- Issue Time
Exports, rather than domestic demand, were the key driver of growth in the EU, according to EUROFER, the European Steel Association.
According to EUROFER, economic growth in the EU has remained ‘soft’ so far this year with indicators suggesting that the economy will continue to struggle to gain momentum over the third quarter as confidence comes under pressure due to geopolitical unrest and concerns about the impact of trade sanctions imposed by Russia.
There is also concern that a sluggish economic performance in France and Italy might stall recovery in the EU and that slowing growth in the large emerging economies will act as a drag on exports.
Axel Eggert, acting EUROFER director-general said that Q1 activity growth was temporarily boosted by a base year effect. He said that in most sectors underlying momentum was slow and that most companies have not seen much of an improvement in terms of new orders, output and capacity utilisation rates. “We expect total output growth to be around 2.3% in 2014,” he said, adding that growth in 2015 won’t be much higher.
EU steel demand growth decelerated in Q2 2014 to 4.4% year-on-year. However, the rise in demand was taken by imports as total steel imports grew 26% year-on-year and long products imports by 49% year-on-year, according to EUROFER.
Domestic shipments from EU mills stabilised ‘around the year earlier level’ implying that EU mills are losing out to third country suppliers.
“Sluggish final steel demand and destocking will result in a slight drop in apparent steel demand in H2 2014. For 2014 as a whole, this results in a year-on-year growth of 2.6%, which is lower than EUROFER’s July forecast but still confirms the view of a moderate recovery of the EU steel market.
According to Eggert, muted conditions are likely to remain so in 2015. He said that a moderate strengthening of demand is to be expected in conjunction with a rise in activity of EU steel using sectors. “However, imports are to remain on a high level, thereby exerting severe margin pressure on EU steel mills,” he said.
“Difficult business conditions for the EU steel sector will continue as long as demand growth remains dull and imports remain on an elevated level,” Eggert concluded.