As a result of the sustained pressure on commodity prices and continuing geopolitical risks, investments in metal production have remained at a low level, says the German engineering federa- tion Verband Deutscher Maschinen- und Anlagenbau’s (VDMA’s) Metallurgical Plants and Rolling Mills specialist association.
VDMA Metallurgical Plants and Rolling Mills specialist association MD Dr Timo Würz comments that, against the backdrop of the relatively high level of sales in 2014, German metallurgical plant and rolling mill equipment producers experienced a double- digit fall of 31% in sales in 2015.
“Order levels have been falling since the autumn of 2014. In all regions, producers of machinery and equipment for the metallurgy sector recorded an average 26% fall in orders received. As a result of the sustained pressure on commodity prices and continuing geo- political risks, investments in metal production remained at a low level,” asserts Würz.
He points out that in the context of global overcapacity in the steel and aluminium industries – especially the very high production volumes in China – global demand for metallurgical plant and rolling mill equipment was subdued.
“In the current year, we again expect a double- digit fall. We cannot exclude the possibility that sales may decline by as much as 25% as new orders generally only have an impact on sales in subsequent years. Currently, we see the main potential in the North American Free Trade Agreement (NAFTA) region and in certain South-East Asian markets,” outlines Würz.
Moreover, he notes that, in line with overall developments, annual average production fell to a value of slightly more than €1.5-billion in 2015, 22% below the figure for the previous year.
He adds that, on the basis of figures provided by respondents to the Munich-based ifo economic institute survey in the metallurgical plant and rolling mill sector, capacity use has fallen since the beginning of the year, compared with the average for 2015. “In April, capacity use was 75%.”
Germany Remains Third
Würz highlights that, on the basis of the export data of the five largest supplier countries – China, Italy, Germany, Japan and the US – the specialist association estimates that there was a further slight fall of about 2% in world trade, in addition to exports by German suppliers of metallurgical plant and rolling mill equipment falling by about 6% in 2015.
He explains that Germany remained the third-largest exporter, after China and Italy, with a volume of €740-million. German exports to China and South Korea grew by 14% and 62% respectively in 2015.
“As in the previous year, deliveries to Spain also increased, by 117%. Exports to the US stagnated by 1%. Deliveries to Brazil almost doubled from a low level, while there was a decline in sales to Russia (down 14%), as expected,” Würz illustrates.
No Upturn in Sight
Further, Würz notes that, as the export figures show, German manufacturers of metallurgical plant and rolling equipment have good prospects of maintaining their strong position on world markets with “innovative” technologies and services.
He adds that German metallurgical equipment producers are also in demand for moder- nisation projects and environmentally compatible plant modifications.
However, Würz concludes that there will be few major projects in the metal production sectors in 2016 as a result of continuing geopolitical risks, volatile commodity prices and the difficult situation in the global steel and aluminium industries.