German steel looks to 2013 for reinforcing profits

Weak demand and rising costs have weighed heavily on German steelmakers in 2012, but industry officials see signs of a recovery emerging. Rising competitiveness will help German steel to more solid profits, they believe. Germany's steel industry is in for a modest upswing next year, after sales slumped 4 percent to 42.5 million tons in 2012, the Wirtschaftsvereinigung Stahl industry lobby group announced Tuesday. The group said it expected steel production to expand slightly to 43 million tons as key customers such as the automobile industry and construction equipment makers had substantially reduced inventories in the course of 2012. "Notably in the first quarter of 2013, customers will seek to replenish stockpiles," the group said, with German steel production likely to get an additional boost from an increase in global demand, expected for the second half of next year. Wirtschaftsvereinigung Stahl predicted 4 percent higher global steel demand in 2013 with worldwide production coming in at around 1.6 billion tons. However, overcapacity in the global steel market of 200 million tons would continue to put pressure on margins, with the world's biggest producer China expected to push more of its low-cost steel into markets. Amid fierce global competition, German steelmakers were doing relatively well, the group found. The industry was running at about 85 percent of its capacity, which was 10 percent more than those of its global competitors.