Posted on 19 Jul 2019
Eurofer, the European steelmakers association, has further lowered its outlook for real and apparent steel consumption this year, according to its latest report published this week seen by Kallanish.
The association now expects real consumption to move down by -0.4% year-on-year in 2019, while apparent demand will decrease by -0.6% y-o-y to 163 million tonnes. This represents a downward revision from Eurofer’s previous forecast a few months ago of a 0.3% growth in real consumption and -0.4% decline for apparent demand.
“Apparent steel consumption fell by -2.5% year-on-year in the first quarter of 2019,” the association explains in its report. “The negative trend in steel demand is the result of the ongoing slump in the EU’s manufacturing sector due to weakened exports and investment. Forward-looking indicators signal, at best, a low-level stabilisation later this year, but no rebound.”
While Eurofer believes Q3 and Q4 should see a slight recovery, a number of uncertainties could well impact the sector down the line.
“The manufacturing sector in the EU may have not seen the worst yet: a deepening escalation of the trade war between the US and several of its main trading partners and a no-deal Brexit would severely impact global trade conditions, trigger a further deterioration in business sentiment and lower investment growth,” the association warns.
“In that scenario, the EU steel sector would suffer badly because at the same time the risk of import distortions increases due to the expansion of the size of the safeguard measures’ quota both this year and next,” the association adds. It also reiterates its opposition to the 5% increase in quotas applied at the beginning of July and planned again for July 2020.
Despite the gloomy outlook, the association notes that potential upside factors could be an orderly Brexit and the resolution of trade disputes between the US and its main trade partners. In addition, the positive performance of the construction sector is continuing, as the sector’s overall activity should grow by almost 3% y-o-y in 2019.
