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German Steel Federation sees crude steel output flat in 2012

The German Steel Federation said that Germany's crude steel output will probably remain almost flat in 2102 as the euro zone debt crisis starts to affect the economy of Europe's largest steelmaker, and the risk of rising raw material prices weighs.

It added that crude steel production in 2011 rose by 1% to 44.3 million tonnes, affected by a summer dip in demand that deepened into a second half slump that forced capacity cuts in steel mills.

Federation president Mr Hans Juergen Kerkhoff said that "We expect crude steel production in 2012 at around 44 million tonnes. The production will substantially remain stable."

He said demand would be supported by major end clients, such as the automotive and engineering sectors, and that the construction segment was expected to grow further in 2012.

But he warned that raw material costs pose a downside risk despite recent slight price reductions for iron ore and coking coal, key inputs in steel making.

Germany's biggest steelmaker, ThyssenKrupp, and other European steel companies have announced some production cuts in the face of weaker demand, and more furnaces are likely to be idled in coming months.

Some producers in the region have announced restarts and even an expansion, but curtailments are widely seen as likely to dominate as customers prefer to run down their inventories in an uncertain economic environment.

Sourced from reutetrs.com

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