European steelmaking margins should recover in 2024 from this year’s trough as cost pressures ease and production increases, says Fitch Ratings.
About 30 million tonnes of hot metal capacity is currently idled in Europe, including long-term idles, as mills’ margins have been pressured in the second half of this year by costs remaining high despite steel prices falling. Utilisation rates in 2023 are at below 60%, the credit rating agency observes.
European apparent steel consumption fell over 7% on-year in 2022, with a 5% drop expected in 2023. Demand is expected to recover in 2024, with forecasts ranging from 5.8% to 7.6%, supported by automotive, industrial production and infrastructure spending, Fitch points out in a report seen by Kallanish.
Higher energy costs, rising geopolitical tensions, lower-than-expected economic growth and the possibility of prolonged high interest rates remain risks.
Increasing CO2 costs under EU ETS have meanwhile resulted in low-to-negative profits over marginal costs for European mills.
Adam Smith Poland
