Study finds German steel industry at crossroads
A German study has underlined the importance of steel for the country’s industrial networks, its economic resilience and the strength of its small and medium-sized enterprises (SMEs). It also unearthed concern over the progress of the low-emission technological transition being carried out by mills.
The study, published earlier this month, was assigned by steel federation WV Stahl to consultancy Oliver Wyman and economic research institute IW Consult. A poll among 192 steel users showed that Germany as a steelmaking location is at a crossroads. Companies are increasingly expressing doubt over whether the technological transition will be successful. Failure, however, would have profound repercussions on investments and jobs for steel-using industries, Kallanish reads in the study.
“A regional steel industry is essential for the competitiveness of subsequent industries – as an incentive for innovation, higher sustainability standards, or in facilitating quality advantages,” says Hanno Kempermann, managing director of IW Consult. “If the steel industry relocates, many of the subsequent industries will reduce their production sites in Germany.”
In figures, the study states that 23% of the production value of the entire German manufacturing industry is generated by steelmakers, their suppliers, and their customers. This equals a value of €1,818 billion ($1,890 billion). SMEs, especially, are major players in the chain. Roughly half of the value generated by SMEs is connected to the “Value Chain Steel Network,” as the authors call it.
Over 60% of companies emphasise that the dense network of the country’s steel value chain provides a platform for targeted research & development activities. Only 14% believe the transition can be carried out as scheduled by 2035. One major hurdle for the transition is high energy prices, said 81% of participants.
Christian Koehl Germany
WV Stahl: German August crude steel production up 0.5% on year
German crude steel production edged up 0.5% year on year to 2.9 million metric tons in August, according to data published Sept. 24 by German steel federation WV Stahl.
However, the volume was down 8.6% month on month, according to the data.
This brought January-August crude steel production from German mills to 25.4 MMt, up 4% year on year.
Of the total August volume, 2.1 million was produced from blast furnaces, down 0.1% year on year, and down 9.1% from July.
This brought the total for the eight-month period to 18 MMt, increasing 2.2% year on year.
According to WV Stahl, German crude steel production from electric arc furnaces in August totaled 734,000 metric tons, up 2.3% year on year but down 7% month on month.
Output from EAFs over January-August also increased 8.6% year on year to 7.4 MMt.
Meanwhile, Germany produced 2 MMt of pig iron in August, up 0.3% year on year, but down 7.4% form the previous month, bringing the eight-month volume to 16.55 MMt, up 2.4% year on year.
Output of hot-rolled steel products in August dropped 3.1% year on year and 9.6% from July to 2.35 MMt, with the January-August volume up 2.6% at 21.7 MMt.
Platts, part of S&P Global Commodity Insights, assessed domestic HRC prices in Northern Europe at Eur555/mt ex-works Ruhr Sept. 23, down 20% since the start of 2024.
Gunnar Groebler new president of Wirtschaftsvereinigung Stahl (WV Stahl)
The German Steel Federation (WV Stahl) has elected Gunnar Groebler, CEO of Salzgitter AG, as its new honorary president. He replaces Bernhard Osburg, who has resigned from the position.
Groebler expressed his commitment to preserving the competitiveness of the German steel industry and ensuring its future viability, especially in light of the current challenging market conditions. Osburg thanked the WV Stahl team for their support and wished Groebler success in his new role.
“I thank the Board of WV Stahl for their trust and look forward to shaping the future of the German steel industry in this role. Bernhard Osburg has done important and energetic work and provided valuable impetus under the currently extremely difficult market conditions. My task now is to do everything I can to preserve the acute competitiveness of our industry and to advance its future viability,” said Gunnar Groebler.
Bernhard Osburg on his departure: “It has been an honor for me to represent the steel industry in Germany as president of WV Stahl. I have been passionate about this industry for 25 years and the association is a political interest group that is focused on our pressing issues and does not need any distractions. I thank the entire WV Stahl team for their professional support during my tenure and the management for the excellent cooperation. I wish Gunnar Groebler every success and a happy hand in his new task.”
Germany introduces new green steel certification standard
The LESS certification was introduced on Monday April 22 at an industry event in the Hannover Messe and announced more widely in a WV Stahl press release.
It was said to be the first standard for the steel industry that allows for tracking and comparing emissions from two key steelmaking routes: the conventional blast furnace route in the transition to low-emitting hydrogen-based production processes, and the electric-arc furnace route. The system therefore enables comparisons of the decarbonization efforts of both steelmaking methods.
LESS was developed by WV Stahl and its member companies and is supported by the BMWK.
The core part of the LESS standard is the labelling system, which allows for classification of low-CO2 steel by carbon intensity, using a graduated scale.
According to the LESS standard, low-emission steel can be grouped into five categories – A,B,C,D,E – depending on carbon and scrap content.
Steelmaking companies that would like to get LESS certificates would have to report their scrap content and Product Carbon Footprint (PCF) in the finished steel product, in accordance with an Environmental Product Declaration (EPD).
This EPD would be provided by independent certification bodies TÜV Nord and DNV.
“The definition of green steel has long been the subject of intense debate worldwide,” WV Stahl president Bernhard Osburg said. “I am delighted that, by joining forces, we have succeeded in developing a widely agreed solution based on international standards which we are now putting into practise. This will provide steel clients with all the information they need to achieve their CO2 reduction targets with the help of low-emissions steel.”
He also emphasized that the LESS standard will help steel-using companies to obtain initial funding for transformation projects.
The introduction of LESS was supported by stainless steel producer Swiss Steel Group.
“LESS creates transparency through a uniform labelling system and a step-by-step classification of low-CO2 steel, and enables steel users to achieve their climate targets with the help of sustainably produced steel,” Swiss Steel Group said on April 24.
The LESS standard was created for international cooperation, so industry sources hoped that it would help to achieve a more unified approach to pricing low-carbon steel and that this would help to promote its uptake across supply chains.
Industry sources estimated that the volume of green steel traded in Europe in 2023 was no higher than 50,000 tonnes, with very few suppliers able to offer “physically produced green steel, with emissions proven by Environmental Product Declarations [EDPs],” according to one distributor.
Fastmarkets’ most recent weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €150-250 ($160-267) per tonne on April 18, unchanged since mid-December.
German mills discontinue scrap pricing survey
A regular monthly scrap pricing survey compiled from data collected at Germany’s steel mills has been discontinued by steel federation Wirtschaftsvereinigung (WV) Stahl at the end of 2015.
The survey has existed longer than the monthly survey by recyclers’ federation BDSV, which is compiled from input by scrap merchants. Often, the surveys’ results gave diverging information.
“The amount of publicly accessible price information has risen in recent years. Given the selection of such sources we have decided to stop our investigations in this regard,” WV Stahl tells Kallanish by way of explanation.
Market players from the scrap collecting industry had often argued that the prices given by WV covered only parts of the industry and were therefore not representative. “Apparently, two or three mils had stopped participating in those statistics,” one market source tells Kallanish. Others argue that the monthly average figures were overlapping and thus did not reflect the market adequately. They bemoan the fact that the prices were used as a basis for calculation by the automotive industry, or to define scrap surcharges in the past.
When WV Stahl announced that it was discontinuing its service, some mills had temporarily considered setting up a scrap pricing service themselves in recent months but this has not happened. “It is not all that easy. BDSV needed two years before it got its service up and running properly,” one source says. BDSV’s data are double-checked by an external institute which crops statistical outliers to arrive at credible figures, the source adds.
Kallanish