Eurofer increases EU demand outlook despite economic uncertainties

Eurofer, the European steelmakers association, has increased further its apparent steel demand outlook for 2021 despite acknowledging that the peak of the positive economic sentiment has been reached and a number of uncertianties lie ahead.

In its latest report seen by Kallanish, the association noted that 2021 European apparent steel demand is set to jump 13% y-o-y. In the latest outlook issued in August, the recovery was forecasted at 11.2% y-o-y. Real consumption will also jump 7% y-o-y this year, after the fall of 9.8% y-o-y in 2020.

Alessandro Sciamarelli, director of market analysis at Eurofer, confirmed that economic momentum seems to have peaked in Europe in August. Confidence in the industrial and economic sectors has started to ease due to growing disruptions affecting the supply chain and increasing energy prices.

The automotive sector is now reported to be the most troubled.

“The ongoing disruptions in the supply chain have continued to affect the automotive industry in the first half of 2021 and are expected to persist up to the first quarter of 2022,” Eurofer says. “Even assuming that from the second half of 2022 onwards the current supply chain issues will disappear, it will take time before pre-pandemic activity levels will resume. Another source of uncertainty is the consumer demand for new cars, which is expected to remain weak at least until the macroeconomic picture and consumer disposable income substantially improve.”

Meanwhile the construction sector, using some 35% of the total steel consumed in Europe, is receiving strong support by the Next Generation EU plans and ongoing housing schemes across the continent.

In regard to trade, Eurofer highlights that Europe continues to have a negative trade balance during the first seven months of 2021. The association calculated that on average the European trade deficit was of 1.5 million onnes/month during the January-July period. Alessandro Sciamarelli confirmed that Europe turned into a net importer of steel back in 2016 and that this situation is now seen as systemic.

Emanuele Norsa Italy