German Steel Sector to Stagnate in 2008?

Another article I missed through taking time off at Christmas, from Deutch Welle.

After years of record growth, Germany's key steel sector is likely to face more uncertain times as the fall in the dollar and the global credit crunch raise business risks, the nation's steel industry association said.

Speaking to the German news agency DPA, association president Dieter Ameling said that, in particular, major export industries such as the automotive field and electrical engineering were likely to be hit by a weaker dollar with automakers also scaling back demand as a result of concerns about new CO2 emission rules.

He said German steelmakers expect production to stagnate in 2008 at about 48.5 million tons of raw steel. This compares to about 48.6 million tons in 2007.

"The car industry is our most important customer but the tendency to purchase has been significantly curtailed," said Ameling, pointing to additional economic risks unleashed by the global credit crunch.

Strong demand from Asia expected

The steel industry, however, remained confident that strong demand from China and the world's leading emerging economies in Asia would continue in 2008, consequently helping to underpin investment in the domestic German steel sector.

While Ameling expects consolidation to continue in the global steel sector, he believes that the European Commission monopoly authorities would be unlikely to give the green light to the merger between the giant Australian steel producers BHP Billiton and Rio Tinto.

As a reason for continuing consolidation in the steel sector, Ameling said that unlike the car or aluminum industries -- where the top five companies together control a 50-percent global market share -- the leading five producers in the steel sector have only a 20-percent market share worldwide.

German Steel Sector to Stagnate in 2008 | Business | Deutsche Welle | 30.12.2007