Germany's two biggest steelmakers, ThyssenKrupp and Salzgitter, have forecast sharp drops in full-year operating profit, stating that the sovereign debt crisis in the eurozone as well as rising prices for energy and raw materials still pose considerable threats, according to European media sources.
Announcing their financial results for the first quarter, ThyssenKrupp forecast a slump in operating earnings this year and Salzgitter reiterated it would be difficult to match last year's earnings figure as there were no signs of a substantial recovery in European demand for steel. ThyssenKrupp said that it is now expected that worldwide steel market will grow by less than four percent this year.
They added, however, that trading conditions are expected to improve in the remainder of the year, echoing comments from the world's largest steelmaker by output, ArcelorMittal, which last week said demand for its products is steadily improving.
The media sources note that European officials have repeatedly said the economic slump will be mild, with a recovery in the second half of this year, while Germany's economy expanded faster than expected in the first quarter. However, recent surveys point to a deeper downturn, with the drag coming from a debt-laden south, epitomized by Greece, Spain and Italy.