EU growth continues but slower, tariffs needed: USSK

Gabriel Holub, from Slovakian flats steel producer US Steel Kosice

Despite its slowing pace, continued solid economic growth in the EU, even stronger in the Visegrad 4 countries, will stimulate steel demand beyond 2018. However, the EU needs trade measures to protect against steel redirected by US Section 232 tariffs. So said US Steel Kosice (USSK) sales manager Gabriel Holub at the Central Europe regional meeting of distributors’ association EUROMETAL.

Overall EU economic fundamentals are robust thanks to private consumption supported by a strong labour market, combined with moderate inflation and expected acceleration of disposable income, according to Holub. EU steel use should rise over 2% on-year in 2018.

Between now and 2022 V4 automotive sector output is expected to grow 20% due to shift in production at major OEMs and better capacity utilisation. “It is a very nice growth which should be translated into a steady growth of steel consumption and increase of related services,” Holub said at last week’s meeting attended by Kallanish.

EU white goods output, too, is seen strong. “There is also a visible very strong commitment from OEMs to research innovations, so with more new products coming to the market, in the future we can expect that this sector will be staying, from a demand perspective, healthy and strong,” he added.

EU steel imports rose in the first quarter, notably from India and Turkey, after falling in the second half of 2017. “The level of imports is expected to be balanced in the near future even if there is currently a period of higher uncertainty mainly linked to US Section 232 tariffs and risk of redirection of volumes to Europe from countries which cannot export to the traditional destinations,” Holub observed. Many European customers have turned to local suppliers in the current period of uncertainty, he added.

The “… balanced” import situation, coupled with increased raw materials prices, should result in continued healthy steel prices in 2018, the manager explained.

Holub warned, however, “… it is necessary to react in order to protect the European steel market from potential huge surge of imports from countries which are hit by measures elsewhere globally.”

He concluded by saying European mills and distributors should cooperate to better manage periods of uncertainty and changing end-user requirements.