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German Steel Slump Deepens: Production Cuts Signal Procurement Risks

Germany’s steel industry faces continued headwinds as evidenced by declining production figures and fluctuating plant activity. The situation is underscored by news articles such as “Germany reduced steel production by 6.4% y/y in May” and “German crude steel output down 10.8 percent in Jan-May 2025,” both citing significant year-on-year drops. These production cuts appear to be reflected in the satellite-observed activity levels, particularly at the Salzgitter Flachstahl plant, as described below.

Measured Activity Overview

Bar chart and satellite map of steel production activity in Germany

Across Germany, the mean steel plant activity has fluctuated, peaking in May and decreasing again in June. Hüttenwerke Krupp Mannesmann (HKM) has consistently operated above the national mean. Salzgitter Flachstahl shows a marked decrease in activity from January to June, dropping from 24% to 16%. AG der Dillinger Hüttenwerke’s activity remained relatively stable over the period.

Hüttenwerke Krupp Mannesmann (HKM) steel plant

Located in North Rhine-Westphalia, HKM operates as an integrated BF/BOF steel plant with a crude steel capacity of 6 million tons. Satellite data reveals that HKM’s activity levels have consistently remained above the German average, reaching 47% in June, the highest level observed in the provided data. While “Germany reduced steel production by 6.4% y/y in May” indicates a general downturn, HKM’s performance suggests localized resilience, potentially related to specific product demands or operational efficiencies.

Salzgitter Flachstahl steel plant

Salzgitter Flachstahl, based in Lower Saxony, is another integrated BF/BOF steel plant with a crude steel capacity of 5.2 million tons. Notably, Salzgitter’s activity has declined steadily from 24% in January to 16% in June. This drop aligns with the broader production decline reported in “German crude steel output down 10.8 percent in Jan-May 2025,” but the magnitude of the activity reduction suggests that Salzgitter may be experiencing challenges beyond the overall market trend. It is important to note that Salzgitter is transitioning its BF plants to DRI and switching to entirely hydrogen-based steel by 2050 as part of its Salcos Green Steel project; however, there is not enough information to establish a correlation between this project and observed recent production declines.

AG der Dillinger Hüttenwerke Dillingen steel plant

AG der Dillinger Hüttenwerke Dillingen, situated in Saarland, possesses a crude steel capacity of 2.76 million tons, operating via the BF/BOF route. Its activity levels have remained relatively stable between 33% and 41% throughout the period, with a slight decrease in June. While this plant also felt the impact of the overall market challenges as reported in “German crude steel output down 10.8 percent in Jan-May 2025,” its steady activity compared to Salzgitter suggests greater stability or different market focus.

Evaluated Market Implications

The news articles “Germany reduced steel production by 6.4% y/y in May” and “German crude steel output down 10.8 percent in Jan-May 2025,” combined with the observed activity reduction at Salzgitter Flachstahl, point to potential supply disruptions, particularly for hot and cold rolled products sourced from this plant.

Recommended Procurement Actions: Steel buyers should immediately:

  1. Diversify sourcing: Given the significant activity decrease at Salzgitter Flachstahl, prioritize diversifying suppliers for hot and cold rolled products to mitigate potential delivery delays or price increases.
  2. Negotiate Price & Contract terms: In anticipation of potential supply shortages driven by overall market downturns, proactively negotiate prices and contract terms, securing supply agreements with alternative sources, especially for products traditionally sourced from Salzgitter.
  3. Monitor HKM Performance: Given that Hüttenwerke Krupp Mannesmann (HKM) steel plant has seen high activity, monitor this plant closely as an alternative supply source.