Defence has become a hot topic in Europe, being cited as a growing steel consuming sector since US President Donald Trump threatened NATO withdrawal unless the EU increases defence spending. However, except for certain products, the impact on the wider steel market is questionable.
“We have a wide scope of steels for security purposes,” Salzgitter chief executive Gunnar Groebler emphasised recently during the company’s annual press conference. To this purpose, the German company has now established the brand of “Secure” steels, and a “Defence” task force to coordinate further activities in this direction.
The “Secure” steels range mainly involves its tubes and heavy plate unit, but also plate distribution subsidiary Universal.
But while some makers of steel, especially plate, will be able to generate extra sales to the defence industry, the effect on the larger plate market will be minimal, an experienced observer believes. “Europe’s capacity of reversing mill plate is around 10 million tonnes, and less than 1% is sold to defence,” he tells Kallanish. “Even if sales in that direction went up by 50%, it would hardly move the larger market.”
He finds increasing geopolitical insecurity has made defence a fashionable topic, “which mills like to cite, and others like to hear; and it might boost the share price of stock-market listed companies”.
This could be the case for Salzgitter, but also for Kloeckner & Co. The listed distribution/processing group hailed the acquisition last month of a rather inconspicuous German plate processor as a significant expansion of its portfolio for defence purposes.
Meanwhile, Germany’s largest defence supplier, Rheinmetall, has declared it will primarily source German steel in future. The company believes that domestic sources are the safer option when considering security policy, a Rheinmetall representative was cited as saying by newspaper WAZ.
Christian Koehl Germany
