Apparent steel demand for flat steel products in Europe has been decreasing for months, but the bottom of the negative cycle is now in sight, according to a senior source at a major European flats supplier.
Mills are seeing apparent demand in Europe bottoming out and hope that a mild rebound will materialise in the coming weeks, as buyers prepare orders for the first quarter of 2023.
“Destocking aggressively intensified since mid-August among distributors and service centres in Europe,” the source confirms to Kallanish. “We expect a different approach in early Q4. All negative factors impacting the market have now been factored in; some positive signs from the demand side could be looming.”
In its latest outlook published in August, Eurofer indicated that apparent steel demand in Europe should move down 2.6% year-on-year in Q4, following falls of 4.3% and 5.9% in Q3 and Q2 respectively. A strong rebound of 6.2% is expected in Q1 2023.
“The negative sentiment in the market hit in September harder than expected, but now demand is bottoming out or even trending up,” the source adds. “Sentiment will also be lifted by the effect of production cuts at European mills, having a real impact on the market from October onwards.”
The source calculates that some 20% of European flat steel supply could have been temporarily idled in recent weeks and months. Other observers believe this percentage could go up as high as 24%.
Flats demand has suffered strongly from the ongoing weakness of the automotive sector in Europe. The source notes, however, that while automotive production in Europe has been running at low levels for some months now, there are some small encouraging signs coming from steel shipments and demand from OEMs.
According to the latest figures issued by ACEA, new European car registrations in August marked the first positive y-o-y monthly growth (+4.4%) since Q3 2021.
Emanuele Norsa Italy
