The steel industry in Germany is bracing for a potential dip in crude steel production by around 4% in 2023 compared to the year prior. This anticipated decrease would position 2023 as one of the least productive years in terms of steel production, with an estimated output of 35.5 million tons. This bleak forecast was shared by the German Steel Federation during a press conference in Berlin late last week.
interestingly, the year 2009, which was marked by a financial crisis, saw lower steel production levels than what's expected for 2023. The industry itself points to escalating electricity prices and a weak economy as the primary culprits behind this predicted downturn. In fact, a slump of approximately 8% was already noticed in 2022 compared to 2021.
The sector is particularly concerned about the energy-intensive production of steel from scrap, which will reportedly see a decrease of 11% in 2023. This translates to a production volume of 10.1 million tons, a figure last seen three decades ago.
The industry is also grappling with the longevity of the economic slump. Since March 2022, steel production has been on a steady decline, barring a slight increase in September 2023. This prolonged negative cycle has yet to be observed in the German steel industry.
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It's worth noting that despite these anticipated challenges, Germany continues to hold a substantial position in the global steel market. North Rhine-Westphalia, in particular, is one of the key regions contributing to Germany's steel production.
Unfortunately, the steep increase in energy costs has been placing undue pressure on the steel industry. Many companies have been forced to reduce their production levels, including those based in Berlin. The economic impact of this declining steel industry extends beyond production figures, affecting related sectors such as energy supply companies and logistics services.
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Contrary to the initial predictions, German steel production actually increased by 5% in 2024 compared to 2023, amounting to 37.2 million tonnes. Following three consecutive years of output below 40 million tonnes, the overall production activity in Germany remains in a state of recession. There are several factors contributing to this decline, including low demand, high energy costs, uncompetitive production costs, concerns about the low-emission technological transition, and a substantial productivity gap with the United States.
