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Thyssenkrupp has warned that Donald Trump’s steel tariffs could deepen Europe’s overcapacity problems by squeezing the bloc’s exports while prompting Chinese producers to flood the market with even more shipments.
Jens Schulte, chief financial officer of the steelmaker, told reporters on Thursday that the company would analyse “over the next couple of months” the indirect impact of the tariffs, which the US president announced on Monday.
Schulte said the tariffs, of 25 per cent on all imports of steel and aluminium into the US, could prompt the world’s largest steel exporter to divert excess output to Europe.
“It is possible that the Chinese players that deliver into the US today, and will now face higher tariffs, could try to deliver more into Europe,” Schulte said.
European steelmakers last year called on EU regulators to take action over cheap Chinese imports as prices fell below the cost of production amid elevated energy costs in the region.
Thyssenkrupp’s steel business — once a jewel of German industry — has suffered from a slump in European demand, driven by lower production by the region’s carmakers.
In November, it announced a plan to slash 11,000 jobs — roughly 40 per cent of the Duisburg-based steel division’s work force — as it sought to reduce its production capacity by up to a quarter.
Over the past two years, Thyssenkrupp has slashed the value of its steel unit by €3bn through a series of writedowns. At the same time, the company has been locked in negotiations with Czech billionaire Daniel Křetínský, whose plan to raise his stake in the steelmaker from 20 to 50 per cent has dragged on.
Schulte made his comments after Thyssenkrupp on Thursday said an advance payment of €1bn to its naval division for a large submarine contract meant it expected cash flow before mergers and acquisitions to reach €300mn this year. The figure is a significant improvement on its previous guidance of a loss between €200mn and €400mn.
Thyssenkrupp’s shares were up 9 per cent in mid-morning in Frankfurt on the news.
Miguel López, Thyssenkrupp’s chief executive, said in a statement the company was “working hard” on the planned spin-off of its naval business Thyssenkrupp Marine Systems.
The company developed plans to list a minority stake in the business after US private equity group Carlyle in October withdrew its interest in a partial takeover. Berlin had been hesitant over the potential sale of a strategically important company to a foreign entity.
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