17 September 2024 – German steel has once again reached a high point in a crisis that threatens its very existence. That’s what you might think when politicians, trade unions and steel manufacturers meet for a whingeing summit. Instead of taking entrepreneurial risks, they are once again craving subsidies. And US consumer confidence continues to rise.
- US consumer confidence continues to rise
- German steel: the moaning has peaked
- Politicians call for more willingness to take corporate responsibility
- Figures from the steel lobby obscure reality
- Exploding costs in steel production? More like an explosion in turnover!
- Turnover of German steel manufacturers jumps by more than 45%
- Steel associations allegedly complain about high costs – but don't show them!
- The myth of Chinese steel flooding Europe's markets
US consumer confidence continues to rise
The University of Michigan’s consumer sentiment barometer for the USA rose for the second month in a row in September. Despite a slight weakening in the assessment of the labour market, expectations for the coming year with regard to personal finances and economic development as a whole improved. Inflation expectations fell from 2.8 to 2.7 per cent.
German steel: the moaning has peaked
German steel is once again allegedly in crisis and on the brink of collapse – at least that’s what the German media are saying when it comes to the results of the National Steel Summit held in Duisburg on Monday.
The Düsseldorf-based Wirtschaftsvereinigung Stahl speaks of a ‘crisis jeopardising the existence of the industry’. It represents the majority of domestic steel producers.
Politicians call for more willingness to take corporate responsibility
At the beginning of September, German Finance Minister Christian Lindner, FDP, and Deutsche Bank CEO Sewing called for the economy to be more willing to perform and, above all, to take more entrepreneurial risk. Christian Lindner had taken a lot of verbal flak from the steel industry in particular with regard to his call for corporate responsibility. Instead, German steel manufacturers are clamouring for further subsidies, a reduced industrial electricity price and, above all, security.
Thorsten Gerber, CEO of the Gerber Group, commented today on the manufacturers’ excessive demands: ’It is unacceptable that double standards are once again being applied here and while steel producers, who have been on the taxpayer’s drip for decades, continue to be subsidised with billions of euros, small and medium-sized enterprises can look where they are.’ He continued: ‘The whole thing should be seen as in nature, where the healthy thrive and the sick are allowed to die.’ In conclusion, Thorsten Gerber said: ‘And anyone who still believes in the whining anchored in the steel manufacturers’ business plan simply needs to compare the figures from the German and European steel lobby with the latest figures from Mario Draghi.’
Figures from the steel lobby obscure reality
Mario Draghi’s report ‘The future of European competitiveness’, which was presented last week, in combination with the figures from the German steel lobby, clearly illustrates that steel manufacturers are not playing with their cards face up. And politicians have been playing the wrong game for decades out of fear of the crude polemics of the powerful trade unions and the threat of job losses.
Exploding costs in steel production? More like an explosion in turnover!
While the EU production costs for a tonne of hot rolled coil averaged 760 euros (800 USD) in 2022, steel manufacturers in Germany were able to generate an unprecedented record turnover of almost 1,700 euros per tonne of hot rolled steel. In comparison, turnover per tonne of hot rolled steel averaged around EUR 1080 from 2009 to 2021.
Turnover of German steel manufacturers jumps by more than 45%
The 20% increase in production costs from 2021 to 2022 is even clearer. In the same period, the turnover of German steel manufacturers increased from 1170 euros to 1700 euros per tonne of rolled steel. An increase in turnover of more than 45% – something doesn’t add up, does it? Incidentally, the turnover level per tonne of rolled steel for 2023 is only just behind.
Steel associations allegedly complain about high costs – but don’t show them!
It is therefore hardly surprising that the German steel associations complain about allegedly high costs, but avoid publishing real costs in their publications.
The myth of Chinese steel flooding Europe’s markets
Finally, it should be said that the alleged flood of Chinese steel that has been flooding the European market for years cannot be substantiated on the basis of current statistics from the EU statistics authority EUROSTAT. The import share of classic hot rolled coil originating from China was just 0.5% in 2022. In 2023, only 0.23% of all HRC imports into the EU came from China.
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