German steel maker Salzgitter expects a continuously weak market environment in the fourth quarter, with the short-term global economic outlook geared more to the downside, amid dwindling demand and a reluctance to invest, especially in Europe and Germany, it said Nov. 13.
In its nine-month results statement, Salzgitter said overall German foreign trade would be particularly hard hit by weak global economic growth.
“While industry is still cushioned by a high order backlog, incoming orders are in a downtrend,” it said. “The weak construction industry and domestic economy emanating from high inflation rates and rising interest rates have in particular placed a burden on the steel industry.”
In the first none month of the year Salzgitter produced 4.4 million mt of crude steel, down from 4.8 million mt in the same period last year. The loss of the production from the relining of Blast Furnace A in August was largely offset through slab stockpiling, slab deliveries from companies within the group, as well as by the reactivation of BF C, it said.
“The economic situation in many of our key markets is currently challenging. In particular, the recessionary tendencies in our home market of Germany placed a burden on earnings strength, especially in the summer quarter,” Salzgitter CFO Burkhard Becker said. “Inasmuch, the result in the first nine months of the financial year 2023 is indeed presentable although discernibly below the exceptional year of 2022.”
Salzgitter’s overall sales in the first nine months of the year dropped to Eur8.4 billion from Eur9.8 billion in the same period last year, due to a downturn in shipment volumes and lower average selling prices of many rolled steel products. It still considered the results as “satisfactory”, mainly thanks to the performance of the Steel Production and Steel Processing business units in the first half of the year and the strong performance of the Technology Business Unit, the company said.
“In these times of economic and political turbulence, we continue to work full steam ahead on rapidly implementing our SALCOS® decarbonization program,” Salzgitter CEO Gunnar Groebler said in the results statement. “To secure and accelerate the transformation of our company, we nevertheless require a clear commitment from policy makers on Germany as a business location and on a resilient primary industry.”
Although the German government last week agreed to lower the electricity tax, further efforts are required as the industry undergoes a capital-intensive transformation and tends with global competition, he said.
Salzgitter’s flagship Salcos projects aims to fully convert the integrated steelworks into low-carbon crude steel production in three stages by 2033.
Author: Annalisa Villa