Day: 9 August 2023

Orderbooks at German machine builders suffered a visible drop in the first half-year and will not recover anytime soon, says mechanical engineering federation VDMA. The regular sentiment reports from VDMA (Verband der Maschinen- und Anlagenbauer) are a barometer for investment activity in manufacturing industries, not only in Germany.

In the first six months of the year, order intake was 14% lower than in the first half of 2022.
Domestic orders fell by 11%, and foreign orders by 15%, with eurozone countries losing slightly more order volume than other countries, Kallanish notes.

The trend became slightly more pronounced towards mid-year. In June, order intake fell by 15% year-on-year overall, but with some remarkable deviation from the period thus far. Domestic orders dropped deeper, by 18%, confirming the prevailing sentiment of a particularly weak German industry.

Orders from abroad dropped less steeply, by 14%. Here, orders from eurozone countries showed a comparatively more positive development with a decline of only 2%, while other countries recorded a minus of 19%. VDMA did not provide an interpretation of the trends.

In any case, the overall decline “means that the balance sheet for the first half of the year is clearly negative,” says VDMA chief economist Ralph Wiechers. “Although many companies are still living off high order backlogs, the air is slowly getting thin in terms of new orders. A turnaround is not yet in sight.”

He attributes the reluctance to invest to restrictive monetary policies aimed at curbing inflation and uncertainties caused by geopolitical disputes. He also mentions the reorientation of companies and their business models as a result of what VDMA calls “the transformation”. This includes digitalisation and transitioning towards lower-emission technology, but also a prevailing lack of skilled workers.

According to a VDMA spokesman, the latter issue has grown into a structural problem. “We have been dealing with a shortage of skilled workers for years, not only in Germany but also elsewhere in Europe,” he tells Kallanish.

Christian Koehl Germany

ArcelorMittal is installing a ladle furnace at its facility in Fos-sur-Mer, southern France for an investment of €73 million ($79m), Kallanish notes.

The investment includes €15m from the French state as part of the “France Relance” growth plan. The new furnace will contribute to reducing the plant’s emissions by 10% and “significantly increase the use of recycled steel in the steelmaking process by 2025”, the firm says in a note. It adds that this is a further step forward in the reduction of the plant’s carbon footprint by 2030, which includes the start of a new electric arc furnace that will allow to cut emissions by 35%.

The new EAF will be operational from 2027 and will replace one blast furnace by the end of the decade. At present, ArcelorMittal has two blast furnaces at Fos-sur-Mer.

The French government will support the overall project with an investment of €1.7 billion. ArcelorMittal and the French government signed last year a strategic partnership for these investments (see Kallanish 7 February 2022).

Natalia Capra France

Stalprofil reported a 30% on-year slump in first-half-of-2023 revenue to PLN 449.8 million ($110.6m) and 87% drop in net profit to PLN 8.3m amid volatile market conditions, the firm indicates in its preliminary results.

H1 2022 was a unique period that saw a sudden spike in demand and record-high prices after the outbreak of war in Ukraine. The same period a year later was meanwhile characterised by falling demand and a continuation of the price downtrend that began in the second quarter of 2022, the Polish distributor says.

“The low level of public and private investment and the resulting weaker demand for steel products are reflected in the national statistics of steel production and consumption,” Stalprofil says in a note seen by Kallanish. The Polish Steel Association reported 14.3% on-year lower national crude steel output in the first four months of 2023, while apparent steel demand slumped 21.2%.

Steel prices fell across the board in H1, including for long products which account for the majority of Stalprofil’s offering. Prices in Poland for HEB 200 beams were 35% on-year lower in June and down 12% from March.

The firm took into account the decrease in steel prices, updating the value of its steel product inventory. The total balance of write-downs on inventories of steel products at end-June lowered the firm’s second-quarter gross profit by PLN 6m.

Adam Smith Poland