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Wednesday, Feb 05, 2003

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German steel industry to hold output at '02 level

Indrani Dutta


THE German steel industry is planning to maintain its 2003 production at the level of 2002, even as the market leader Arcelor is planning to downsize its workforce.

Prof. Dr A. Ameling, Chairman of the German Iron and Steel Institute, told Business Line that this production planning, which would restrict production around 44.9 million tonnes against 45 million tonnes of 2002, was being planned on the basis of the forecast given by customers. "This is all that the market can take'', he said.

The automobile sector which, with a consumption of 11 million tonnes was the biggest buyer, was preparing for a negative growth rate of one per cent as was the construction sector. The machinery sector and the electrical goods sector were planning for marginal growth in production.

Dr Ameling, who was here in for a steel seminar, said that worldwide overcapacity was not that high. "On the higher side it might be about 100 million tonnes which needs to be cut - but is not in the range of 200 million tonnes as was being estimated''. However, the German expert who is also the President of the German Steel Union, said that although within the European Union there were no subsidies, in other countries there were subsidies which needed to be cut.

The German steel industry has overcome its problem of low prices and all the companies including majors like ThyssenKrupp, Saltzgitter and Arcelor were in the profit mode. "However, one would like the margins to improve further and cost cutting, along with increased prices were being relied upon to boost the bottom line'', he said. Another round of price increase of around 100 euros per tonne has been announced the by the country's steel majors for the first quarter of 2003.

Market leader Arcelor is also planning a price increase from April even as it is looking at cost cutting as part of its restructuring exercise. The industry employee strength of 1,00,000 is set to decrease by around 2,000 mostly one account of downsizing at the three plants of Arcelor.

As for any import restrictions, Dr Ameling said that although Germany did have some minimal restrictions by the way of tariffs on imports from the Third World, exports from these countries have not reached the requisite level as yet.

Asked to comment on the Indian scene, he said that although he had not studied it in detail, it seemed that a big chance was emerging for the steel manufacturers especially in the infrastructure sector.

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