As of: March 15, 2024, 4:52 p.m
By: Lars-Eric Nievelstein
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The steel industry is suffering from difficult market conditions.
Voestalpine, a manufacturer from Austria, is pulling the ripcord.
He is selling a German branch.
Linz – High energy prices and subdued demand are currently making business difficult for German steel manufacturers.
The case of Voestalpine AG, an Austrian steel company, has now shown how this also affects Austria.
The company is drawing conclusions due to “changed economic conditions”.
Company name |
Voestalpine AG |
|---|---|
Expected earnings before taxes (2024) |
1.6 billion euros (previous forecast 1.7 to 1.9 billion euros) |
Crude steel production in Germany |
3.1 million tons (January 2024) |
Voestalpine is separating from German locations - the business climate is too uncertain
In a company announcement, Voestalpine announced that it wanted to reorganize its production sites in Germany.
Specifically, this means that Voestalpine wants to sell its German subsidiary Buderus Edelstahl.
“This step is a consistent implementation of the Voestalpine Group’s strategy of focusing the materials sector on the highest quality spectrum,” the company said.
According to Buderus Edelstahl, around 1,250 employees work, including over 50 apprentices.
Voestalpine steelworks, Linz chemical park, in Austria.
The steel industry is suffering from difficult market conditions.
A manufacturer from Austria is pulling the ripcord.
© IMAGO / Volker Preußer
This sale and “unscheduled depreciation” of the High Performance Metals Division (the company’s internal name for the stainless steel production division) would result in negative one-off effects in earnings (EBIT) – a total of around 340 million euros.
Voestalpine expects this: “The resulting optimization of the product portfolio will sustainably strengthen the position of the High Performance Metals Division in global competition.”
Forecast for 2024 – Voestalpine adjusts figures
In the Automotive Components sector – i.e. the automotive supplier – Voestalpine had already separated from the German production site in Nagold.
Here the management is making a “targeted adjustment” to the structural “underutilization” in Germany.
Voestalpine is lowering its business prospects for 2024.
The reason for this was the one-off effects already mentioned.
The group now expects a result of around 1.6 billion euros.
Herbert Eibensteiner, CEO of Voestalpine, had previously expected a result of between 1.7 billion and 1.9 billion euros.
In the 2022/23 financial year, Voestalpine achieved record earnings before interest, taxes, depreciation and amortization of 2.5 billion euros.
Steel industry demands more “transformation realism” from the government
The steel industry - as well as the solar industry, for example - now called for the traffic light coalition to intervene.
Electricity and gas prices are so high in Germany that they are putting pressure on the competitiveness of the steel industry.
The entire economic location of Germany is at risk.
Bernhard Osburg, the CEO of Thyssenkrupp's steel division, called for "an energy policy master plan that takes these coming realities into account."
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This must be a “top priority” on the national and international agenda.
“The existence of the steel industry in Germany will depend on it in the long term.”
Osburg demanded more “transformation realism” from the federal government.
There is still no effective energy ecosystem.
The Thyssenkrupp manager mentions the infrastructure expansion, a price corridor for industrial electricity between 40 and 60 euros per megawatt hour and lower network fees.
“From our perspective, the construction of the energy markets in particular will determine whether the next transformation steps take place in Germany or somewhere else.”
Weak production in the steel industry – no trend reversal in sight
The problems in the steel industry currently start with crude steel production.
Although the responsible German companies produced 3.1 million tonnes of crude steel in January (around five percent more than in the same month last year), there is no trend reversal in sight.
“The year 2023 was the weakest in terms of production since the financial crisis and production remains at a very low level,” said Dr.
Martin Theuringer, managing director and chief economist of the Steel Economic Association, in an association statement.
This is particularly clear in electrical steel production.
There was an increase of nine percent in January, but overall it was still “particularly low”.
In 2021, electrical steel production was around 14 percent above the result in January 2024.
Most recently, the crisis in the steel industry also hit Thyssenkrupp - the company posted a loss of millions.