Economic environment
Europe
Economic development in Europe remained subdued at the start of the 2026/27 business year. The eurozone showed only slight economic momentum. Moderate growth is still expected for the remainder of the calendar year. Infrastructure investments approved in Germany, as well as higher spending on the European security and defense architecture, had a stabilizing effect.
The European Central Bank recently took initial steps toward a more restrictive monetary policy. Although inflationary pressures had eased somewhat, the conflict in the Middle East is accompanied by uncertainties on the energy supply side. As a result, inflation risks remain elevated. The labor market stayed robust despite the challenging economic environment.
Trade policy uncertainty continued to be a key factor shaping economic developments in Europe. U.S. tariff policy continued to weigh on the investment climate. At the same time, the trade policy framework for the European steel industry improved. The new EU safeguard follow-up measures and the carbon border adjustment mechanism (CBAM) strengthened protection more effectively for the European steel market against import pressure. In the short term, however, high inventory levels weighed on market prices.
Demand for voestalpine products in the construction, mechanical engineering, and steel construction sectors remained subdued. There were no signs of a sustained recovery in construction activity. The automotive industry presented a mixed picture. In the flat steel segment, voestalpine was able to secure market share and maintain stable demand thanks to high product quality and delivery reliability. The market environment in the automotive components segment, however, remained challenging. Strategically important growth segments such as railway infrastructure, aerospace, and warehouse technology continued to perform well.
USA/North America
Economic developments in North America continued to show solid underlying momentum at the start of the 2026/27 business year. The U.S. economy remained on a growth trajectory, although the pace of growth stabilized. Key drivers were private consumption and investment in artificial intelligence. Industrial indicators had recently become somewhat more subdued but remained in expansionary territory.
The U.S. Federal Reserve left its monetary policy unchanged for the time being. Due to persistently elevated inflation risks, the scope for monetary policy remains limited. The renewed escalation in the Middle East also led to rising energy prices and increased uncertainty in North America. Initial positive signs were evident in the oil and gas exploration sector. Geopolitical risks and the possibility of further escalation continue to weigh heavily on the outlook.
Trade policy conditions continued to shape the business environment for voestalpine’s North American sites. U.S. tariff measures had a dampening effect on order activity. Despite initial positive momentum in the oil and gas industry, demand for voestalpine products for these applications continued to be adversely affected by the tariff measures. The market for tubes and profiles also remained challenging due to intense competition. The environment for Automotive Components continued to be challenging. In contrast, the aerospace, railway systems, and warehouse technology segments performed well and served as stable sources of revenue.
Brazil/South America
The Brazilian economy, the voestalpine Group’s most important South American market, continued its moderate growth trend, albeit with slowing momentum. The service and agricultural sectors continued to make positive contributions. High financing costs, however, weighed on industrial production and investment activity. In addition, increased Chinese imports and the threat of U.S. punitive tariffs had a negative impact on the Brazilian industrial sector.
The Brazilian central bank began a cautious shift in interest rate policy. However, financing costs remained high. The provisional implementation of the EU-Mercosur Interim Trade Agreement provided a boost.
For voestalpine’s Brazilian sites, the market environment remained challenging overall. In the specialty steel segment, slight improvements in demand were recorded at the beginning of the 2026/27 business year. Tubes & Sections showed mixed performance. Railway Systems once again recorded stable and robust demand.
China/Asia
The economic environment in China continued to be shaped by trade tensions, discussions regarding Chinese overcapacity, and a strong focus on exports. Overall economic growth remained positive and was largely supported by robust exports, particularly in the technology sector. At the same time, the domestic economy showed subdued growth. Subdued consumer confidence, a weaker labor market, and ongoing adjustments in the real estate sector weighed on demand. There were still no signs of a broad-based recovery in the construction industry.
Discussions between the EU and China regarding trade imbalances and overcapacity continued during the reporting period.
Tensions surrounding the Strait of Hormuz weighed particularly heavily on Asian countries, as they are heavily reliant on energy imports from the Persian Gulf. In China, the ongoing energy price shock placed an additional burden on production costs and further dampened domestic demand, which was already subdued.
High-tech industries such as specialty machinery manufacturing continued to perform well, albeit at a slower pace. Production of German car manufacturers in China showed subdued development. Demand for high-quality tool steel was positive. The market for railway infrastructure also remained stable.