hand, by constantly growing pressure from imports, particularly from China. To a large degree, the growth in demand was skimmed off by manufacturers from third countries. As a result of massive imports of commodity steel products toward the end of the summer, steel prices plunged on the European spot market. A number of countries in Asia and the Americas, which were also being flooded with Chinese steel, reacted by setting up trade barriers. In Europe, the European Commission initiated investigations during the past six months regarding possible anti-dumping measures for cold-rolled steel and several smaller product groups of minor importance, however, no significant steps beyond this have been taken thus far. Overall, crude steel production in the European Union in the first six months of the current business year remained at the same level as last year.
As far as raw materials are concerned, against the backdrop of very low prices, in the first half of the business year, prices for iron ore, coal, and coke mostly moved laterally (albeit shifting slightly downward recently), while prices for scrap headed downward as global demand for this material declined.
With regard to the customer segments most important for voestalpine, the automobile industry continued the positive trend seen in previous periods. It therefore remained the cornerstone of the Steel Division’s incoming orders in the first half of 2015/16, which were satisfactory overall. The premium segment remained strong, however, the mass market manufacturers have also been able to substantially increase their sales figures in recent quarters. The civil engineering sector is profiting from the somewhat weaker euro, but demand continues to remain volatile. Demand in the white goods and consumer goods sectors, on the other hand, remained at a stable level. The electrical industry, which faced a difficult competitive environment during the past business year, demonstrated a slight upward trend in the first six months of the current business year. The construction industry—the most important customer segment for mass market steel—however, is still not showing any substantial growth momentum.
The performance of the energy sector continues to be impacted by the low oil price, which, in turn, results in restrained investment activity. One of the few major pipeline projects that were awarded in the past six months—high-quality tube plates for a natural gas project in Abu Dhabi in the United Arab Emirates—was awarded to the Steel Division’s heavy plate business segment. This order will provide satisfactory capacity utilization for the relevant facilities in the second half of the current business year.
The division’s investment focus in the first half of 2015/16 was the continuation of construction of the direct reduction plant in Corpus Christi, Texas and of secondary metallurgy system 4 in Linz, Austria, which has been largely completed. The port facility in Texas has now been completed and the main facility, the 137-meter-high reduction tower has already reached its full height. The launch of production continues to be on track for the first calendar quarter of 2016. The investment project for secondary metallurgy system 4 in Linz is now in its final phase. Start-up of operations is set to take place gradually; the vacuum system is slated to be commissioned first, followed by the ladle furnace. The entire system is expected to be available beginning in January 2016. Ground was broken for the new continuous casting facility CC8 in Linz last July; once it has begun operations, a number of product innovations will be possible. In the heavy plate business segment (Linz), the entire quarto rolling stand is being replaced. Work began in mid-October and will continue until mid-November 2015. On October 29, 2015, blast furnace 5 was recommissioned; a previously scheduled major repair had been undertaken during the past four and one half months without any noteworthy incidents. In the first half of the current business year, the Steel Division invested a total of EUR 401.9 million (previous year; EUR 189.3 million).
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