Voestalpine passes rising costs on to steel prices

Voestalpine Group achieved very good profit in the three fiscal quarters that ended on 31 December but notes it was not left unhurt by the surge in raw materials and energy costs.

“The question here is, to what extent we can forward the prices to the market,” chief executive Herbert Eibensteiner said during a conference call on Wednesday attended by Kallanish. He let on that the company is optimistic it can indeed hand down the additional costs in its steel product prices, but was not specific about the extent.

The “enormous surge” in energy costs came especially in the third fiscal quarter, so Eibensteiner’s comment implies that prices, especially on the spot market, should increase. He did not say so explicitly, and referred to the company’s big share of long-term contracts. “There will be a time lag, owed to the different durations of the contracts,” he said.

Regarding the largest sector with such contracts, the automotive industry, voestalpine believes that production at carmakers has bottomed out. “The demand for cars is undiminished,” and the trough was, after all “not due to a lack of demand, but of supply”, Eibensteiner pointed out.

According to the company’s Q3 report, its steel prices climbed through to the end of the reporting period, due to its specific contracting structure. Its direct reduction plant in Texas, for example, profited from good demand for steel in North America.

Christian Koehl Germany