Economic environment
EUROPE
At the start of the 2025/26 business year, economic activity in Europe continued its subdued trajectory. Market sentiment fluctuated between optimism – fueled by announced infrastructure programs in Germany and increased investment in Europe’s security architecture – and pessimism, driven by repeated tariff threats from the US administration targeting the European Union. An agreement on a flat 15% tariff for all US imports from the EU was not reached until after the end of the reporting period.
As a result, the overall situation remained largely unchanged in the first quarter of the new business year. Investment activity, industrial production, and the construction sector all showed signs of stagnation. In contrast, private consumption and the services sector performed better, especially in tourism.
In this environment, the automotive sector remained largely stable. Demand from the construction, mechanical engineering, and consumer goods sectors remained cautious. The imposition of a 50% tariff on all steel imports into the United States placed additional strain on the voestalpine Group, particularly affecting seamless tube exports. On a more positive note, strong momentum continued in the railway infrastructure, aerospace, and warehouse technology segments.
NORTH AMERICA/USA
At the start of the 2025/26 business year, the North American economy was marked by a series of announcements, reversals, negotiations, and renewed threats of US tariffs targeting virtually all trading partners. So far, the uncertainty surrounding these developments has not been reflected in published data on North American economic performance. In fact, front-loaded purchases in anticipation of tariffs may have had a positive short-term effect on the economy. Both GDP growth and labor market data pointed to robust economic strength during the reporting period.
In contrast to these aggregated indicators, voestalpine’s North American sites faced widespread uncertainty and at least temporary restraint on the part of customers. Group companies that supply products to the US from international locations experienced declines in shipment volumes due to tariffs. Overall, market demand in North America during Q1 2025/26 was strong for voestalpine in warehouse technology, aerospace, and railway systems. Business performance in Tooling, Automotive Components, and Tubes & Sections was volatile. Demand for products related to oil and gas exploration declined significantly during the reporting period.
BRAZIL/SOUTH AMERICA
Economic conditions in Brazil – voestalpine’s leading South American market – were generally positive at the start of the new business year, although industrial activity remained subdued. Rising inflation expectations prompted the Brazilian central bank to raise its benchmark interest rate further, reaching 14.75% – the highest level in 20 years. As a result, both consumer spending and industrial investment slowed. Additional pressure came from high import volumes from China and increasing uncertainty due to tariff announcements from the US administration.
voestalpine’s operations in Brazil showed mixed performance in this environment. The Tubes & Sections and Railway Systems segments performed satisfactorily overall, despite growing market challenges. In contrast, management at the Villares Metals specialty steel plant responded to the deteriorating conditions with extensive cost-cutting measures.
CHINA/ASIA
In the first quarter of 2025/26, China was at the center of US tariff announcements and responded with sweeping countermeasures. This escalation triggered a cycle of rising trade tensions that was temporarily eased through a time-limited agreement on more moderate tariff policies.
Despite this volatile and uncertain environment, China’s economy showed continued resilience and relative stability, in line with previous positive trends. Exports stayed strong, supported in part by front-loaded orders ahead of the announced tariffs. Problems in the real estate sector remained unresolved in the 2025/26 business year, which continued to dampen both construction activity and private consumption. Industrial production remained strong overall. voestalpine benefited from this in the Tooling segment, which saw strong demand for high-quality tool steel during the reporting period.
Competition in China’s automotive industry intensified, especially in the electric vehicle segment, as more manufacturers entered the market. This trend affected voestalpine’s Chinese Automotive Components plants, which experienced reduced call-offs in the first quarter.
The market for railway infrastructure, on the other hand, continued to perform satisfactorily in the first quarter of the new business year.