STEEL GRIPS online - Sustained recovery in EU manufacturing remains strong

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May 10, 2012

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Sustained recovery in EU manufacturing remains strong

Apr 20, 2011

Eurofer confirms that evidence for a sustained recovery in EU manufacturing remains strong, supported by firm export demand and an expected improvement in EU investment. Internally, the EU continues to show strongly diverging trends at the country level, with respect to economic, industrial and export performance. The EU’s stronger member countries, with Germany clearly in leading position, have so far been able to offset the much weaker performance of the countries affected most by fiscal and financial stability problems.

Due to rising inflation – driven by rising prices for oil and other commodities – and geopolitical unrest, the risks for the economy are currently more skewed towards the downside than at the start of the year.

Gordon Moffat, Eurofer director-general: “Rising capacity utilisation rates across most sectors and high confidence levels amongst industrialists suggest that investment will strengthen this year and next. Total investment is forecast to increase almost 3% in 2011 and around 4% in 2012. The outlook for investment in machinery and equipment is particularly robust with 5 to 6% growth, but also investment in construction is seen growing slightly this year and a bit stronger in 2012, ending a 3-year period of decline”.

The EU steel market looks relatively well balanced at the start of 2011. Stock levels at end-users and in the distribution chain are still assessed as being well adjusted to the current level of downstream activity and bookings in early 2011 remained firm. Real consumption growth will provide the main stimulus to apparent consumption growth in 2011 and 2012, supported by the continued rebound in activity of all steel-using sectors.

Also the stock cycle will continue to have a slightly positive impact on steel demand.

Imports are seen rising further, by 12% in 2011 and another 6% in 2012.

Gordon Moffat adds: “The latest outlook clearly underpins that the European manufacturing industry will remain the driving force of the European economy - with the European steel industry at its base. The main uncertainty for the steel sector is the ability of steel mills to pass on the ever increasing production cost of hot metal to downstream customers”.

For the full report, click on the link: Economic and Steel Market Outlook 2011-2012

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