Market environment

The economic upward trend in Europe—which was based more on optimism than on facts at the start of 2017—stabilized in the first quarter of 2017/18 and by now has developed a solid foundation in terms of both the most important sectors of the economy and geographic considerations. In the summer of 2017, the growth encompasses not just most EU member states but also all key industries (with a few exceptions). Against this backdrop, in a year-over-year comparison the majority of voestalpine’s customer segments, too, were much more successful in the first quarter of 2017/18 than they had been as of late. While the economy was driven yet again by the automotive industry, the mechanical engineering sector, the aerospace industry as well as the white goods and consumer goods industries enjoyed a positive development, and the construction industry exhibited ongoing trends toward a recovery. By contrast, the ambitions of the oil and gas industry with respect to investments in Europe are relatively restrained, especially in terms of pricing. There has been a significant reduction in investment activities with respect to the European railway infrastructure since the summer of 2016. In Great Britain, signs that the country is increasingly feeling the negative impact of BREXIT are becoming ever more pronounced, but this does not yet affect voestalpine’s British sites.

The North American economy developed but moderately in the first quarter of 2017/18. While private consumption did show some strength, the investment activities of the industrial sector remained limited, not least due to ongoing political uncertainties. The energy sector, however, is an exception, as it can profit from substantially decreased production costs in shale mining, with the result that the production of crude oil and natural gas looks increasingly viable even in the face of low energy prices. The railway sector in North America recovered but slightly. With the exception of Mexico, the momentum of the automotive and consumer goods industries flattened out within NAFTA as a whole, whereas developments in aerospace were much more positive.

China’s growth rate in the first quarter of 2017/18 was as robust as its growth rates in previous periods, which benefitted not least the automotive industry. During the year 2017 to date, the German premium manufacturers have continued to boost their sales volumes in the Far East. China also remains an attractive market in the railway infrastructure segment due to the ongoing push to expand its high-speed network. Demand in the Far East for tool steel remains positive, given the excellent development particularly of the automotive and consumer goods industries.

Even in 2017, there are but few signs of the expected economic recovery in Brazil after several years of recession, because the political situation continues to be too unstable for a real recovery to take hold.