FRANKFURT (Reuters) - Germany’s second-largest steel maker Salzgitter (SZGG.DE) said on Wednesday that it expects to post a significant 2020 pre-tax loss, most likely of more than 100 million euros ($109 million), as the coronavirus pandemic weighs on its business.
Steel demand is plunging as many sectors are facing the threat of a recession, Salzgitter said, adding that key customers such as the automotive industry are bracing for a decline of more than 80%.
“The stabilising tendencies on the European steel market came to an abrupt end with the restrictions placed on the economy due to the COVID-19 pandemic,” Salzgitter said as it slipped to a first-quarter pre-tax loss of 34 million euros from a year-earlier profit of 126 million.
The company curbed production, put staff on short-time work hours and has put some investments on ice. Hundreds of managers have agreed to voluntary salary waivers.
However, Chinese steelmakers have not curbed steel production, are building high levels of inventory and could flood the European market once demand recovers, Salzgitter warned, calling on the European Union to reduce import quotas.
Reporting by Arno Schuetze; editing by Jason Neely