SEATTLE (Scrap Monster): The Economic Committee under the European Steel Association (EUROFER) has announced publication of new report titled ‘Economic and Steel Market Outlook 2017-2018’. According to the report, the European economy is expected to continue the trend of 2016 during early-2017. It predicts rebound in construction activity during 2017. Also, raw material prices are likely to rise further during the year.
The overall activity in steel-using sectors recorded marginal growth of 1.8% in 2016. After displaying strong growth during the first half of the year, the activity gained only little strength in the third quarter of 2016. The activity in the Central European countries witnessed decline during 3Q ’17, mainly on account of double-digit decline in construction sector steel activity. Meantime, activity in other sectors such as transport equipment and automotive continued to expand at a healthy pace. Eurofer forecasts mildly positive outlook for 2017 and 2018. The projected demand growth for capital goods will support steel activity across most sectors. The total production activity by steel-using sectors, which reported marginal 1.1% year-on-year growth, is likely to expand by 2% per annum in 2017 and 2018.
The EU construction output witnessed slight decline of 0.7% over the previous year during third quarter of 2016. The construction activity in Western Europe grew by almost 2% year-on-year, whereas Central Europe reported sharp 11% decline in activity. Eurofer predicts rebound of EU construction sector activity in 2017 and 2018. The residential sector will continue to show strength. The recovery will be led by Western European countries including France. The construction demand from private and public services sector is expected to rise. The construction output is predicted to grow by 2.1% in 2017, followed by an accelerated growth of 2.8% in 2018.
The automotive output in the EU region grew by 5.5% in 2016. The automotive output grew by 3.5% in third quarter of 2016. The production growth somewhat moderated during Q4. All major markets in the EU registered modest rise in demand. Although fundamentals for automotive market in the EU are expected to remain overall positive in 2017 and 2018, the production activity growth is feared to lose its momentum during this period. The total EU automotive output, including parts and components, is expected to grow by 3.2% in 2017. However, the growth rate will slow down to 1% in 2018.
The tube production activity by the EU region increased nearly 1.9% in 2016. The steel tube output has expanded by 1.6% in Q3 last year. The Eurofer report forecasts steel tube output by the EU region to grow by 1.4% in 2017 and 2018.
During 2016, EU region reported 2.9% year-on-year growth in real steel consumption. EU real steel consumption is forecast to increase by 1.3% in 2017 and by 1.4% in 2018.
The total steel imports by the EU region from third countries rose by 9.2% in 2016, thereby hitting the highest annual level since 2007. The total finished steel product imports grew by 10% over the year. The major exporters of flat products to the EU during the year were China, the Russian Federation and South Korea. The key exporters of long products were Turkey, the Russian Federation and Ukraine. Also, total steel exports by the region to third countries registered 11% decline during all of 2016.