The same applies to steel, which is found in so many industrial products: the weal and woe of suppliers in 2022 will depend to a large extent on energy and raw material security. Salzgitter AG’s high prices for finished steel are still playing their part – as long as gas is not stopped.
The strong demand for steel in sectors such as the automotive, mechanical engineering and construction industries means that Germany’s second largest manufacturer, Salzgitter, earns significantly more. Lower Saxony’s group profit increased in the first quarter compared to the previous year from EUR 76.6 million to EUR 368.8 million – almost five times as much. One reason is the high prices that are currently being asked in the midst of the rise in prices for various commodities.
After a period of weakness, the steel economy had picked up again before the start of the war in Ukraine. However, Salzgitter remains cautious, as Thursday’s interim report shows. CFO Burkhard Becker emphasized that “primarily price and supply risks for energies” must continue to be observed.
The group recently increased its profit forecast for the future. However, this is subject to the condition that the costs of purchasing energy and basic resources do not increase any further and that the supply of natural gas does not fail. The uncertainty in connection with the war can hardly be estimated in concrete terms.
As early as April, Salzgitter AG pointed out the great importance of gas as a source of energy for German industry after the Federal Ministry of Economics and Technology had declared the early warning level of the gas emergency plan: “Without natural gas, no steel production.” One is in the process of limiting the use to the minimum possible.
Natural gas has been an indispensable raw material for generating electricity and heat not only for households, but also in many sectors. Hydrocarbons such as methane often also flow into chemical products.
Salzgitter’s earnings before taxes rose from EUR 117.3 million to EUR 465.3 million in the first quarter of the year – a new record. In addition to the core business with steel, the trading division and the stake in the Hamburg copper group Aurubis also contributed to this. External sales increased by around 60 percent to EUR 3.35 billion in the first quarter.
The surpluses are also needed for investments with which Salzgitter is preparing for the production of “green” steel in the medium term. Instead of climate-damaging coking coal, hydrogen is used, which in turn has to be obtained from water or ammonia, which requires a lot of electricity. By 2033, the conversion should be implemented with a targeted CO2 saving of more than 95 percent.