The European steelmakers’ trade association Eurofer is warning that the regional sector could be heading for a crisis. It does in fact use the term “… severe crisis” in a statement on current market conditions sent to Kallanish.
Surging import volumes, stalling economic growth, high and volatile raw material costs and sharply growing carbon costs are coming together to form a perfect storm for the sector, Eurofer says. “The impact of this combination of factors has already begun to affect European steel producers, with facilities being idled and production being cut back significantly across Europe,” the association adds.
“The European steel sector has had less than two years of stability, a period which arguably ended in mid-2018 with the imposition of the US’ Section 232 measures”, says Eurofer director general Axel Eggert. The association expects steel market demand to decline in Europe by -0.4% in 2019. The stalling demand coincides with import volumes rising at an ever-faster rate, Eggert says, indicating that the safeguard measures in place since last year are inadequate.
There are also issues with carbon pricing, and surging raw material costs for iron ore, steel and coking coal. “Any one of these factors would cause difficulties for the sector. In combination they are a perfect storm of negative dynamics entirely beyond the control of the steel industry itself,” Eggert emphasises.
Eurofer has written to EU policy makers making this point, in particular relating to making the EU steel safeguard more robust and effective, it says. The association also wants European authorities to continue to work on World Trade Organization reform and on international cooperation to remove the causes of subsidised global steel overcapacity.
“Despite being well-intentioned, the current steel safeguard framework has not prevented surging imports. EU producer margins are on the floor, which undermines their ability to invest in skills, technology and low-carbon development. The alarm bells are already ringing and action is required today to prevent this flood washing the sector away,” Eggert warns.