The war in Ukraine, soaring energy prices and supply chain disruption could result in a 1.9% contraction in EU steel consumption this year, the European Steel Association (Eurofer) is warning – although it expects a 5.1% growth in 2023.
The latest outlook from the organisation, which represents all steel producers in the EU, says the steel market for 2022 and 2023 remains subject to a high level of uncertainty, which is likely to continue to undermine demand from steel-using sectors.
Axel Eggert, Eurofer dg, adds: ‘In the current context, amidst a worsening energy crisis and shortages in raw materials, we cannot exclude a new recession or a stagflation scenario’.
Steel consumption strongly rebounded in 2021 (up 15.2%), after the deep slump of 10.7% in 2020 caused by the pandemic. However, the trend is expected to reverse in 2022 with a milder recession (consumption down 1.9%) followed by recovery in 2023 (up 5.1%).
‘High uncertainty is set to last at least until the end of 2022, subject to developments around of Russia’s invasion of Ukraine – which as of now remain unpredictable – and its consequences on global supply chains.’
Domestic deliveries saw a modest growth of 0.6% in the fourth quarter (after a 6.5% rise in Q3), reflecting the slowdown in demand within the EU over the second half of 2021. Throughout 2021, deliveries sharply recovered (+10.7%) from a two-year recession (-9.6% in 2020 and -4.2% in 2019).
EU imports recorded a 43% rise for the third quarter following growth of 48% in Q3 and 45% Q2. As a result, imports from third countries rose 32% in 2021 after falls of 17.1% in 2020 and 10.9% in 2019, mirroring the improvement in steel demand and showing high import penetration.
Despite soaring energy prices, component shortages and lower output, total output in steel-using sectors in 2021 rebounded +7.3% after 8.4% fall in 2020.
‘The rapid deterioration of the global situation following Russia’s invasion of Ukraine has cast further shadows on the steel-using industries’ outlook,’ says Eurofer. ‘As a result, growth in output is expected to be halved in 2022 (+2% compared to +4% February forecasts) and to remain modest in 2023 (+2.3%).
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