A gloomy outlook from Germany’s two biggest steelmakers, ThyssenKrupp and Salzgitter.
They are downbeat about earnings for the rest of the year believing the eurozone crisis will hit spending on factories and new equipment reducing demand for steel in the region.
Both posted quarterly losses and ThyssenKrupp said it now expected the worldwide steel market to grow by less than four percent this year.
ThyssenKrupp forecast a slump in operating earnings this year and Salzgitter reiterated it would be difficult to match last year’s earnings figure.
Data showed on Monday that strong industrial production in Germany in March could not make up for a slide in output across the rest of the eurozone, signalling an oncoming recession may be worse than expected.
For ThyssenKrupp, the European slump comes on top of problems it has been having at its Steel Americas business, where cost overruns at mills in Brazil have caused losses.
The company posted a net loss of 587 million euros in its fiscal second quarter through the end of March, down from a year-earlier profit of 272 million, due to another loss at Steel Americas and a mix of sliding prices and weak demand in Europe.
Salzgitter, Germany’s second largest steelmaker, posted a slightly bigger than expected quarterly loss as pricing pressure caused a loss at its steel business and it sold fewer large-diameter tubes such as gas pipelines.