Procurement and energy market
Depending on the market conditions, the purchase prices for raw materials, energy, and transport and construction services may fluctuate significantly. Energy prices on the wholesale market continued to fall significantly over the course of 2023. The current price level is at approximately the same level as at the beginning of 2022 before the start of the Ukraine war, but still above the long-term average. In addition to a good supply situation on the electricity and gas markets, the fall in demand for energy as a result of production declines in energy-intensive sectors in particular was also an important reason for falling prices.
Further development depends largely on the further overall economic development in Germany. The lower price level may be somewhat delayed for end users and therefore also for the processing of products. In 2023, producer prices also fell compared to their highest level in the third quarter of 2022. Producer prices fell below the previous year’s level on average. In the energy-intensive cement and transport sectors the high energy prices from 2022 still have an impact with a significant delay. Crude oil and oil product prices in particular remained at a high level and were unable to benefit from the fall in the price of natural gas, coal and electricity. In addition, wage costs in 2023 rose significantly due to high collective bargaining agreements and are now being priced in. This may lead to risks in relation to energy costs and construction prices.
Among other things, we counter the risk of increases in energy prices through a stringent price adjustment strategy and the conclusion of long-term procurement contracts. However, these precautionary measures only have an effect for a limited time and must be weighed against potential opportunities arising from falling energy prices.
Depending on the market and competitive situation, it may not be possible or may only be possible to a very limited extent to pass increased costs on to the customer in the short term. This in turn has a negative impact on margins.
The consolidation of requirements and the optimization of long-term volume commitments result in opportunities to raise potential for procurement prices, even in a challenging market environment.
