Apparent demand was expected to recover by 3.2%, rising to 130 million tonnes in 2024, Eurofer said in its report, published on April 29. It revised downward its previous, more optimistic forecast in February of a 5.6% recovery to 137 million tonnes for the year.
“The overall evolution of steel demand remains subject to very high uncertainty,” Eurofer said. “Quarterly improvements in apparent steel consumption are expected to continue throughout 2024, albeit resulting in volumes still below pre-pandemic levels.”
For 2023, Eurofer reported apparent steel demand in the bloc to have declined by 8.7% year-on-year, to 126 million tonnes, compared with 138 million tonnes in 2022, marking the fourth annual downturn in the past five years.
Apparent steel consumption in the EU did improve in January-February, however, with flat steel prices recovering, supported by restocking.
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, averaged €731.73 ($784.15) per tonne in January, sharply up from a monthly average of €688.20 in December 2023. The January average was the highest since May 2023.
In February, however, the situation changed and prices started to decline due to a lack of both apparent and real demand.
In March 2024, Fastmarkets’ Northern Europe HRC index averaged €691.99 per tonne, and the price has continued to decline in April.
“The key problem is lack of end-user demand,” a distributor in Germany said. “In the first quarter of 2024, we saw 15-20% fewer orders from the automotive industry compared with the previous year.”
Since early February 2024, HRC prices in Europe have been going down practically non-stop, hitting rock-bottom in late April.
End-user outlook
Automotive
The automotive industry in Europe was one of the few steel-consuming sectors to perform well in 2023, with data from the European Automotive Manufacturers Association showing that new car registrations rose by almost 14% in 2023, with more than 10.5 million new vehicle sales.
Eurofer said that automotive output in the bloc increased by 8.5% overall in 2023, revised slightly downward from its previous recovery rate prediction of 8.8%.
But overall output levels in the sector remained low in historical terms, with the industry continuing to be exposed to external factors and expected to remain at the levels seen in 2018-19. The sector was expected to decline by 0.4% in 2024 (revised down from 0.1% growth in a previous outlook) and to increase by 0.8% in 2025 (revised up from 0.2% growth).
Market participants said that demand for steel coil from the automotive industry was broadly stable at low levels through 2023 and was not expected to show any significant rebound in 2024.
Market sources said that some mills have already started negotiations for long-term contracts with end-users in the automotive industry for the second half of 2024, with HRC target prices reported around €780 per tonne, compared with around €750-800 per tonne for the first half of 2024.
“Mills want a rollover [in long-term contracts], but end-users are trying to bring [HRC] prices down,” a steel service center said.
Construction
The construction industry, meanwhile, declined by a moderate 1% in 2023, Eurofer said, revised from a 2.1% decline forecast in February, after having grown by 4.8% in 2022.
The construction sector accounts for 35% of steel consumption in the EU
For 2024, Eurofer said that construction activity would continue to decline, falling by 1.9% rather than its previous prediction of a 0.4% decline.
“While overall construction activity is expected to continue benefiting to a limited extent from governmental housing support and public construction schemes,” Eurofer said, “the effect of these publicly funded construction schemes is expected to significantly decrease in 2024 due to multiple downside factors.
“[These include] the shortage of construction materials, their rising prices, as well as reduced fiscal room for construction spending in EU countries,” it added. “These issues have resulted in declining construction confidence.”
Weak construction demand has taken a toll on the European long steel market in recent months, with high interest rates limiting activity, especially in the residential sub-sector.
“Civil engineering is expected to continue to provide the strongest contribution to the construction sector’s performance, but to a lesser extent,” Eurofer said. “This sector will continue to be supported by EU-wide public policies, but their effects have become increasingly uncertain and difficult to quantify due to the recent deterioration of the economic outlook.”
Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, averaged €648.75 per tonne in March 2024, down by €8.75 per tonne from a monthly average of €657.50 per tonne in February 2024. The assessment was sharply down, however, from a monthly average of €720.00 per tonne in March 2023.
Published by: Julia Bolotova
