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European Steel Market Stalls: Production Declines in Germany and Italy Amidst Global Slowdown

European steel production faces headwinds as evidenced by recent reports. According to the news article titled “Germany reduced steel production by 10.1% y/y in April,” German steel production experienced a significant year-over-year decline. Similarly, the article “Italy reduced steel production by 10.8% m/m in April” indicates a substantial month-over-month decrease in Italian output, though year-over-year figures showed an increase. The satellite-observed activity at specific steel plants, as detailed below, provides further insight into these regional trends. No direct relationship between observed plant activity and the Italian report could be established.

Measured Activity Overview

Bar chart and satellite map of steel production activity in Europe

The mean steel plant activity in Europe is showing an erratic trend. Donetsksteel Metallurgical Plant shows a slowly increasing trend, rising from 12% in March to 16% in May. SIJ Acroni Jesenice steel plant activity increased significantly, reaching 62% in May. SSAB Raahe steel plant also shows an upward trend from March (17%) to May (34%). Due to the obvious data issues with the mean steel plant activity in Europe, no conclusion can be drawn comparing it to any individual steel plant.

Donetsksteel Metallurgical Plant

Donetsksteel Metallurgical Plant, located in Donetsk, Ukraine, primarily produces pig iron using integrated (BF) process with a BF capacity of 1500 ttpa. Although satellite data indicates a slight increase in activity from 12% in March to 16% in May, it’s important to note this plant already operates at a reduced capacity given the regional instability. This observation aligns with the broader context of the “Global steel production fell by 6.3% m/m in April” news article, which notes that the CIS+Ukraine region saw production decreases. The increase in activity at this specific plant contradicts the global trend for the region, though the increase is minimal and the plant has been operating at low production levels since the start of the measurements.

SIJ Acroni Jesenice steel plant

SIJ Acroni Jesenice steel plant in Slovenia, a smaller EAF-based producer with a crude steel capacity of 726 ttpa, focuses on flat rolled steel products. Satellite observations show a notable increase in activity at the plant, from 40% in March to 62% in May, indicating a potential ramp-up in production. No explicit connection to news articles can be established.

SSAB Raahe steel plant

SSAB Raahe steel plant in Finland, an integrated BF-BOF producer with a crude steel capacity of 2600 ttpa, produces hot-rolled coils and billets. The satellite-observed activity at SSAB Raahe shows an increase from 17% in March to 34% in May. The increased activity at SSAB Raahe doesn’t appear to be directly linked to any of the provided news articles.

Evaluated Market Implications

The article “Germany reduced steel production by 10.1% y/y in April” and the article “Steel sales in Germany decreased by 5% in April, inventories decreased” both suggest a softening of the German market. The production in Germany decreased by 10.1%, while steel sales also saw a decrease in April. This suggests a market-wide reduction in demand.

Procurement Action:

  • Buyers should monitor German steel prices closely, as further production cuts could lead to price volatility, despite low demand. Buyers who rely on German steel products should seek to diversify their supply base.

  • With the recent increase in activity at SSAB Raahe, Finnish products may be available to substitute German steel products.