German Steel Federation WV Stahl has warned of risks related to a rise in raw materials, but reiterated its cautiously optimistic outlook for steel production in 2010.
Mr Hans Juergen Kerkhoff president of WV Stahl said that there are few downside risks to the forecast for German steel production growth of 10% to 15% to between 36 million tonnes and 38 million tonnes.
He cited as a positive development German raw steel production of 3.4 million tonnes in January, an increase of almost 28% on the year. He added that clients have stopped destocking their inventories and resumed buying, but there is unlikely to be strong restocking in Germany this year.
Nevertheless, Mr Kerkhoff said the situation on the raw materials market is very worrying, and represents a risk to a sustainable upturn. He added that "The gap between raw materials prices and steel prices is widening."
He noted that in particular the expected rise in iron ore and coal prices and the price of scrap steel also jumped by 35% from its low in June 2009 to February 2010.
Mr Kerkhoff also criticized the planned iron ore joint venture between BHP Billiton Limited and Rio Tinto Limited in Western Australia and called on regulatory authorities to put a stop to it. Germany's Federal Cartel Office and the European Commission, the European Union's top antitrust authority, are also investigating the planned JV.
Germany produced 45.8 million tonnes of raw steel in 2008, but the commodity market's performance means this year's steel production forecast is far more cautious.