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BRUSSELS (Scrap Monster): The European Ferrous Recovery and Recycling Federation (EFR) has expressed its concerns about the current and future situation of the European steel industry and about the drop in steel consumption due to weakening activity in steel consuming industries.

According to the EFR's statement issued following its recent general assembly, the general situation of the EU steel industry remains worrying. Steel demand is 25% below its 2007 level and with a current 25-30 percent overcapacity. During the first six months of 2012, steel scrap use by EU steel mills indicated a 3.4% decrease to 51.39 million mt. In the same period, Turkey was the main steel scrap importer with 5.57 million mt, up 11.6% year-on-year.

The EFR suggested that the closure of some steelworks, mergers and environmental issues represent a serious threat to the steel sector, resulting in decreased scrap order volumes. Additionally, scrap operators have witnessed a considerable reduction of scrap availability.

The short-term market outlook is certainly not very positive for EU steel producers and recyclers. Currently surging rebar volumes are flooding the Turkish market at prices well below domestic production costs. 'As Turkey, the main scrap purchaser, is being squeezed out of its traditional market, the EU markets for steel and steel scrap will undoubtedly be affected.' said EFR president Tom Bird.