HomeBricks & MortarGermany Faces Challenges Despite 5.2% Steel Production Growth in 2024

Germany Faces Challenges Despite 5.2% Steel Production Growth in 2024

Germany Faces Challenges Despite 5.2% Steel Production Growth in 2024

Germany’s steel industry saw a 5.2% increase in production in 2024, reaching 37.23 million tons compared to 2023. This growth, reported by the German steel association WV Stahl, reflects an ongoing recovery in steelmaking, driven by increased output in both oxygen converters and electric arc furnaces. Despite this rise, steel production has remained below the critical 40 million-ton threshold for the third consecutive year, signaling a continued struggle for the sector, with production levels still far from pre-recession standards. The report highlights that while production increased, demand for steel in Germany remains weak. Market supply is expected to drop by 7% year-on-year, reaching a historic low of just 27 million tons. This decline in domestic demand reflects a broader issue in the German market, where steel consumption has shrunk by nearly a third since 2017, in contrast to growth in other industrialized nations within the EU.

In terms of steelmaking methods, production via oxygen converters increased by 3.3% to 26.42 million tons, while output in electric arc furnaces (EAF) rose by a larger 10.2% to 10.82 million tons. This shift toward electric arc furnaces could be a sign of industry adaptation in response to ongoing environmental and cost pressures, as the EAF method uses less energy and can incorporate recycled materials. In December 2024, steel production in Germany rose by 4.1% year-on-year, totaling 2.74 million tons, though it decreased by 5.7% compared to November 2024. Notably, oxygen steel production increased by 5.9% from December 2023, while production from electric arc furnaces fell by 3.1% year-on-year, reflecting the challenges posed by rising electricity costs.

One significant concern for German steelmakers, according to WV Stahl CEO Kerstin Maria Rippel, is the surge in cheap steel imports from third countries, particularly China. The rising imports, alongside Germany’s uncompetitive electricity costs, threaten the viability of many steel businesses. The 2024 increase in electricity prices alone cost German steel companies an additional €300 million, exacerbating financial pressures. Rippel called for urgent action from both Berlin and Brussels to address these challenges, urging the German government to restore €5.5 billion in subsidies for grid tariffs and to take a stronger stance in the EU on trade protection. Rippel emphasized that the steel industry’s survival depends on decisive action, warning that mere discussions would not suffice, particularly as steel imports continue to flood the European market.

Experts like Martin Theuringer, Managing Director and Chief Economist at WV Stahl, also stress the need for fresh economic stimuli to revive steel demand and production in Germany. The ongoing risks from foreign trade policies, particularly with the U.S. and China, further complicate the outlook. Steelmakers in Germany face significant headwinds, and a comprehensive strategy to strengthen investment conditions and counteract foreign competition is critical to sustaining the industry’s future. As one of the world’s top ten steel producers, Germany remains a key player in the global steel market. However, its struggles to adapt to shifting economic and trade conditions underscore the pressing need for policy intervention and innovation within the industry.

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