Posted on 26 Oct 2018
Growth in EU steel consumption is expected to level out over the next quarters after strong demand growth in the second quarter of 2018, the European steel association Eurofer said Wednesday in its economic and steel market outlook for 2018-2019.
“EU apparent steel consumption is forecast to rise by 2.2% in 2018 and by a further 1.1% in 2019,” Eurofer said, forecasting total apparent consumption in the EU at around 163 million mt in 2018 and 164 million mt in 2019.
High overall levels of steel consumption and stock building across the steel distribution chain drove a strong Q2 demand growth rate of 4.4% year on year, but trade tensions with the US and slower demand globally have lowered the growth outlook for 2019.
In addition, the potential for further trade disputes like tariffs on EU automotive exports to the US and subsequent escalation, as well as persistent excess capacity in the the global steel sector are also causes for concern, according to Eurofer.
Overall, “EU steel market fundamentals are expected to remain supportive to a continued but moderate increase in apparent steel consumption,” the association said.
Amid changing trade flows, EU steel makers were also affected by new import and export dynamics in Q2 that could have an enduring impact in 2019 as well, Jeroen Vermeij, Eurofer’s Director of Market Analysis and Economic Studies noted Wednesday.
While domestic deliveries from EU mills rose 3.7% year on year, third country imports rose 9.8% in the same period, leaving the share of imports in EU apparent consumption at 25%, up 1.7% on Q1.
This was largely driven by Turkish and Russian imports, up 57% and 56% on the year respectively, data presented by Eurofer showed.
“Domestic mills benefited less than foreign suppliers from such positive demand conditions,” Vermeij said.
Pressure on domestic mills from importers is expected to persist into 2019, with Q3 domestic deliveries predicted to grow at only 0.6% on the year, while imports should remain at a 10% growth rate.
Meanwhile, EU steel exports slumped in the first eight months, down 5% on the year amid existing trade frictions and protectionism.
“Domestic demand, rather than exports, will be the main engine of growth over this period [for the steel-using sectors],” the association said.
