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II. Profitability, Financial Position and Net Assets
1. Purchasing
As in previous years, procurement markets remained very tight. Despite this difficult environment, it
was possible to ensure that the Salzgitter Group’s plants were always fully supplied at market prices,
although the prices of important input materials and services once again reported a sharp year-onyear
rise.
The continued high levels of economic growth in populous emerging markets such as China, India
and Russia resulted in a rapid increase in steel consumption and consequently a surge in the demand
for raw materials needed for steel production. Temporary supply bottlenecks arose as a result of limited
delivery capacities and insufficient logistical infrastructure in respect of rail and port capacities, as well
as freight space, which filtered through in the form of sharp price increases and shortfalls in many
market segments. Price volatilities of up to 50% or even more within the space of a few months were
the rule rather than the exception for alloys and sea freight prices.
Movement in the Price of selected Raw Materials and Energy Resources
%
300
250
200
150
100
50
Iron Ore, FOB (US-$/t)
Coking Coal, FOB (US-$/t)
Fuel Oil “S”, FOB (US-$/t)
Scrap, Europe, ex works (€/t)
2003 2004 2005 2006 2007
Iron ore
The international iron ore market continued to come under great pressure. Supply failed to keep pace
with rising rise in demand in 2007: China alone imported around 70 million tons more iron ore than
in the previous year. We recorded price hikes of between 5.3% and 9.5% for pellets, fine ore and
lump ore in 2007. The cost increases for the Salzgitter integrated iron works were in the order of 6%
including cost and freight. Ore deliveries totaling around 6 million tons came from Sweden, South
Africa, Brazil and Canada. Given current developments in the spot markets, we also anticipate marked,
demand-driven price increases in 2008. In mid-February, the first price agreement for deliveries of
benchmark-type fine ore was concluded between the Brazilian producer VALE (formerly CVRD) and
Japanese iron works entailing a price increase of 65%.