The second largest European steel producer, thyssenkrupp, said on Feb. 13 during its Q1 of the fiscal year 2024-2025 (period from October to December) that the market environment remains challenging due to uncertainties about future global economic growth and US new steel tariffs imposed by President Trump adding potential further headwinds.
In today’s press call CFO thyssenkrupp Jens Schulte, said that there could be secondary effects if, as a result of the US tariffs, cheap steel from other countries, such as China, were to be pushed onto the European market. “This would further increase price pressure in Europe. However, a reliable estimate of this effect is not yet possible, as the newly announced tariffs have not yet come into effect,” Schulte said.
As things stand at present, the tariffs announced on imports to the US would have only a very limited impact on thyssenkrupp’s business. This applies in particular to the announced tariffs on steel, which the company confirmed to S&P Global Commodity Insights in a separate e-mail reiterating what was said in the analyst’s call.
“Europe is the main market for thyssenkrupp’s steel. The export of steel products from thyssenkrupp Steel Europe to the USA is negligible and mainly concerns high-quality products with a good market position. The majority of thyssenkrupp’s sales in the US come from the trading business (tk Materials Services) and the automotive supply business (tk Automotive Technology). In principle, thyssenkrupp is well positioned in these businesses in the US with a significant share of local manufacturing for the local market. Much of the production for US customers takes place within the US. This focus on local production minimizes the risk of possible tariff risks and similar regulatory changes,” the company said adding that it continues to monitor developments very closely and is constantly analyzing possible scenarios of import tariffs and their impact on our businesses.
In Q1 the steel division reported a decline in sales by 11%, attributed primarily to lower spot-market price levels across all customer segments. Shipments decreased significantly, particularly in the automotive and industrial sectors, although there was some offsetting demand in packaging steel and grain-oriented electrical steel. The overall topline was negatively impacted, yet the division benefitted from significant positive effects, including compensation for electricity prices and further cost advantages, particularly in raw materials.
the company did not disclose the shipment and the crude steel tonnages in details when asked. In the fiscal year 2023-24 thyssenkrupp produced 9 million mt of crude steel, sightly below the 9.4 million mt produced in FY2022/2023.
The company is finalizing its business plan for Steel Europe and sees a 50/50 JV with EPCG as the logical next steel to the independence of Steel Europe.
Green transformation is being implemented with the 2.5 milion a year DRI plant under construction and with the company that signed a MoU with Volkswagen for the supply of CO2-reduced bluemint Steel from the planned DRI plant.
During the call with analysts, the Ceo underlined again the current company view which is the need to start production of the DRI using natural gas. “For the time being, the cost of green hydrogen is not competitive so there is a clear indication that we need to start the whole thing, as I said, with gas,” he said. “Of course, we are very committed to this project. But of course, it needs to be also monetized, and it will be then effective if we are using gas in the beginning as long as we have not competitive pricing for the green hydrogen,” the Ceo said.
Platts, part of Commodity Insights, assessed hot-rolled coil in Northwest Europe at Eur600/mt ex-works Ruhr February 12, up Eur5 on the day, since the beginning of the year HRC prices moved up by Eur40/mt. In the last quarter of 2024, HRC prices moved sideways to Eur550-560/mt base ex-works to the lower level of 2024.
