Speaking at the EUROMETAL Steel Net Forum Iberia in Porto, Jeroen Vermeij said that European steel consumption will not grow year-on-year in 2017, in contrast with a forecast year-on-year growth of 2.20% in 2016.

This is a conservative forecast, Vermeij said, reflecting a weak economy and the tendency of what little market demand there is to be fulfilled by existing capacity and imports rather than new orders.

Apparent steel consumption in the first half of 2016 grew by 2.60% year-on-year while imports grew about 11% year-on-year, Vermeij said.

The growth outlook for next year is stagnant, he said, because private consumption, which has been the main driver of steel consumption in 2016, will not be able to compensate for low public spending and low private investment.

The automotive sector is the only industrial sector in Europe operating at pre-crisis production levels. All others, including residential construction, are still slowly recovering, he said.

In the third quarter of 2016, Europe’s GDP grew by only 0.40% year-on-year, and market conditions in Europe are not likely to improve.

Investors, however, are not only deterred by a weak market, but by geopolitical instability and high risks, Vermeij said, pointing to how the refugee crisis and Brexit have provided shocks to the European Union, threatening financial stability, trade deals and the Schengen agreement.

However, despite the bleak outlook, market sentiment remains positive, Vermeij said.

And Georges Kirps, director general at EUROMETAL, was more optimistic about steel consumption in 2017.

“The German economy is still booming,” Kirps said, “[and] I think European steel consumption growth will be somewhere between one and two percent.”

European industrial production has so far reflected this sentiment, increasing 1.10% year-on-year in the third quarter.

Lorenzo Holt, Metal Bulletin