German steel production expected to decrease in 2019

by David Fleschen

The RWI Leibniz Institute for Economic Research expects domestic demand for steel in Gemany to fall by 1.8 percent this year. Accordingly, raw and rolled steel production is likely to decline for the second year in a row. Capacity utilization at German steel mills is expected to continue to decline slightly, but at 84 percent, they will remain high by international standards. While employment in the German steel industry actually increased last year despite unfavorable conditions, it is likely to decline by 1.8 percent this year. Global crude steel production is expected to increase by only 1.8 percent this year, leaving the problem of overcapacity unresolved.

These are the most important results of the RWI report:

In its current steel report, RWI expects global crude steel production to increase by just 1.8 percent a year. Last year it had grown by 4.7 percent. Capacity utilization is expected to increase slightly this year, however, as production capacity is unlikely to expand. However, at just under 75 percent, it is likely to remain fairly low in the longer-term comparison. There is still overcapacity, and in all probability generation can not "grow into" it.

The economic conditions for the German steel industry are currently unfavorable. The production of the most important steel users is only increasing moderately. The current problems of the automotive industry have a dampening effect. At the same time, foreign business is burdened by the increase in protectionist measures in the steel sector. As a result, demand for steel is expected to fall 0.6 percent this year, with demand for steel on the market actually dropping by 1.8 percent due to full bearings.

German rolled steel production is expected to decline by 1.4 percent in 2019, having already fallen by 2.6 percent in 2018. Crude steel production is expected to decline by 1.7 per cent and by 2018 has also already fallen by 2 per cent. Capacity utilization at German steel mills is likely to continue to fall slightly, but at a good 84 percent, they will remain high by international standards.

The decline in crude steel and rolled steel production has not yet impacted employment, and even increased last year. For 2019, however, a decline in employment of 1.8 percent is emerging.

Commenting on the situation of the German steel industry, RWI Chief Economist Roland Döhrn says: "Despite a weakening steel economy, the German steel industry has performed well so far. Falling capacity utilization is likely to affect employment this year. "

Source: RWI, photo: fotolia

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