Eurofer assesses steel demand reduction

European steelmakers’ association Eurofer, expects that demand from major steel-using activities will decrease on average by -58% due to the ongoing coronavirus crisis, Kallanish learns from a document sent to the European Commission.

The assessment of the demand reduction was made in a report sent to the European Commission to explain the reasons behind Eurofer’s request for drastic limitations related to the safeguard system for imports (see related article).

According to the association (citing external researches) the automotive industry is likely to experience the biggest downturn. “Vehicle sales are down more than -10% on forecast levels and no ramp-up is possible due to supply chain problems,” the association says.

“As far as mechanical engineering is concerned, studies explain that the sector will see both supply and demand shocks lasting until the first quarter of 2021 in the worst-case scenario, with catchup effects not seen before Q2 2021. Eurofer’s own analysis also confirms that EU steel consumption is currently low, will further drop massively in Q2 and Q3 2020, and will remain at low levels in the imminent future,” the association adds.

For the construction sector, the impact is reported to be more moderate in terms of steel demand. The sector is expected to be responding to the difficulties later, as projects are put on hold, planning is stalled and confidence is lost.

In terms of imports, Eurofer is concerned that the pressure will increase on the already suffering European steel market. “Our analysis is that Q2 2020 imports are not going to decrease significantly, as purchases and shipments were already concluded during the previous quarter. Import material is therefore coming in, while business is currently being concluded for Q3 2020. The volumes that are still coming (and will continue to come) to the EU market, will further aggravate the market situation (volume-wise), with the dramatic drop in EU steel demand. Recent import levels of hot-rolled flat and hot-dipped metallic coated [… products] are a good example of this,” the association says.