Eurofer: EU steel market on track for muted recovery
Apr 27, 2010
EUROFER’s Quarter 2-2010 report on the Economic and Steel Market Outlook 2010-2011 confirms that the EU steel market started 2010 on a positive note. EUROFER director general Gordon Moffat told STEEL GRIPS online: “Improving business confidence has triggered some restocking, but so far inventories have remained well balanced with supply-demand fundamentals”.
EUROFER member companies’ deliveries and orders are picking up from the lows reached in 2009. The rebound is driven by restocking rather than improving steel consumption at the end-user level. Following their depletion in 2009, inventories still have some way to go before achieving parity with manufacturing output levels anticipated for this year.
Prospects for the steel using sectors have improved owing to the pickup in international trade and easing drag from the inventory cycle in the manufacturing chain. Most steel using sectors are expected to show positive year-on-year growth again from Q2-2010 onwards. The key exception will be the construction industry, for which the outlook has deteriorated in recent months.
With a forward view to 2011, the recovery in activity in the steel using industries gaining further strength should bolster real steel consumption and also provide an additional impulse to the stock cycle. This will set the stage for a further improvement in EU market fundamentals.
Uncertainty remains high, however. The latest trade data show that imports are rising again. Any event leading to global demand lagging the rising trend in steel output could result in temporary oversupply and rising import pressure in the EU. Gordon Moffat adds: “The exorbitant price increases recently announced for raw materials will have a deep impact on steel prices and the downstream value chain and ultimately on the European consumer. They jeopardise the rather fragile recovery of manufacturing industry and the economy of the European Union as a whole”.
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