Mr. Sülzle, to begin with, a few words about the current situation in the steel market?

With the outbreak of the war in Ukraine, energy and raw material markets have exploded. Prices for reinforcing steel, mesh panels, and wire rod have risen by more than €500 per ton — that’s over 60 percent. At the same time, supply chains have been massively disrupted. This situation is unprecedented and presents us with enormous challenges.

The word “disruption” is circulating through many industries. Is the steel world now experiencing a turning point?

We are definitely experiencing a turning point right now. Many traditional business models have been replaced by revolutionary changes in recent years. Think of retail and online shops like Amazon, or the hotel industry and platforms like Airbnb. Even bookstores and music shops have long been replaced by services like Spotify and Audible.

What does this have to do with the bending industry?

The bending industry is also undergoing a transformation of its traditional business model, although this shift has not yet taken place on a digital platform. In the past, while purchase prices for reinforcing steel fluctuated at times, they remained within a stable corridor over many years. This allowed businesses, with a bit of skill and luck, to operate profitably despite low margins. Over the last 20 years, the price of reinforcing steel remained below €600 per ton for 90 percent of the time. Today, we are paying more than twice that amount.

What triggered this turning point?

When prices began to rise at the end of 2020, our industry believed that — as in the past — a sharp drop would follow the steep increases. But as this hope failed to materialize quarter after quarter, the industry must now seriously consider whether the old rules still apply in the future. In hindsight, we can see that the COVID-19 pandemic, combined with the challenges of climate change, marked the beginning of a turning point — one that has now been dramatically intensified by the war in Ukraine, changing everything we knew before.

And suddenly the old rules no longer apply?

There’s a lot to suggest exactly that. The steel industry itself is facing enormous challenges. Reducing CO₂ emissions will require massive investments, which will result in significantly higher production costs. The raw materials needed for steel production are also limited and have risen sharply in price. Likewise, energy costs — whether gas, coal, or electricity — have skyrocketed. A shortage of skilled workers, rising logistics costs, and limited transport capacities complete the picture.

And from a critical perspective, does this mean that the approaches of the past no longer apply to the future?

Exactly. That’s why, at the end of January 2022, we informed our customers in a letter about our view of the situation and the changes ahead.

Why did this letter attract so much attention in the market?

That’s a good question. We were surprised ourselves by how widely our letter was shared and discussed in the market. We probably addressed issues that others hadn’t dared to speak about openly until now. Our intention, however, was to provide an open and honest assessment of the situation. The events of recent weeks have confirmed our statements.

What impact do the price increases have on existing orders?

This is currently our biggest challenge. Together with our customers and partners, we must find solutions during this difficult time. The events and consequences of the war were unforeseeable for anyone, and as a result, the foundation of existing orders has been undermined — making it unreasonable to continue them without adjustments. We carefully considered whether and how to approach our customers. Ultimately, we chose an open and honest dialogue, fully aware of the reactions this might provoke. From our perspective, however, there was no alternative.