Recovery in steel demand will take time: Eurofer

The European steelmakers’ association Eurofer believes that the recovery in demand for steel products will take some time, beyond the industrial production restart currently happening in Europe, Kallanish notes.

The association has decided to not issue forecasts for 2020 and 2021 apparent and real steel demand yet, as the coronavirus emergency impact remains yet to be fully assessed.

“Market conditions are not expected to improve before the fourth quarter of 2020 or early 2021. Much will depend on the length of the industrial lockdown in steel-using sectors that has almost put a stop to new steel orders (on the supply side) – although there are already signs of some restart in automotive and other sectors – as well as on governments’ ability to alleviate the huge economic and social costs of the pandemic so as to support demand,” Eurofer comments. “Consumer demand, due to the huge social disruption caused by the pandemic, is set to remain depressed throughout 2020; therefore, it will take time before the end of industrial lockdown leads to substantial output increases,” the association says.

Once the economy returns to normal conditions however, the association believes that downside risks present before the start of coronavirus pandemic will also remain, such as a no-deal Brexit and trade issues. “All the downside risks that had considerably weakened steel-using sectors and steel demand during 2019 will still be there, namely import distortions and continued global overcapacity and weakness in the global manufacturing cycle,” Eurofer continues.

Since beginning of April the association has requested that the European Union to significantly reduce the safeguard quotas for the second half of 2020 in order to align them to the fall in demand. While the review of the measures is ongoing, it is apparent that a further tightening of import measures in Europe could lead to retaliations from other countries, something of which Eurofer is also aware. “A new escalation in protectionist trade measures would also contribute to a sustained negative outlook,” the association adds.

In its latest report Eurofer revealed that apparent steel demand had fallen by -5.3% year-on-year in 2019 to 154 million tonnes, the lowest level since 2015. Imports of steel products in Europe decreased by -11.5% y-o-y while exports were down only -1.5% y-o-y.