ArcelorMittal stops Green Steel: Shock for the German steel world!

ArcelorMittal stops Green Steel: Shock for the German steel world!

ArcelorMittal, one of the world's largest steelmakers, is halting its plans to produce green steel in Germany. The background: high energy costs make the implementation of these innovative projects uneconomical. This reports Marketscreener.com, and it's a further blow to the already struggling German steel industry, which has been in recession for some time.

Despite these difficulties, Germany remains one of the largest steel producers in the world. The annual production volume is currently around 37 million tonnes. Steel consumption per capita was around 337 kilograms in 2023, which shows that the population's demand for steel products remains unbroken. The steel industry's recent sales were around 45 billion euros, which accounts for around 37 percent of the German metal industry's total sales Statista informed.

Steel industry factors

The developments in the German steel industry are in the context of a global market that has changed significantly in the last few decades. Thomas Brenner of Salzgitter AG reports that German steel mills have come under increasing pressure as overcapacity and falling prices have been a serious problem since the 1960s. Many steelworks, especially in the Ruhr area, have already had to close, leading to a drastic decline in production facilities. Although the number of employees in the steel industry has been relatively constant over the last 15 years, they have been trending downward since 2020.

It also currently shows that the steel price index has risen from 66 points in 2016 to 108 points in 2024. This price development highlights the challenges facing the industry. While thyssenkrupp AG had to close several locations and recorded sales of around 35 billion euros in 2023, the lowest in the last 20 years, companies like Salzgitter AG must make the right decisions to remain competitive.

The search for sustainable solutions

A promising aspect remains the focus on sustainability. Steel production is responsible for around a third of German industry's emissions. Innovative approaches, such as the hydrogen method being discussed by thyssenkrupp, could help reduce these emissions. Recycling is also very important, as around 14.9 million tons of steel scrap were recently recycled in Germany to produce new crude steel, which makes both economic and ecological sense.

Salzgitter AG's share price is currently at EUR 19.64, with a pleasing upward trend of 24.37 percent year-on-year. Experts see an average price target of EUR 23.18, which means a distance of +20.97 percent from the current price FT.com reports. In this solid position, Salzgitter AG must now address the challenges of the industry and set a strategic course to secure a successful future.