Eurofer slashes demand outlook, 2023 deteriorates significantly

Eurofer slashes demand outlook, 2023 deteriorates significantly

Eurofer has slashed its demand outlook for the European steel industry for both this year and next. The association now expects apparent steel demand to contract also in 2023.

According to its latest report issued this week, Eurofer expects apparent steel demand to move down 3.5% year-on-year in 2022 and 1.9% y-o-y in 2023. In August, when the previous report was published, the outlook predicted a drop of 1.7% y-o-y this year, followed by a strong recovery of 5.6% in 2023.

“The positive trend seen in apparent steel consumption throughout 2021 came to an end in the second quarter of 2022, due to the impact of ongoing disruptions linked to the war in Ukraine, poor demand outlook and severe rises in energy prices and production costs. All these downside factors are expected to weigh even more in the second half of 2022 up to the second quarter of 2023 included, as a result of the prolonged effects of the war in Ukraine,” Eurofer explains in a note sent to Kallanish.

“Apparent steel consumption is set to decrease also in 2023, albeit at a lower rate, as demand from steel-using sectors is expected to remain severely subdued, at least until the second quarter of 2023. These developments are conditional on the evolution of energy prices and the Russia-Ukraine war – which are unforeseeable at the time of writing – and its impact on global supply chains,” the association adds.

The negative correction in 2022 demand would be the third registered during the last four years, taking apparent consumption in Europe back to 145 million tonnes, the level registered in 2019.

As demand remains under pressure in Europe, available data indicate that import activity has been higher than in 2021 during the first eight months of 2022. Nevertheless, the trend is slowing down significantly as the year progresses.

In Q2, total steel imports into the EU rose 1.6% y-o-y, after a jump of some 28.5% y-o-y in Q1. During the first eight months of the year the European steel trade deficit was of 2.1 million tonnes/month on average; in 2021, the full-year trade deficit reached 1.5m t/m on average.

Emanuele Norsa Italy