The Cologne Institute of Economics (IW Cologne) called for maintaining steel production in Germany and Europe and warned against postponing entire production stages.
In a recent study reviewed by Kallanish, issues such as high energy costs and low availability of hydrogen are discussed against the backdrop of the transition to steel production. Some European companies doubt the expediency of switching to DRI technology, recommending leaving pig iron production in countries with a high level of energy supply, for example, in the Middle East.
IW Cologne emphasizes that the German manufacturing industry is closely linked to the value chain, which is characterized by international sustainability and significant exports. If individual links in the chain fall apart, others will follow. According to IW Köln, half a million jobs in Germany are directly dependent on the steel industry, including suppliers and direct consumers. If we also take into account the auxiliary industries of metallurgy, this figure may grow to 5 million jobs, the institute notes.
It also highlights the importance of regional proximity between business partners and highlights security as one of the factors. Many foreign countries with low electricity costs lack other basic prerequisites, such as political stability and a functional transport infrastructure.
IW Cologne recognizes that the import of hydrogen and sponge iron may play a role in the German steel industry, which may need to restructure its supply chain. In an article posted on LinkedIn, Salzgitter CEO Gunnar Grobler agrees with IW's conclusions. "A comparison limited by production costs is short-sighted. This does not take into account the overall costs, risks and reliability of supplies," he writes.
A functional closed-loop economy in Europe will only work over short distances, as transportation costs become an increasingly important factor, Grobler writes. - You can always buy your steel cheaper somewhere else. But what is the cost of losing production capacity? He's asking.
Author: Christian Kel,
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