The Eastern European flat steel market is “on the road to convergence” to Western Europe’s level, according to Laurent Plasman, head of operational marketing at ArcelorMittal Flat Carbon Europe.
This forecast is based on solid growth of gross domestic product (GDP), the development of construction industry and infrastructure, as well as strong domestic demand, Laurent Plasman told participants at the EUROMETAL Central Europe regional meeting in Warsaw on March 22.
GDP per capita in Poland, the Czech Republic, Slovakia and Hungary was 54% of the EU average in 2000, it jumped to 68% in 2010 and it is expected to reach 79% in 2020. However, the gap between GDP in Eastern Europe and Western Europe is expected to remain.
“[The improving GDP] obviously fuels consumption confidence and spending and translates into better steel demand,” Plasman said.
Strong growth in infrastructure and construction activity supports the positive outlook for the Eastern European market, he said.
Poland, the key Eastern European steel market, is the main beneficiary of EU funding and has received €78 billion ($84 billion) from the trade union – about 36% of the total funding provided by the EU to Eastern Europe.
Eastern European countries have been showing the fastest recovery in steel demand since the crisis.
“The European steel industry [took a big] hit during the crisis [of 2008-2009] and countries [have] seen a very problematic recovery, with demand in most of countries still below the pre-crisis level,” Plasman said.
The total compound annual growth rate (CAGR) for strip mills across Europe’s 28 nations (EU28) almost returned to a pre-crisis level in 2016, standing at 75 million tonnes in 2016, just 0.70% lower than in 2008. However, the major EU steel markets have remained below the 2008 level.
For Germany, the CAGR fell 0.10% to 18 million tonnes in the same comparison; while in France, CAGR was 4.90 million tonnes, about 4% lower than in 2008; in the UK, CAGR was 4.70 million tonnes n 2016, 1.80% lower; in Iberia (Spain and Portugal), it was 7.90 million, 1.90% below the pre-crisis level; in the Benelux countries (Belgium, the Netherlands and Luxembourg), it was 6.90 million tonnes, down by 1.40%; and in Italy it was 12.50 million tonnes, about 1.50% down compared with 2008.
In Poland, however, the CAGR jumped by 3.90% to 5.90 million tonnes in 2016 compared with 2008; while in the Czech Republic, Slovakia and Hungary it increased by 1.20% over the same period to 4.50 million last year.
Good private consumption and favourable interest rates will further boost steel demand.
“Eastern Europe has a very good production base [for steel coil] that can fully cover domestic demand in the region,” Plasman said.
ArcelorMittal has three mills in Poland and the Czech Republic, US Steel owns a mills in Slovakia, and in Hungary there is ISD Dunaferr.
However, steel imports to the region from China, Korea, Italy, Russia and Ukraine have been increasing to over the past couple of years.
Imports of steel products from Russia and Ukraine to the region jumped by 51% year-on-year in 2016 to 0.90 million tonnes, while imports from the two countries to the whole EU region grew only by 18% year-on-year to 3.60 million tonnes.
Imports of cold rolled coil (CRC) into the region dropped in 2016 after the European Commission (EC) started anti-dumping probe into the material, but the decline in import volumes was compensated for by increase in hot rolled coil (HRC) imports.
It has also started two anti-dumping probes into HRC from six countries, including China, Russia and Ukraine.
While EU imports of steel from China were steadily growing, in Eastern Europe the numbers remained stable until spiking in 2016, when deliveries from China increased by 64% year-on-year to 120,000 tonnes.
“We see trade cases as an instrument to tackle unfair imports,” Plasman said. “ArcelorMittal is a global company, dependent on both imports and exports of all kinds of products. But long-term investments [have been] hampered by unfair trade.
“The flood of dumped imports has done a lot of damage to the EU steel industry. And this includes imports from countries like Iran, Russia, Ukraine and Brazil, not only China,” he added.
The influence of the UK’s decision to leave the European Union (Brexit), the worldwide geopolitical situation, and trade policy changes all bring uncertainties to the Eastern European steel market, Plasman said.
Maria Tanatar – Metalbulletin