For the Steel Division, the business year 2022/23 was shaped largely by the Ukraine war and the resulting distortions in the European steel market. The loss of steel imports from both Russia and Ukraine led to an imbalance of supply and demand at the start of the reporting period, resulting in erratic price increases in the European steel market. Following these highly volatile developments in the first business quarter, the market rebalanced in subsequent quarters, in turn causing European steel prices to fall.
The prices of key raw materials used in steelmaking, such as iron ore and coal, shot up in the wake of the Ukraine war but then declined again as the business year wore on.
Given Europe’s dependence on Russian energy supplies—oil and coal as well as natural gas—energy prices had already risen substantially at the outbreak of the Ukraine war. By the time of the sabotage of the Nord Stream pipelines in the Northern fall of calendar year 2022, Europe’s energy prices were increasing precipitously. Although market conditions eased and prices fell over time, the cost of energy did not return to the level prevailing prior to the outbreak of the war.
The Steel Division saw unusually strong demand in the first quarter of the business year 2022/23 amid this extremely volatile environment, influenced by tight supplies and dynamic developments in both prices and costs. Demand returned to normal over the Northern summer of 2022 once the European steel market had regained its equilibrium. Recession forecasts for Europe affected developments in the third quarter of the reporting period, leading to a significant cooling of demand, which was dampened yet further by strong inventory reduction effects. Some of the division’s competitors had to remove capacities from the market during this time. While the Steel Division also had to contend with reduced capacity utilization, it nevertheless managed to keep all of its key facilities online.
Demand rebounded sharply in the fourth business quarter. A recession did not materialize as forecast by the end of the reporting period either, which in turn improved overall sentiment in the European steel market.
The Steel Division’s individual market segments developed as follows in the business year 2022/23:
In the European automotive industry, ongoing supply chain problems adversely affected automotive production throughout most of the reporting period. Under the circumstances, this sector was unable to process its high order levels. Nevertheless, orders from the Steel Division’s automotive market segment were good throughout the business year 2022/23 thanks to the division’s broad customer base and its proactive working of the market.
Supply chain issues rapidly improved toward the end of the reporting period, substantially contributing to volume growth in the division during the last business quarter.
Growth in e-mobility provided a highly positive environment for the electrical industry segment too. Toward the end of the business year 2022/23, however, industrial engine and compressor manufacturers were confronted with a significantly weakening economic environment, whereas demand for electrical steel strip used in electric drivetrains remained high for strategic reasons.
Demand from the consumer goods and white goods industries in the reporting period was subdued following the preceding boom during the COVID-19 lockdowns. Rising interest rates and recession fears had an additional dampening effect over the course of the business year 2022/23.
The mechanical engineering sector benefited from high order levels that ensured high capacity utilization over long periods of time. The slowing momentum in individual segments did not make itself felt until the end of the reporting period.
Demand in the construction industry was good throughout the first half of the business year just ended but slumped to some extent as the year wore on.
Against the backdrop of high energy prices worldwide, the energy sector—the main market of the heavy plate business unit—profited from very good demand throughout the business year.