The EU steel market remained on a relatively fast growth track in the
second quarter, supported by healthy economic fundamentals and the good
operating performance of steel-using sectors. Nonetheless, imports
continued to grow much faster than the domestic deliveries of EU mills.
Steel demand growth levelling out in the EU and in other regions over
the coming quarters – against the backdrop of persisting excess
capacities in the global steel sector and proliferation of distortionary
steel trade actions worldwide – is reason for concern. Axel Eggert,
Director General of the European Steel Association (EUROFER), said
“Growth is stabilising in EU steel markets, in line with expectations.
However, the various challenges facing the sector will impact us in the
coming months. Trade tensions could clearly upset the market’s balance,
as could slowing demand in other parts of the economy”.
EU steel market overview
EU28 apparent steel consumption grew by 4.4% year-on-year in the second
quarter of 2018. Healthy levels of real steel consumption, in
combination with stockbuilding in the steel distribution chain in this
period, led to this growth.
In the second quarter of 2018 domestic deliveries from EU mills to the
EU market rose by 3.7% year-on-year. Third country imports rose by 9.8%
compared with the same period of 2017 and surpassed the already
extremely high level of imports registered in the first quarter of 2018
by almost 5%. The share of imports in EU apparent consumption rose from
23.2% in the first quarter to almost 25% in the second quarter.
The continued, marked increase in import supply in the second quarter
appears to confirm previous concerns about third country exporters
pushing extra volumes to the EU market in anticipation of safeguard
measures, and a willingness of buyers to take certain speculative risks.
EU steel market fundamentals are expected to remain supportive to a
continued but moderate increase in apparent steel consumption. However,
ongoing trade frictions with the US, and cooling global demand, suggest
that external risks could continue to climb, which in turn would
increase uncertainty and lead to weakening prospects for EU steel users.
Moreover, other trade barriers which are being considered by the Trump
administration, such as tariffs on EU automotive exports to the US,
could lead to a further escalation of the trade dispute and have a
damaging impact on steel demand.
Nevertheless, EU apparent steel consumption is forecast to rise by 2.2% in 2018 and by a further 1.1% in 2019
EU steel-using sectors
Business conditions in the second quarter of 2018 were similar to those
in the first quarter of the year. All steel-using sectors in the EU
except steel tube industry registered a solid increase in production
activity.
Prospects for the EU steel-using sectors in 2018 and 2019 are rather
favourable. Despite a mild moderation in economic momentum, framework
conditions for steel using sectors are expected to remain supportive to
continued but somewhat slower growth of production activity. Domestic
demand rather than exports will be the main engine of growth over this
period.
However, the global economic context has become more uncertain due to
rising protectionism and the risk of escalating trade tensions. This
might have a negative impact on business confidence and investment.
Output in EU’s steel-using sectors is forecast to grow by 3.5% in 2018 and by 1.8% in 2019.
Source : Strategic Research Institute, SteelGuru