This report is a translation of the original report in German, which is solely valid.
EUROPE
The European economy performed weakly in the first three quarters of the business year 2023/24. The sharp interest rate hikes by the European Central Bank (ECB) to combat inflation had an increasingly dampening effect on the economy. This primarily affected the manufacturing industry, the capital goods sector and the construction industry. Industrial production has now been in decline for five quarters. Although consumption was still rising at the beginning of the business year, momentum slowed towards the end of the reporting period. At the end of the third quarter, the high inflation finally declined somewhat, which led to the ECB temporarily ending its cycle of interest rate hikes.
For voestalpine, this economic environment meant a decline in demand from the construction, mechanical engineering, white goods and consumer goods industries as well as in the capital goods sector. The tooling industry in particular, which is supplied with tool steel by the High Performance Metals Division, recorded very weak demand in the second and third quarters of the business year 2023/24. At the same time, imports of material from Asia and China were high.
There was positive news from the energy industry, railway systems and the aerospace industry, which bucked the trend in the economy as a whole and performed very dynamically. In the European automotive industry, the supply chain situation has eased considerably, which voestalpine felt in the form of increased demand.
USA/NORTH AMERICA
At the beginning of the business year 2023/24, the US Federal Reserve (Fed) raised interest rates very sharply, which quickly had a dampening effect on inflation. The economic downturn predicted at the same time did not materialize and the US economy grew more strongly than expected in the first three quarters of the business year 2023/24. The main pillar was consumption, which was driven by a very strong labor market with low unemployment figures and high wage growth. Interest-intensive sectors such as the construction industry declined, but not as much as feared.
Demand for voestalpine products was satisfactory in the first nine months of the business year 2023/24. The energy industry and railway systems in particular contributed significantly to this. The aerospace industry also provided positive impetus again in the reporting period. The capital goods sector was comparatively subdued.
BRAZIL/SOUTH AMERICA
Brazil was confronted with high inflation and interest rate hikes much earlier than Europe and North America and also overcame the peak of inflation more quickly. The Brazilian National Bank began to cut interest rates as early as the second quarter of the business year 2023/24. The Brazilian economy performed surprisingly well in the first nine months, growing by around 3 % in this period. This upward trend was primarily driven by a record harvest and relatively good consumer spending. The industrial sectors were unable to keep pace with this development and became increasingly weaker towards the end of the reporting period.
The voestalpine sites in Brazil performed well in the first three quarters of the business year 2023/24. The boom in the photovoltaic sector had a positive effect on orders for special sections. The production of special steels benefited from the high international demand for products for the oil and natural gas industry. In the third quarter of 2023/24, the voestalpine sites in Brazil also felt the slowdown in economic momentum.
CHINA/ASIA
The Chinese economy remained in growth mode in the first three quarters of the business year 2023/24 and defied the negative developments in the real estate sector. However, growth rates were significantly lower than expected and below the high levels of the past. The extremely low inflation and at times deflation is a reflection of the weak momentum in Chinese domestic demand. The manufacturing industry sector, and in particular the high-tech sector, stands out positively with a resurgence in exports.
The Chinese steel industry is characterized by a special situation: although the construction sector is weak and demand for steel is correspondingly lower, Chinese steel manufacturers are producing at record levels. Exports are putting pressure on the international steel markets — a situation that has already occurred several times in the past.
The Chinese voestalpine sites reported a good performance for the first three quarters of the business year 2023/24. However, exports of Chinese tool steel had negative effects for the European voestalpine sites, especially for the High Performance Metals Division.