Restocking in January supported some price upticks in the European flat steel market, Fastmarkets reported.
The price of hot-rolled coil in Northern Europe moved up steadily; Fastmarkets’ daily HRC index domestic, ex-works Northern Europe averaged €731.73 ($786.27) per tonne in January, the highest monthly average since May 2023.
But Voestalpine expects sluggish demand from main industry sectors and predicts a gloomy economic outlook in Europe for January-March.
“The expected economic downturn is noticeable in some areas,” the company said in its report, referring to interest rate sensitive sectors such as construction, mechanical engineering and consumer goods industries. “And, from today’s perspective, [they] will not show any signs of recovery for the remainder of the business year 2023/24.”
Voestalpine’s current business year goes from April 2023 to March 2024.
Voestalpine had a similar outlook for investments in industrial production facilities, but the company said it expects the automotive industry sector to remain stable in January-March.
In terms of different regions where the company operates, the outlook for Europe is the gloomiest.
“Europe is expected to see the weakest economic trend worldwide for the remainder of the 2023/24 business year. The Eurozone has been teetering on the brink of recession in the last two quarters and no positive impetus is expected for [January-March],” the company said.
Voestalpine’s key indicators
Revenue from Voestalpine’s steel division was €1.37 billion ($1.51 billion) in October-December — the third quarter of its business year 2023/24 — down by 7.4% from the previous quarter.
The drop in revenue happened because “product prices for shorter-term contracts fell slightly,” the company said; its steel division sells products exclusively via contracts.
The decline in steel prices first became apparent in the spot market then moved to the contract business, Voestalpine said.
Indeed, Fastmarkets’ daily steel HRC index, domestic, ex-works Northern Europe averaged €847.77 per tonne in April — its highest monthly value in 2023 — and decreased gradually during the next few months.
The index was at its lowest in October, at €616.63 per tonne. Since then, average monthly prices have been increasing again.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) from the steel division were €156.9 million in October-December, down by 13.4% compared with the previous quarter.
Voestalpine said that delivery volumes fell slightly quarter on quarter, without mentioning specific figures, adding that the decline in sales volumes was the main driver for the earnings drop in the steel division.
Meanwhile, Voestalpine Group’s total revenue was €3.87 billion in the third quarter of the business year 2023/2024, down from €4.07 billion in the previous quarter.
And the group’s EBITDA was €368.3 million in the third quarter of 2023/24, down from €410.1 million in the previous quarter.
Voestalpine’s decarbonization targets
Currently, 52% of Voestalpine’s revenue is generated by operations with “no material carbon footprint,” the financial report said. The company plans to grow this share to 65% by 2030.
Voestalpine intends to replace coal-fueled blast furnaces with climate-friendlier electric-arc furnaces (EAFs) powered by green electricity at its Austrian sites in Linz and Donawitz by 2027; construction is already “in full swing,” the company said.
In early January, Voestalpine awarded Primetals Technologies the contract to supply the new EAF for its Linz site; and in September, the company announced that Danieli would supply the EAF for its Donawitz site.
Voestalpine has its own green steel brand, called “greentec steel.”
By 2035, 80% of its revenue will be generated by operations with no material carbon footprint, the company said; its steel division will then consist of two EAFs and only one blast furnace. Meanwhile, its Metal Engineering division will have a twin EAF, Voestalpine said.