Mechanical engineers need more steel again, the automotive industry anyway: as a result, steelmakers are recovering significantly from their losses from the Corona crisis. For example, the German market leader Thyssenkrupp announces a profit of 125 million euros in the last three months; this is the first quarterly increase since the outbreak of the pandemic. The Essen-based group not only benefits from the fact that it is again selling more steel at higher prices. Its other divisions are also better used, such as blacksmithing and auto parts. CFO Klaus Keysberg speculates that Thyssenkrupp would have grown even faster if bottlenecks – for example in computer chips – had not slowed sectors such as the auto industry.
Steel is also currently in short supply after many industries recovered from the crisis faster than initially feared. However, it takes some time for manufacturers to restart their complex system with blast furnaces and process plants. As a result, steel prices have increased significantly around the world.
Thyssenkrupp does not want to decide on the future of the steel plant until next year at the earliest
Thyssenkrupp will benefit mainly in the future, according to Keysberg, since the group only sells a good ten percent of its steel production at current market prices. Thyssenkrupp supplies the rest, for example, to the automotive industry under multi-month contracts which can be renegotiated over time. “The positive effect on profits will come,” Keysberg said. “We won’t see that until later in the competition.” Competitor Salzgitter also reported the highest first-half profit before tax in 13 years on Wednesday. By their own admission, Lower Saxony will start the next few months with full order books.
Despite the profits, the industry faces challenges. On the one hand, countries like China have increased their shares in the steel market. Many regions are trying to protect their respective manufacturers with tariffs against cheap imports from abroad. In contrast, steelworks emit many greenhouse gases. The industry is considering new factories that will no longer process iron ore with coal but with hydrogen. This protects the climate if the hydrogen is obtained with a lot of green electricity. But the new factories will cost billions and will initially be more expensive to operate than conventional blast furnaces. Many manufacturers are therefore negotiating start-up aid with the State.
Thyssenkrupp had tried in recent years to separate from the crisis-prone Rhine and Ruhr steelworks in order to focus on more stable business. But a steel merger with competitor Tata and a sale to Liberty Steel failed. Thyssenkrupp therefore plans to subcontract the division to an independent company. “There will be no decision on this until next spring,” Keysberg said.