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Liquid reduction agents
Prices for liquid reduction agents (heavy fuel oil and substitute reduction agents such as recycled
waste oil) for use in the blast furnaces at the Salzgitter plant fell by around 3% year on year in 2007.
This was due to a collapse in fuel oil prices in the first half of the year, combined with high inventories.
Fuel oil price quotations recovered sharply during the second half of the year and reached new
heights. This was a reflection of the rally in the price of crude oil and the demand for low-sulfur fuel oil
used in shipping which, in turn, was driven by new environmental regulations. At the same time, we
increased the proportion of substitute reducing agent, which resulted in significant savings. We expect
prices to remain high in 2008, at around the level of the second half of 2007.
Scrap
Scrap procurement volumes amounted to 476 ktons (Salzgitter plant) and 1,124 ktons (Peine plant) in
2007. Here we had to absorb year-on-year price rises of 13% (Salzgitter) and 10% (Peine). We expect
a further increase of 10% for both plants in 2008.
Electricity
The average electricity price (energy plus charges related to the German Renewable Energies Act [EEG],
the German Cogeneration Act [KWKG] and fees for the use of the grid) rose by 5.1% in 2007 as
against the 2006 annual average. The individual components of the price of electricity developed very
disparately: the pure energy price increased by 4.5% as compared with charges related to the Renewable
Energies Act which soared 55% as a result of the construction of new plants. While Cogeneration
Law charges remained unchanged, the cost of using the grid fell 3.7%. We do not exclude the possibility
of double-digit percentage increases in electricity prices for 2008.
Natural gas
In 2007, the average price of the natural gas procured (Salzgitter/Peine plants) decreased 5.8% year
on year. This reduction results exclusively from lower prices for heavy fuel oil in previous periods. The
price of natural gas is connected to the price of fuel oil through an escalation clause, which means
changes take effect with a six-month delay. The sharp rise in crude oil prices since mid-year pushed up
prices for heavy fuel oil markedly. As a result of the aforementioned time delay, this in turn will result in
a significant, double-digit increase in the price of gas in 2008.