A look at the economic situation facing German industry shows that it is not just the automotive sector that is affected. As early as August 2021, a flash survey by the German Chamber of Industry and Commerce (DIHK) revealed that supply bottlenecks were affecting the German economy across the board.

The survey reveals that as early as late summer, almost half of the companies surveyed were affected by supply bottlenecks and price increases for steel. The scale of the shortage is truly dramatic. For around 85 per cent of companies in the metal industry, the steel shortage is a problem. The construction sector and the automotive industry are also affected. Hard to believe but true: steel, stainless steel (V2A) and rust- and acid-resistant duplex steels have become scarce commodities. There is no sign of the situation easing.

No Supply Bottlenecks in Sight for Steel and Stainless Steel

On the contrary: the employers’ association Gesamtmetall warned early on that material shortages were hampering production. Whilst global demand for metal products rose significantly, missing parts and material shortages slowed production. As a result, output fell by 1.5 per cent in the spring compared with the previous quarter. In contrast, as recently as June 2021, the German government was still anticipating a robust economic upturn. There was no mention of material shortages for steels, stainless steels (V2A) and other corrosion-resistant metals.

Shortly before that, Economics Minister Peter Altmaier had even raised his economic forecast. Instead of three per cent, the German economy was set to grow by 3.5 per cent in the current year, the ministry announced. For 2022, the ministry expects growth of 3.6 per cent. The Frankfurter Allgemeine Zeitung (FAZ) quoted Altmaier as saying: “By 2022 at the latest, we will have regained our former strength. Our economy is strong, robust and ready to hit the ground running.”

Steel Imports – Subject to Quotas or Protective Tariffs

The German government’s outlook has been overtaken by market dynamics. Since then, public debate has been dominated by supply chain disruptions and fears of inflation. The German Steel and Metal Processing Association (WSM) attributes the precarious supply situation to a misjudgement. Around 80 per cent of companies are convinced that steel manufacturers, along with their customers from a wide range of industries, have underestimated economic developments. This situation is exacerbated by a shortage of import volumes. Due to strong domestic demand, China, for example, is exporting significantly less steel. And let us not forget: steel imports into the European Union (EU) are in some cases subject to quotas or protective tariffs.

Added to this is the fact that supply chains are often completely disrupted. One striking example illustrates how global trade is grinding to a halt. In August 2021, a terminal at the Chinese port of Ningbo was closed for two weeks. A single case of Covid-19 was the reason why around 1,000 employees at the world’s third-largest port were sent into quarantine.

Supply chains were disrupted, and the impact was immense: the coastal metropolis of Ningbo, with a population of 5.6 million, is home to the world’s largest container port. In 2020 alone, over 19 million containers were handled and shipped around the world. The closure of the terminal accounts for a fifth of total operations and is disrupting the supply chain. Shipping has also been affected. More than 40 huge container ships quickly became backed up at sea off Ningbo. The repercussions are felt across the globe. The Kiel Institute for the World Economy puts the figures as follows: global trade shrank by just under two per cent compared to the previous month. Incidentally, another indicator of the disruption to supply chains is the sea freight capacity on the route through the Red Sea. The not-so-good news from there is that 20 per cent less is currently being transported than expected.

No Improvement in Steel and Stainless Steel Supply Expected

Following the hardships caused by the coronavirus pandemic, the problem of disrupted supply chains is now being compounded by high consumer demand. For example, in June 2021, the US imported 20 per cent more goods than in the same month the previous year. This enormous demand is meeting empty warehouses at manufacturers. This is inevitably having an impact on supply chains. This leads to the so-called bullwhip effect. This means that if orders at retailers increase, this leads to larger order volumes at the other end of the chain. In anticipation of rising demand, retailers and intermediaries are, in a sense, ordering to build up stock. Combined with port closures, the bullwhip effect is actually exacerbating the logistical situation on the world’s oceans.

RFSG – Reliable Delivery of Stainless Steel

The bullwhip effect cannot be completely prevented in dynamic supply chains, but it can be mitigated. To achieve this, all players along the supply chain must communicate closely with one another and ensure transparency in ordering processes. An approach that is a tradition at RFSG. Not least due to its ability to supply stainless steel blanks and duplex steels, the company from the Siegerland region enjoys a reputation that extends far beyond the region. Medium-sized in structure and modern in orientation – this is the motto with which RFSG maintains its position in the markets. An approach that is proving its worth right now.

The synergy between its own high-bay warehouse, seamless logistics services and Europe-wide order processing gives RFSG considerable scope for action in the current situation. Rust- and acid-resistant stainless steels and duplex steels are available from RFSG. The importance of delivery capability in light of the situation on the global markets is demonstrated by the fact that RFSG is currently receiving a veritable flood of enquiries. In some cases, the availability of stainless steel even takes precedence over price.

Rust- and Acid-Resistant Stainless Steels and Duplex Steels from Europe

Foresight combined with consistent digitalisation are proving to be the right steps to take in order to meet the challenges of the markets – and the global economy. RSFG has, for some time now, operated its own online stainless steel shop. The experience has been extremely positive – as has the feedback from customers. Another

decision has also proved beneficial: the early move to reduce reliance on international markets. All our sheets come from Europe – a decisive advantage, as is currently being impressively demonstrated.

Back

Any Questions?

We are here to help

Contact

Fields
Message
Privacy Policy
captcha
Send