Although the forecast for steel production and consumption in the EU is positive for this and the coming years, according to Professor Roland Dohrn from the University of Duisburg-Essen, who shared his presentation at the EUROMETAL Steel Net Forum Iberia, in Porto, Portugal, on March 17, it still has chances for a downward revision. At the same time, the EU GDP forecast for 2023 has been revised downwards compared to last year, while 2024 will see higher results “because after a bad year there is always a catch-up”, according to Professor Dohrn.
More specifically, while steel production worldwide fell by 4.3 percent to 1.83 billion mt, steel production in the EU fell by 10.5 percent year on year, to 136.7 million tons in 2022, according to the WorldSteel Association. Meanwhile, it is worth mentioning that last year the situation in the European steel industry was affected by the high prices for energy, the high volatility of prices and demand, which were mainly caused by the military aggression of the Russian Federation against Ukraine. This year, however, according to representatives of the sector, the challenge from energy prices has lost its power somehow, but the war in Ukraine will continue to affect the world and Europe as well as it has a strong impact on the food sector, and inflation in the EU is highly dependent on this sector. In particular, the inflation rate in Europe is forecast to drop by 5.5 percent in 2023, while in 2024 it may show a two percent recovery.
In 2022, all the leading European steel producers reduced their production last year, including Germany, down by 8.4 percent, Italy down 11.6 percent, France down 13 percent and Spain down by around 19 percent. At the same time, this year, according to EUROFER, production of steel may drop by 0.6 percent and may increase by 1.8 percent in 2024, while EU GDP is likely to increase by 0.1 percent and 1.9 percent, respectively in 2023 and in 2024. “Production of steel mills grows slower than GDP in the EU,” Professor Dohrn said. Meanwhile, following a 4.6 percent drop in apparent steel consumption in 2022, this year it is forecast to decrease by 1.6 percent and to rebound by 1.6 percent next year.
Apparent steel consumption grew slower than production of steel given the lower steel input per produced unit in some sectors like electric vehicles. Besides, the EU has been witnessing changing production patterns within sectors; for example, thermal isolation of existing houses needs less steel than new buildings.
At the same time, in terms of end-user demand, in the construction sector, which has a 35 percent share in total steel consumption, it is expected to drop by 1.6 percent year on year in 2023 but to increase by 1.6 percent next year. End-user demand in the automotive sector, which has an 18 percent share in total steel consumption, is forecast to increase by 1.1 percent compared to last year, but to drop by 0.6 percent in 2024, according to the presentation made by Juan Mañá Herranz from ArcelorMittal Spain.