Prospects for the steel market in Europe have worsened for the second half of 2022 and into 2023, according to the European Steel Association (Eurofer), with lower-than-expected demand for steel and ‘historically high levels’ of imports penetration.
Two major factors identified in Eurofer’s latest quarterly outlook are the continuing deterioration of the EU economy following Russia’s invasion of Ukraine and the energy crisis driving a recession in industrial sectors.
‘All downside factors have remained in place and even exacerbated, especially skyrocketing energy prices, which lead to unbearable production costs,’ says Eurofer director general Axel Eggert. ‘This has entailed a further cut in apparent steel consumption and a significant downward revision of steel-using sectors’ output in the EU for the remainder of this year and supposedly for the first half of next year.’
Also worrying, he says, is ‘the persistent high level of distortive steel imports’ into the EU. ‘We risk heading towards significant industrial capacity destruction in Europe, if emergency trade measures reflecting the precarious situation of some critical industries in Europe are not taken.’
After a rebound of 16.3% in 2021 after the pandemic, apparent steel consumption in the second quarter of 2022 fell 4.8%, down to 38.6 million tonnes. Negative performances are predicted to continue into the first half of 2023, with a 3.5% drop in apparent steel consumption this year (previously estimated at -1.7%) and -1.9% next year. Eurofer points out these would be the third and the fourth steel consumption recessions respectively in five years.
Domestic deliveries recorded a sharp decrease in the second quarter (-7.1%), reversing 2021’s growth of 11.9%. By contrast, Eurofer says, EU imports continue to grow, although at a slower pace (up 1.6%, after 28.5% in the first quarter), with import penetration persisting at historically high levels.
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