Germany

The German economy recorded a slight decline in the fourth quarter of 2024. Neither domestic demand nor exports showed dynamic growth, while high levels of uncertainty weighed on the economic environment. Industry in particular was under pressure: production fell, the business climate deteriorated and orders in the mechanical engineering and automotive sectors declined despite a major order in shipbuilding. Companies acted cautiously, which further inhibited investment. Job losses in the manufacturing sector and subdued inflation dampened consumer confidence, while positive impetus from the service sector only provided limited support for the economy as a whole.

Political uncertainties also made the situation more difficult. A new German government is not expected until spring 2025, and the international trade situation remains tense owing to the re-election of Donald Trump as US President and to possible tariff increases on EU imports.

The German steel industry remained under considerable pressure towards the end of 2024. Despite a slight increase in crude steel production, the annual total remained well below 40 million tonnes. Weak demand from the automotive and mechanical engineering sectors and subdued construction activity weighed on the market. High inventories and stagnating or falling prices, particularly for flat steel products, put pressure on producers’ margins. In addition, high electricity costs led to interruptions in production, particularly at electric steel plants.

International trade faced further uncertainty: the re-election of Mr Trump and potential tariff increases on EU imports could result in an additional negative impact on exports.

Meanwhile, Germany’s recycled steel market encountered a difficult environment in the fourth quarter of 2024. Prices continued their downward trend, exacerbated by weak demand and production cuts in the steel industry. In particular, manufacturers of high-quality steels reduced their production owing to falling order backlogs. Inflows of recycled steel also declined, especially for new grades such as swarf. In December, high electricity costs and public holidays led to further production stoppages, which further depressed demand. At the end of the year, recycled steel stocks along the value chain reached historically low levels as many consumers stocked up for the coming year. Overall, the market continued to be characterised by uncertainty and limited availability.