German steel production seen dropping 15% in 2020

German crude steel production is likely to be around -15% lower in 2020 than in the previous year, according to the current economic status report by Essen-based RWI institute.

The forecast is made on the assumption that the economic recovery that came after mid-year will continue. It may therefore be overshadowed by the latest restrictions in Germany related to Covid-19, Kallanish notes. Output is forecast to reach 33.5 million tonnes, at a capacity utilisation of less than 69%.

Looking ahead, author Roland Döhrn states that this year’s decline is unlikely to be fully made up in 2021. Even without another Covid-19 wave, a long-term decline in demand will continue, he argues. “Demand for steel in the automotive industry, which has been declining since the end of 2018, will in all likelihood pick up only moderately,” he writes.

“The transformation to e-mobility will possibly mean a disruption because it means a change of the supply structure in the automotive industry,” he writes. Batteries will become a cost factor, while the role of traditional German production chains will lose significance.

He expects crude steel production to reach 37.5mt in 2021, up 11% on-year. This means that around 75% of capacity would be utilised, a figure still well below the over 80% reached in the years before 2019.