Economic environment
Europe
Despite the pressures caused by the conflict in the Middle East, the European economy proved more resilient than expected in the first half of the 2026/27 business year and recorded modest growth overall. Supporting factors included the robust labor market and the increasingly effective stimulus from expansionary fiscal policy, particularly in the areas of defense and infrastructure.
Industrial production remained at a low level. Although there were initial signs of a recovery, these were not yet firmly established due to persistently subdued order intake. The construction sector received a slight boost, particularly from civil engineering.
The European Central Bank continued its shift in monetary policy during the first half of the 2026/27 business year and raised key interest rates again in September 2026. The decisive factor was the rise in inflation resulting from higher energy prices, which reflected the ongoing tensions in the Middle East. The ceasefire agreed upon in April 2026 proved fragile, and shipping through the Strait of Hormuz was once again severely disrupted starting in July 2026. Oil and gas prices recently rose again, weighing on purchasing power and consumer confidence.
Ongoing trade tensions with the U.S. also weighed on the economy. In particular, the 50% tariffs on steel imports, which remained in effect, continued to dampen the export momentum of European steel producers.
Positive momentum came from the EU safeguard measures in effect since July 2026. Together with the Carbon Border Adjustment Mechanism (CBAM), they reduced import pressure and supported European steel price levels. The trend in steel prices during the summer months supports expectations for the second half of the 2026/27 business year.
Demand from the construction, mechanical engineering, and steel construction sectors remained subdued. The automotive industry continued to present a mixed picture. While voestalpine was able to maintain its strong market position in the flat steel segment thanks to high product quality and on-time delivery, the market environment for the Automotive Components business unit remained challenging. Rail systems, aerospace, and warehouse technology, on the other hand, continued to show positive development.
North America/USA
The U.S. economy performed solidly in the first half of the 2026/27 business year. Key drivers were private consumption—boosted by tax refunds—and robust investment in technology and artificial intelligence. Commercial construction investment and industrial production, however, showed weaker performance, and momentum in the labor market slowed. As a net exporter of energy, the U.S. was comparatively less affected by the conflict in the Middle East and significantly increased its sales of crude oil and liquefied natural gas. In light of inflation that remained well above the target level, the Federal Reserve raised the benchmark interest rate in September 2026 for the first time since 2023.
For voestalpine’s North American sites, the tariffs had a dampening effect on ordering activity. Demand for products for the oil and gas industry was weighed down by trade restrictions, despite the favorable environment for the U.S. energy sector. The environment also remained challenging for the Automotive Components business unit. Aerospace, Railway Systems, and Warehouse & Rack Solutions, on the other hand, were stable sources of revenue.
South America/Brazil
The Brazilian economy, the voestalpine Group’s most important South American market, lost momentum in the first half of the 2026/27 business year. Private consumption declined, while investment rose significantly. In addition, U.S. tariffs and intense competitive pressure from Chinese imports weighed on domestic industry. The central bank continued its cautious monetary policy shift and lowered the key interest rate from 15% to 14%. Real interest rates, however, remained at a high level. Since the energy price shock slowed the decline in inflation, monetary easing is likely to proceed only slowly for the time being.
The market environment for voestalpine’s Brazilian sites remained challenging overall. While the slightly positive trend in demand was confirmed in the specialty steel segment, the market for Tubes & Sections showed mixed results. Railway Systems, on the other hand, benefited from stable demand.
Asia/China
Overall, the Chinese economy performed steadily in the first half of the 2026/27 business year and remained within the government’s growth target, although momentum slowed over time. Economic growth was driven by exports, while the domestic economy remained weak.
The real estate crisis persisted, and capital expenditures continued to decline sharply. Industrial sentiment and consumer confidence were also subdued. Production capacities, which had been massively expanded in recent years, exerted downward pressure on prices considering weak domestic demand. At the same time, the debate over Chinese overcapacity continued, and calls for trade defense measures increased within the EU. The blockade of the Strait of Hormuz also weighed on Asia’s energy-import-dependent economies due to sharply rising prices.
The picture for voestalpine’s Chinese sites was mixed. The Automotive Components business unit continued to be burdened by the loss of market share by German automakers in China, while demand for high-quality tool steel was positive. The persistently high level of investment activity in China’s railway infrastructure sector, particularly in high-speed switches, also provided a boost.