ArcelorMittal lowers apparent steel demand outlook for Europe on weak longs market; flats consumption still set to improve

ArcelorMittal has downwardly revised its Europe steel demand forecast for 2023 due mainly to weak construction activity, but expects apparent steel demand for flat products to increase, the steelmaker said in its second-quarter earnings report published on Thursday July 27.
Apparent steel demand in Europe is expected to moderate in 2023 to -0.5% to +1.5% compared to the previous expectations of +0.5 to +2.5%, according to ArcelorMittal.

This is mainly due to reduced consumption of long steel products due to weak construction activity, while apparent demand for flats is still expected to increase.

Indeed, weak construction demand has weighed heavily on the European long steel market in recent months, with most producers taking longer than usual summer maintenance breaks due to a lack of inquiries, participants told Fastmarkets.

“The construction industry is facing pressure from rising interest rates. There is a lack of new projects,” a trading source in Europe said.

Northern European rebar prices have fallen as low as €575 ($636) per tonne ex-works in late July 2023, from highs of around €1,050 per tonne ex-works in September 2022.

At the same time, apparent steel demand for flat steel in Europe is still expected to increase in 2023, according to ArcelorMittal.

“Inventories remain low in our core markets, restocking has not yet occurred,” the company said.

Markets sources in the EU flat steel market confirmed to Fastmarkets that the level of inventories for flat steel products across Europe was moderate to low and most buyers would need to restock after the summer holidays, with the pickup in apparent steel demand likely to support a rebound in prices for some flat steel products.

Shipments, steel prices
ArcelorMittal’s steel shipments in Europe declined by 8.7% to 7.3 million tonnes in April-June 2023, compared with 8.3 million tonnes in the same period last year. This was due to lower production rates because of the outages of blast furnaces (BF) in Gijon, Spain (BF A) and Dunkirk, France (BF4) in late March.

Both furnaces were restarted in mid-July.

Flat steel prices across Europe were much lower year on year in the second quarter of 2023, but mainly due to high comparative base in the second quarter 2022, when steel prices had surged to historical peaks amid panic buying due to Russia’s invasion of Ukraine.

Fastmarkets’ calculation of its daily steel hot-rolled coil index, domestic, exw Northern Europe, averaged €771.50 per tonne in the second quarter of 2023, down from €776.68 per tonne in the first quarter of 2023, and down from €1,116.83 per tonne in the second quarter of 2022.

Sales in Europe in the second quarter of 2023 fell by 21.8% year on year, to $10.5 billion from $13.4 billion, due to both lower steel shipments and “lower average selling prices,” ArcelorMittal said.

Green steel funding approved for Spain, Belgium, France, still pending for Germany
ArcelorMittal remains committed to its decarbonization goals and has recently secured massive government funds to finance its decarbonization projects.

Notably, on July 20, the European Commission approved €850 million in funding for Dunkirk, which will be used for a 2.5 million tpy direct reduction of iron (DRI) module and 2 new electric-arc furnaces (EAFs).

This follows approval from the European Commission on June 22 for €280 million in state aid which the Belgian authorities will provide for ArcelorMittal’s DRI– EAF decarbonization project in Belgium (2.5 million tpy DRI and 2 new EAFs).

And in April, Spain’s Council of Ministers approved a €450 million grant to ArcelorMittal to replace its BF-BOF steelmaking in Gijón, northern Spain, with a 2.3 million tpy DRI module and 1.1 million tpy EAF.

“The overall support that we will receive from the Belgian and French authorities is in line with our broader ask to our host governments for our decarbonization projects,” ArcelorMittal said.

The company now is awaiting for the European Commission approvals for German government funding support.

The steelmaker plans to build a DRI and EAF-based steel production plant at its Bremen site, and will supplement EAF production at its Eisenhuttenstadt site with a new DRI pilot plant.

ArcelorMittal Europe has a target to reduce CO2 emissions by 35% by 2030, and to reach carbon neutrality by 2050.

Published by: Julia Bolotova