EUROMETAL IBERIA: EU steel consumption to stagnate in 2017, Eurofer exec says
European steel consumption will stagnate in 2017, the head of economic studies at Eurofer told delegates at the EUROMETAL Iberia conference in Portugal on Friday November 11.
Speaking at the EUROMETAL Steel Net Forum Iberia in Porto, Jeroen Vermeij said that European steel consumption will not grow year-on-year in 2017, in contrast with a forecast year-on-year growth of 2.20% in 2016.
This is a conservative forecast, Vermeij said, reflecting a weak economy and the tendency of what little market demand there is to be fulfilled by existing capacity and imports rather than new orders.
Apparent steel consumption in the first half of 2016 grew by 2.60% year-on-year while imports grew about 11% year-on-year, Vermeij said.
The growth outlook for next year is stagnant, he said, because private consumption, which has been the main driver of steel consumption in 2016, will not be able to compensate for low public spending and low private investment.
The automotive sector is the only industrial sector in Europe operating at pre-crisis production levels. All others, including residential construction, are still slowly recovering, he said.
In the third quarter of 2016, Europe’s GDP grew by only 0.40% year-on-year, and market conditions in Europe are not likely to improve.
Investors, however, are not only deterred by a weak market, but by geopolitical instability and high risks, Vermeij said, pointing to how the refugee crisis and Brexit have provided shocks to the European Union, threatening financial stability, trade deals and the Schengen agreement.
However, despite the bleak outlook, market sentiment remains positive, Vermeij said.
And Georges Kirps, director general at EUROMETAL, was more optimistic about steel consumption in 2017.
“The German economy is still booming,” Kirps said, “[and] I think European steel consumption growth will be somewhere between one and two percent.”
European industrial production has so far reflected this sentiment, increasing 1.10% year-on-year in the third quarter.
Lorenzo Holt, Metal Bulletin
EUROMETAL IBERIA: Is protectionism the best way ahead for European steel?
The subject of European anti-dumping duties applied to cheap Chinese steel imports dominated discussions at the Eurometal: Iberia steelmakers and distributors conference last week in Porto, Portugal.
Darren O’Riordan, director general of China-owned steelmaker Ansteel’s Spanish branch, spoke during his presentation on Friday November 11 of the dangers of the EU’s recently applied trade barriers to Chinese products.
“Protectionism is good in the short term but not in the long term,” O’Riordan said. “[European] consumers should be careful.”
He argued that too much protectionism could effectively block all foreign imports and reduce the sourcing options available to consumers and distributors, making prices too high.
Since the beginning of this year, EU domestic ex-works prices in Southern Europe have risen to €440 ($477) per tonne from €290 ($315) per tonne for hot rolled coil (HRC), to €545 ($591) per tonne from €350 ($380) per tonne for cold rolled coil (CRC), and to €455 ($494) per tonne from €325 ($353) per tonne for steel plate.
Over the past few months, the EU has set anti-dumping duties on Chinese imports of HRC, CRC and steel plate, and it is speculated that duties on hot dipped galvanized coil (HDG) could be added.
As China attends to its own economic problems and tries to develop a more service-oriented economy, it has been dismantling domestic steel mills and plans to eliminate 100-150 million tpy of steel capacity over the next five years, at the cost of 400,000 jobs in the country, O’Riordan said.
Standing in front of a map of China’s “One Belt, One Road” economic development plan – which shows the country’s ambitions to forge new trade routes across Asia into Europe and Africa – O’Riordan explained how China was not focused on exporting basic steel to Europe but rather on expanding into much larger markets in Asia and elsewhere.
Nonetheless, many in the audience were in favour of the EU’s anti-dumping duties against China and found them to be helpful, if not a final solution to the woes of Europe’s steel industry.
“People emphasise [China’s] reduction in capacity, but production is what matters,” one delegate told O’Riordan during his presentation. “China is not reducing its production or its exports, and it’s not privatising either.”
Another delegate commented privately that, in order for a person to be a consumer, one first needed to have a job and an income.
A major point of contention when discussing European anti-dumping duties imposed against Chinese steelmakers is the support they receive from the Chinese government. Many, such as Ansteel, are state-owned.
China is expected to be granted market economy status (MES) by the World Trade Organization (WTO) after December 11, which would allow it broader access to the European market and would change the way the EU calculates anti-dumping margins against it.
On November 2, China asked WTO members to honour this impending change in regulation.
On November 9, however, in a move apparently directed at China, the European Commission proposed a revision to the methodology it uses to calculate anti-dumping margins even for MES member-states of the WTO, particularly in regard to under-priced imports from state-backed or state-owned entities.
Lorenzo Holt, Metal Bulletin