The European steel market can expect negative-to-muted growth for this and coming years with some brighter spots in demand from the construction, renewable energy and agricultural sectors, according to steelmakers speaking at this week’s S&P Global Platts’ Steel Markets Europe conference in Barcelona.
Construction is today the market’s stronghold, with growth of 2.2% foreseen in calendar year 2019, said Anil Jhanji, director, markets, customer and shared services, Tata Steel Europe. The engineering sector will grow 0.9%, he said.
Automotive vehicle production, another major steel-consuming area, is seen declining 2.4% this year, following the introduction of the WLTP vehicle emissions testing standards.
“Automotive is going through a shake-up,” Jhanji said, pointing out that the advent of new energy vehicles is also changing the sector’s metals usage.
Jhanji noted that growth of 30-40% in steel imports in the EU over the last two years, together with overall dull market growth prospects, has squeezed mills’ EBITDA margins to far below the 15% considered optimum for a healthy spend on research and development. “The ability to innovate is at risk…none of the EU mills is running at that level today.”
Jerome Guth, product sales steering, ArcelorMittal, said that the solar and wind energy sectors should provide steel growth areas for the coming years although steel intensity may vary according to specific projects.
With a typical usage of between 2 mt and 50 mt per megawatt of capacity installed, these sectors can look forward to double-digit growth rates over the next five years, Guth said.
A “mega-trend” in steel-using construction is growth in the use of HVAC (heating, ventilation and air conditioning) systems, where compound annual growth rates of 5.6% are seen in the 2015-2022 period, he said.
The use of steel in grain and silo storage in the agricultural sector is also “growing very fast,” Guth said.
The ArcelorMittal executive noted that steel intensity has reduced significantly in the packaging sector as “customers are moving quickly to become more committed to CO2 emissions reduction.”
— Diana Kinch
