EUROFER Predicts Gradual Steel Demand Recovery in 2018

SEATTLE (Scrap Monster): The European Steel Association (EUROFER) has predicted that the gradual recovery in European steel demand is likely to continue in 2018. The demand recovery will be mainly on account of boosted performance from steel-using sectors backed by rising sector investments and robust exports. Meantime, mounting foreign supplies of steel into the European market will continue to impact domestic steel sector. Incidentally, imports had witnessed considerable jump during the second quarter of the current year, EUROFER noted.

The steel trade body noted that EU apparent steel consumption reported marginal year-on-year decline during Q2 2017, after posting healthy growth during the quarter prior to that. The slight drop cannot be considered as a sign of weakness in the robust consumption trend. Instead, the decline is viewed as a technical correction related to the stock cycle, said EUROFER. As per statistics, domestic steel mill deliveries reported 3.5% decline during the quarter. On the other hand, steel imports from third countries surged higher by almost 10%.

Axel Eggert, Director General, EUROFER, in a statement, said that the relative balance between domestic supply and imported steel during Q1 this year was reversed during Q2 at the expense of European steel mills. The import volumes increased despite reduced imports from countries including China following imposition of anti-dumping duties on several categories of imported steel products.

First indications of quarterly steel consumption suggests that steel demand has started picking up during the third quarter. The apparent steel consumption is expected to continue its year-on-year growth during Q4 also. However, seasonal destocking on account of year-closing may dampen the growth during the last three-month period of the year. On the whole, EU apparent steel demand is expected to register growth of 2.3% for the whole year 2017. Meantime, EUROFER predicts 4.2% surge in total yearly output during 2017.

The gradual recovery in steel demand is likely to persist in 2018, mainly on account of anticipated jump in real steel consumption throughout the EU market. The output in the EU’s steel-using sectors is likely to grow by 1.9% during next year. The relatively strong growth in investment coupled with boosted exports will further strengthen steel sector activity growth. However, EUROFER is uncertain as to what extent the EU steel suppliers will benefit from the growing EU demand. The rising volume of imports from foreign countries continues to remain as the main threat to the EU steel market.