German steel industry leader ThyssenKrupp Steel (TKS) recently warned that workers at the Duisburg-headquartered company face deep cuts due to a declining European steel market.
On September 28, German media quoted Dennis Grimm, executive board spokesperson for TKS, as saying, “The current market situation has deteriorated again in recent months, and unfortunately, there is no recovery in sight.” Grimm noted that the flats producer is now developing a new business plan. While he declined to quantify prospective job losses resulting from the new plan, Grimm noted that there would be “fewer than today.” In total, TKS employs about 27,000 people across Europe.
Hot rolled coil has steadily declined in Europe throughout 2024 due to poor economic situations and higher interest rates by the European Central Bank, which put significant pressure on demand.
Transactions for the flat-rolled product were about €520-525 ($575-580) per metric ton with delivery in late September, down from offers of about €720 per metric ton EXW in January of this year.
The news hardly came as a surprise to one industry watcher. “It was obvious”.
The source pointed to Germany’s higher reliance on cheaper natural resources from Russia, which have come under sanction following the February 2022 invasion of Ukraine, as well as stiffer competition from China.
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TKS’ main production site at Duisburg, in Germany’s North Rhine-Westphalia State, can annually pour about 10 million metric tons of pig iron from its four blast furnaces and up to 13 million metric tons of crude steel via two basic oxygen furnaces. The plant then casts slab for rolling into hot and cold rolled coil, as well as plate.
Other products at the plant include non-grain- and grain-oriented electrical steels, along with downstream coated products, such as hot dipped galvanized sheet, tinplate and pre-painted sheet.
TKS also faces questions over how much it is to receive from parent group ThyssenKrupp to become a stand-alone company. This stems from the fact that the latter has been eyeing divesting the steel arm since at least 2015.
Czech energy company EP Corporate Group (EPCG) recently completed its acquisition of a 20% share in the steel industry leader after announcing its plans in May. It is now in discussions on acquiring the remaining 30%. EPCG is part of Prague-headquartered EP Holding, an energy group with assets across Europe that is also involved in carbon-neutral products.
On September 27, German auto group Volkswagen issued an updated forecast for its financial year, which follows the calendar year, citing a “challenging market environment and developments that have fallen short of original expectations.” The group forecasts a 2.59% drop year on year in customer deliveries to about 9 million vehicles from 9.24 million in 2023. Volkswagen noted that the original deliveries forecast was for a 3% rise to 9.51 million vehicles.
Meanwhile, Volkswagen’s reported sales revenue is €320 billion ($354 billion), down less than 1% from over €322 billion ($357 billion) in 2023, though the original forecast was for a 5% hike. The auto industry is a major consumer of flat rolled steels for autobody. Hot rolled coil serves as feedstock for the production of cold rolled coil, which also serves as feedstock for hot dipped galvanized sheet.
An August 20 Euronews report citing the European Commission stated that Chinese BEVs have flooded the European Union, boasting a 25% market share at the end of 2023. Industry watchers at LME Week events, which took place in the week of October 4, also noted that many European automakers have pushed back deadlines to convert to zero emissions.
Further west, in the United Kingdom, Tata Steel took Bast Furnace 4 offstream on September 30. This is the second of two furnaces on the site to suffer the same fate, with BF 5 being blown down back in July. Tata plans to replace the blast furnaces with two electric arc furnaces, which the parent group aims to commission by 2027.