By Christoph Steitz, Emma-Victoria Farr and Tom Käckenhoff
FRANKFURT/DUESSELDORF (Reuters) - Thyssenkrupp (ETR:TKAG) and EPH are facing delays in talks about a steel joint venture as ongoing contract negotiations with automotive clients hamper the German group's efforts to work up a necessary business plan, three people familiar with the matter said.
The issue underscores ongoing challenges for Thyssenkrupp to find a strategic solution for its iconic steel division, which has come under pressure from high raw material and energy prices as well as cheap Asian steel imports.
Thyssenkrupp said in e-mailed comments that open-ended and constructive talks with EPH continued unabated and that the company wanted to reach an agreement as soon as possible but would not let itself be rushed into any deals.
"Of course, the challenging environment with a weak economy, rising raw material costs, high energy costs and strong competition from non-European market players is having an impact on the outlook for European steel manufacturers and therefore also on the ongoing talks with EPH," the company said.
EPH declined to comment.
Sources told Reuters in December that the German firm may have to make financial sacrifices to get a planned 50:50 joint venture with EPH, which first emerged as a potential partner in June 2023, over the finish line.
Both parties still remain interested in continuing discussions but there are differences over the outlook for Thyssenkrupp Steel Europe, Germany's biggest steelmaker, the people said.
While both sides are holding talks on less critical aspects of a deal, any serious efforts by Thyssenkrupp to win EPH and billionaire owner Daniel Kretinsky as a co-shareholder of its steel unit depend on updated business assumptions that reflect the sector's changing environment, the people said.
That is still out several weeks as Thyssenkrupp is working through contract renegotiations with automotive clients, its single largest customer group, they added.
Thyssenkrupp is hoping that updated contracts will show stabilising prospects for the steel division over the next 12-18 months and provide tailwind for its green transition that aims to decarbonise production, one of the people said.
Thyssenkrupp Chief Executive Miguel Lopez earlier this week said that there was no deadline for discussions with EPH and that Thyssenkrupp was working on a new business plan for steel which would then serve as a basis for continuing talks.
Thyssenkrupp said doing that was "absolutely essential in the current volatile world and especially in the steel industry, which is heavily dependent on economic cycles".