EU price volatility fading, end-use activity uncertain: EUROMETAL conference

The European steel sector has seen a surprisingly fast recovery in activity over recent months, after having been able to control the Covid-19 pandemic. The new economic reality, however, requires new solutions from both producers and the distributors’ chain.

Steel prices will see certain fluctuations in the following months, but the cycle of volatility is seen coming to an end, Kallanish heard during Thursday’s EUROMETAL Iberia Steel Net Forum in Lisbon.

“We have learned from the pandemic. Now we have to be careful while evaluating prices and demand following recent movements in China,” EUROMETAL president Fernando Espada said at the event. “China is taking drastic decisions, which in turn lead to uncertainty in the market. The reduction of its production has led to a correction in the global market. The offers will not be the same, so you have to find a balance.”

According to EUROMETAL data, steel user sectors have improved their performance so far this year, except for the automotive industry. “The steel industry is changing in search of creating greater added value and sustainability of its products. We must look with optimism at the structural changes caused by the CO2 reduction plan, emphasising the digitisation of processes based on new business management,” Espada added.

Meanwhile, Eurofer director of market analysis Alessandro Sciamarelli said the worst of the economic recession is over, supported mainly by the recovery of construction activity. Growth in steel-consuming sectors, however, remains uncertain in the second half-year due to higher energy prices and global supply chain disruptions.

Eurofer nevertheless foresees steel demand will be moderately positive during 2021 and 2022, with the construction sector set to be the best-positioned. Construction output is expected to rise by 11.2% in 2021, following the 4.2% drop seen last year. The recovery will continue also in 2022.

“Consumption is set to increase 11.2% this year and continue to recover in 2022,” Sciamarelli explained. The automotive industry has been hit by the microchip shortage and subsequently saw demand reduce across Europe, weakening the sector’s position in the global market. “Car production is estimated to rise 15.3% in 2021 and to grow further by 7.9% next year. The outlook, however, remains uncertain due to the current semiconductors crisis, lower consumer demand and the implementation of EV standards,” Sciamarelli added.

According to Eurofer, the impact of the EU Next Generation economic recovery plan will become apparent by mid-2022.

Todor Kirkov Bulgaria