The material steel is facing new challenges
May 15.05.2012, 44 - Around 90.000 million tons of steel are produced in Germany every year. According to the German Steel Federation, the German steel industry offers jobs to 2010 citizens. The German automotive industry and mechanical engineering required around 15 million tons of steel in XNUMX and, according to information from the industry association, the steel came mainly from Germany because of the high quality standards. The industry is therefore an important engine of the German economy. But in times of the energy transition, the manufacturers of the material are confronted with new problems. Rising electricity prices and cheap foreign competition make it more and more difficult for the German branch of industry to withstand global competition.
Energy transition is not without consequences
After the reactor accident in Fukushima, the German government decided in March of last year, head over heels, the energy turnaround. The quick actionism of the Merkel government has not remained without consequences: electricity prices have risen by ten percent after the shutdown of the power plants. It took eight months for the prices to settle again. For the industry, quick action resulted in costs in the three-digit million range. Meanwhile, the prices have again reached "pre-Fukushima level". Until 2030, the cost of the energy transition will be around 335 billion. The energy costs account for a large part of the total expenditures of the steel industry, so producers are worried about the rising costs. Frank Schulz, Arcelor Mittal Germany Holding's CEO, comments: "Everything that influences global competitiveness is worrying - especially rising energy prices." The industry association Wirtschaftsvereinigung Stahl estimates that the annual additional costs for the German steel industry from the year 2013 will add up to 1,5 billion euros. This threatens Germany as a business location and seems to open the door to international competition.
Location Germany threatened
Seven years ago, in 2005, the European Union introduced emissions trading to limit greenhouse gas emissions. Only European companies are subject to this set of rules. The two largest steel producers, China and the USA, can further expand their supremacy. The People's Republic of China produces the most steel with 683,3 tons annually and the Chinese share in global production is 45,1 percent. Schulz fears that car manufacturers and machine builders will buy the material from the competition in the future. "The quality of the manufacturers there is steadily improving," admits the Chairman of the Management Board of Arcelor Mittal Germany Holding. The German manufacturers demand that the electricity costs for the steel industry should fall to a competitive level in a global comparison.
Steel as part of the solution
The energy transition would not be possible without steel, says Schulz, referring to wind turbines, power station turbines and lightweight steels for automotive engineering. Schulz appeals to politicians to improve the framework conditions. “Steel is not the problem, but part of the solution,” explains the ArcelorMittal head of Germany. Schulz also emphasizes the importance of the material in the German economy: “Steel is an essential part of the value chain in Germany. The economic successes, that one came out of the crisis quickly, confirm how important this value chain is ”.
Recent developments
Last week, the steel industry association announced that crude steel production fell in April compared to the previous month. In the previous months, the industry had continued to recover after the sharp setbacks at the end of 2011. The industry association attributes this development to the Easter holidays and the associated closure of the work. The April balance sheet of the Steel and Metalworkers' Trade Association is also cautious. Although production in the first quarter was 1,4 percent higher than in the previous year, order intake fell by 2,1 percent. Commodity prices are also still at an elevated level with a recent upward trend.
(The European Circle)
