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Weak confidence and cash and credit issues backfire on EU steel demand

Add Time:2012-07-16 20:53:00 Clicks:

EUROFER’s Q3-2012 steel market outlook signals that market fundamentals may remain depressed longer than expected. Only from the 2nd quarter of 2013 onwards is EU steel demand forecast to improve again.

EUROFER director general Gordon Moffat: “Weak confidence in combination with liquidity and credit issues is showing a negative impact on the EU business climate.  With global economic growth currently hitting a soft patch, export growth is also cooling down, despite the weaker Euro. This is bad news for the manufacturing sector and for steel consumption in the EU”.

Despite the EU escaping a technical recession in Q1-2012, available data signal that economic momentum continued to slow down in the 1st half of the year. Moreover, sentiment has come again under pressure in recent months as concerns about the Eurozone crisis and particularly the indecisive way it is being dealt with by EU’s policy makers have resurfaced.

So far, solid order books have softened the manufacturing sector downturn, keeping activity and capacity utilisation at satisfactory levels. However, corporate and consumer retrenchment will translate into new orders remaining subdued for the time being. Meanwhile, construction activity across the EU will remain under pressure as well, due to a lack of new publicly or privately funded projects.

This will backfire on steel demand in the EU. Apparent steel consumption is estimated to have fallen by 9% year-on-year in the 1st half of 2012. Demand in the 2nd half of the year is seen stabilising around the depressed levels of H2-2011. Total apparent steel consumption in 2012 is forecast to fall 5%.

Gordon Moffat: “Our base case scenario is still a moderate improvement of the business cycle in 2013 and a corresponding pick-up in real and apparent consumption. However, confidence and access to finance need to improve to get the market moving upward again”.

Full report - Economic & Steel Market Outlook 2012-2013 is available on EUROFER site

Represented by EUROFER, the European steel industry is a world leader in its sector with a turnover of EUR 170 billion and direct employment of 360 thousand highly skilled people, producing on average 190 million tonnes of steel per year. More than 500 steel production and processing sites in 23 EU member states provide direct and indirect employment and a living for millions of European citizens.

The European steel industry is the backbone of Europe’s prosperity and an indispensable part of the European supply chain, developing and manufacturing in Europe thousands of different, innovative steel solutions. The European steel industry provides the foundation for innovation, durability, CO2 reductions and energy savings in applications as varied and vital as automotive, construction, machinery, household goods, medical devices, and wind mills.

Steel is 100% recyclable, it can be recycled over and over again without loss of properties. All the steel in collected end-of-life products is recycled, irrespective of the percentage of steel in the products. Steel therefore contributes significantly to the long-term conservation of the fundamental resources for future generations. About 45% of the total EU steel production is recycled steel scrap.

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