Thyssenkrupp sees steel market deteriorating, M&A talks unaffected for now

Thyssenkrupp TKAG.DE has seen conditions in the steel market deteriorate markedly, the chairman of the company’s steel division said on Wednesday, but added efforts to partially sell the unit were unaffected for now.

The German conglomerate said that previously optimistic earnings expectations in the steel market had been significantly dampened by a mix of economic weakness in Germany and other markets as well as higher raw materials and energy costs.
At the same time, cheap Chinese steel imports into Europe have been an additional headache.

“Most of this is familiar to the steel industry, aware of the traditional ups and downs of the steel economy and the resulting strong fluctuations in steel prices,” said Sigmar Gabriel, who chairs the supervisory board of Thyssenkrupp Steel Europe.

Gabriel, a prominent figure of Germany’s Social Democrats who in the past served as economy minister, said unrestrained access of Asian steelmakers to Europe, along with the fact that they do not have to bear the costs of CO2 emissions, was threatening the sector’s existence.

He said that unless there are fair competition conditions through appropriate measures at EU borders there was a risk of Europe’s steel industry faltering.

Gabriel said ongoing talks about possibly selling half of Thyssenkrupp’s steel division to Czech billionaire Daniel Kretinsky were unaffected by the darkening market environment, saying these swings were common in the steel sector.

“I am sure Mr Kretinsky knows this,” he said.
Source: Reuters (Reporting by Tom Kaeckenhoff and Christoph Steitz; editing by Friederike Heine and Jason Neely)