Brussels, 29 October 2015 – Revised data on the EU steel market suggest that demand could grow by 1.5% in 2015, on a par with the expected rise in activity of the EU steel consuming sectors. However, third country suppliers rather than domestic producers will be the main beneficiaries from demand growth in the EU market. Weakening domestic order intakes signal that steel buyers are remaining very cautious.
EU steel market
During the second quarter of 2015 apparent steel consumption in the EU grew by 5.5% year-on-year; the first quarter had seen rather subdued growth. The year-on-year increase in steel demand can be largely explained by greater levels of real steel consumption in the EU. This increase is also aided by some inventory replenishment which was well aligned with the normal inventory cycle over the year.
EUROFER Director General Axel Eggert said, “Third countries’ imports have swollen to the highest quarterly level since the second quarter of 2011. This ballooning of imports confirms our fears that third country suppliers are the main beneficiaries of current market conditions. Their increase in market share is coming at the expense of domestic producers”.
“EU producers are not winning from demand growth in their own market, domestic orders are under pressure” advised Mr Eggert.
This year, apparent EU steel consumption is expected to increase by 1.5%; around 2% growth is foreseen for 2016. EU steel companies will continue to be exposed to difficult market conditions, even as imports are predicted to experience some moderation in 2016. However, this moderation must be seen in the context of three consecutive years of relentless growth and aggressive pricing strategies by trade partners.
EU steel consuming sectors
Output in EU’s steel using sectors rose by 2.1% year-on-year in the second quarter of 2015. As expected, output growth picked up some speed following a rather muted start in the first quarter of this year. Steel using sectors benefited from continued – albeit mild – pick-up in EU domestic demand, particularly in consumer-related market segments.
Mr Eggert commented, “The automotive sector remains the star performer, but construction activity is also showing signs of rebounding. In spite of slowing demand from the emerging markets, the weaker euro also helped Eurozone exporters to benefit from robust demand in the US, South Korea and India”.
Total activity in EU steel consuming sectors is predicted to rise by 1.9% in 2015 and by 2.5% in 2016.
EU Economic Context
In the second quarter of 2015, private consumption remained the key driver of GDP growth. The current strength of domestic economic fundamentals – as signalled by real activity data and forward-looking indicators – suggest that economic activity will sustain its steady growth pace into 2016.
Investment growth is expected to gain some traction next year owing to strengthening global trade and the euro remaining relatively weak for the time being. Low oil and other commodity prices should help the corporate sector to improve profitability. National and cross-border investment initiatives could also help in bridging the current EU investment gap.
Economic and Market Report
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About the European steel industry
The European steel industry is a world leader in innovation and environmental sustainability. It has a turnover of around €170 billion and directly employs 330,000 highly-skilled people, producing on average 170 million tonnes of steel per year. More than 500 steel production sites across 24 EU Member States provide direct and indirect employment to millions more European citizens. Closely integrated with Europe’s manufacturing and construction industries, steel is the backbone for development, growth and employment in Europe.
Steel is the most versatile industrial material in the world. The thousands of different grades and types of steel developed by the industry make the modern world possible. Steel is 100% recyclable and therefore is a fundamental part of the circular economy. As a basic engineering material, steel is also an essential factor in the development and deployment of innovative, CO2-mitigating technologies, improving resource efficiency and fostering sustainable development in Europe.