Steel production falls to a historic low in 2023
Weak demand, combined with high and internationally uncompetitive electricity prices, has caused German steel production to fall to a historically low level in 2023. The downward trend in crude steel production was also recorded in December 2023. Compared with the previous year, output fell by 2.3 per cent. This means the downward trend that has persisted since early 2022 continues. In the fourth quarter of 2023, production was around 5 per cent below the corresponding level of the previous year.
A total of just 35.4 million tonnes of steel was produced in Germany in 2023. This is the lowest production volume since the 2009 financial crisis. At that time, however, production rebounded quickly following a severe slump caused by the recession.
Steel production in electric arc furnaces fell particularly sharply last year. With a decline of around 11 per cent to 9.8 million tonnes, it even fell below the low point reached during the financial crisis. At that time, electric arc furnace steel production stood at 11.3 million tonnes. A weak construction sector, combined with high electricity prices, has taken a particularly heavy toll on this electricity-intensive production method. However, oxygen steel production was also only able to stabilise last year, and even then at an extremely low level.
Kerstin Maria Rippel, Chief Executive of the German Steel Association, commented: “The annual figures for steel production in Germany clearly show that the situation for the steel industry – and in particular the electric steel production route – is very serious. There remains an urgent need for political action here: most acutely regarding electricity costs, which are still uncompetitive and – with transmission grid charges having doubled since the start of the year – are higher than ever before.”
The federal government must also urgently put the financing of the transition to climate neutrality – which has been hanging in the balance since the Federal Constitutional Court’s ruling on the Climate and Transformation Fund – on a sound financial footing, Rippel continued: “We need a clear political strategy on how the path to climate neutrality is to be sustainably financed. This is a key element in driving forward the transformation of the steel industry and the decarbonisation of our country as a whole.