The industrial group Thyssenkrupp is encountering a far more challenging path to producing green steel than initially projected. A critical tender process for the supply of green hydrogen has been suspended, as the submitted prices have exceeded all feasible calculations. This setback is forcing management to reconsider its strategy and re-enter negotiations with government officials.
Share Price Shows Resilience Amid Fundamental Concerns
Market sentiment toward Thyssenkrupp shares has been volatile following the news. While the stock faced pressure earlier in the week, it demonstrated notable resilience on Wednesday, advancing by 2.66 percent to trade at €9.89. Despite this uptick, the broader technical picture remains concerning. The share price continues to trade below its 50-day moving average of €10.71, and it has declined approximately 11 percent over the past 30 trading days. The overarching economic viability of the green transition stands as the primary risk factor for the company’s valuation.
Hydrogen Tender Halted Due to Price Shock
The ambitious plans are colliding with the realities of the energy market. Thyssenkrupp Steel has paused a bidding procedure, launched in February 2024, to secure green hydrogen for its Duisburg plant. The company stated the received price offers were “significantly higher” than anticipated. Although the firm remains committed to building the direct reduction plant, projected operating costs threaten to become unsustainable under current market conditions.
Renegotiation of State Support Becomes Imperative
The gap between plan and reality now has direct political ramifications. Company executives are currently in talks with the German federal government, seeking an adjustment to the existing framework of state subsidies. Initial investment decisions were predicated on assumptions regarding hydrogen availability and pricing that have proven overly optimistic. The energy source is not only more expensive but is also expected to be available in sufficient volumes later than previously assumed.
Analysts suggest the equity will likely remain susceptible to significant fluctuations until a resolution is found for the high cost of hydrogen, whether through market mechanisms or revised government support programs.
