German steelmakers are beset with problems. Sluggish demand, rising Chinese imports and falling prices are depressing their current performance. The sector’s green transformation, instead of offering a brighter future, poses another threat to their long-term competitive position.
For evidence of this tightening steel trap, look no further than Thyssenkrupp. It is embroiled in the complex carve-out of its steel unit, in which Czech entrepreneur Daniel Křetínský has bought a 20 per cent stake and is in talks over a further 30 per cent. The unit is performing poorly: operating profits nearly halved in the third quarter. It faces overcapacity as its core German automaker client base loses market share. Thyssenkrupp is involved in a tussle with the steel unit’s management over how much of a dowry to provide it.
Meanwhile, Thyssenkrupp Steel has undertaken to switch from coal to renewable hydrogen. This is a costly proposition.