As Europe’s leading producer of copper and alloy semi-manufactures and the world’s largest exporter, Germany’s fortunes rise and fall with the tide of business across the continent. But the first half of 2019 has not been kind, especially when compared to the more favourable market conditions that had prevailed in the opening six months of 2018. As a result, many German copper fabricators now find themselves facing the most difficult operating environment since the onset of the global financial crisis, and forced to make the same kind of difficult decisions.
Industry data is compiled and published by the Wirtchafts Vereinigung Metalle (the German Non-Ferrous Metals Trade Association). Preliminary numbers have been released for the opening quarter and they make for depressing reading. Production of copper and copper alloy semis (brass mill products) slumped 10% year-on-year to 227kt, from 252kt in the same period of 2018. Meanwhile, output of copper wire rod and wire dropped 8% to 173kt, from 192kt in the first half of last year. Taken together, this adds up to a severe 9% reduction in total semis production from 444kt to 400kt. More recently, Aurubis reported a 9% decline in its group output of shapes in the first half of this calendar year, an 11% fall in its production of flat rolled products and speciality wire and a 7% rise in its shipments of wire rod. However, the latter now includes 100% share of attributable volume from Deutsche Giessdraht compared to only 60% ownership in the prior year period.
Nor is it likely there will be any let up in pressure anytime soon as recently released data revealed a 0.1% contraction in German GDP in the April to June quarter, after modest growth of 0.4% in the first quarter of the year. Particularly concerning was a sharp slowdown in construction activity, a major end use market for copper. Equally worrying, given its importance to the German economy, has been a 12% year-on-year reduction to 2.9M units in automobile assembly in the year to July. Not only is domestic consumption soft, but there is also some very evident weakness in export demand within Europe in a number of product lines. In the year to May, export volumes of copper wire rod and drawn wire fell 12%, copper tube dropped 20%, copper sheet and strip slipped 12% and copper alloy sheet and strip plunged 23%. The continuing weakness of the flat rolled products business recently prompted Wieland to announce that it was introducing short time working at its Villingen plant from September. The last time these measures were enacted was in December 2008 during the global financial crisis.
Roskill released the first edition of its NEW report, Copper Demand to 2035, in August 2019. Click here to download the brochure or sample pages, or to access further information.