The European steel sector showed a marked slowdown in the first quarter of 2022 compared to 2021, suggesting bleaker prospects for the rest of the year, the European Steel Association (Eurofer) reports.
A review of the steel market published in late August indicates apparent steel consumption is expected to experience its third recession in the past four years, with a decline of 1.7%.
‘The evolution of steel demand remains subject to high uncertainty fuelled by the ongoing energy crisis, inflation, supply chain disruptions and Russia’s war in Ukraine,’ the Eurofer release says. ‘Import penetration has remained considerably high.’
Director-general Axel Eggert says a gloomier outlook for the steel market for the rest of 2022 is consolidating, a mood likely to spill on to 2023.
‘We have been facing skyrocketing energy prices and bottlenecks in supply chains for almost a year now, and the dire consequences of Russia’s invasion of Ukraine for half a year,’ he adds. ‘Yet, there is no sign that uncertainty will ease any time soon, while steel imports in the EU are still significant: this is detrimental for a healthy EU steel industry.’
Despite substantial growth in apparent steel consumption in 2021 (+15,2%) and in the first quarter of 2022 (+6.5%), the volumes are still below the pre-pandemic peak of 2018. Eurofer says a declining trend is expected for the rest of 2022, resulting in a moderate recession and in a further halving of steel-using sectors’ output growth (+1.1%).
Domestic deliveries had a nearly flat growth in the first quarter of 2022 (+0.2%, after +1.2% in the fourth quarter of 2021), mirroring the sluggish demand seen since the second half of 2021.
Even so, in 2021 deliveries sharply rebounded (+11.3%), after 2020’s slump (-9.6%). Imports into the EU continued to increase significantly (+28.8%) over the first quarter of 2022, although less marked than Q4 and Q3 of 2021 (+43.4% and +47.7% respectively).
Despite a limited rise (+0.4%) in the second quarter, import penetration remains considerably high.
EU steel-using sectors
Eurofer says a more nuanced picture emerges for steel-using sectors in Q1 2022. The output growth figure of 4.9% is better than the previous quarter’s performance (+2.6%), meaning a fifth consecutive year-on-year growth.
However, favourable conditions for construction, mechanical engineering and transport were offset by negative results for automotive and domestic appliances.
The organisation says unfavourable conditions stemming from Russia’s ongoing war in Ukraine, with worsening supply chain issues, energy crisis and high production costs, are expected to negatively impact on those sectors spared so far.
‘This is why the steel-using sectors’ output for 2022 has been revised downwards by half compared to Eurofer’s previous forecasts (from 2% down to 1.2%).’
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