Northern Europe long steel prices steady despite Eurofer’s stark warning on survival of EU steel sector
In the week to November 22, mills attempted price rises in the rebar market; but buyers have so far resisted and somre mills are likely to begin cutting production in a bid to rebalance supply-demand dynamics, sources told Fastmarkets.
But European steel association Eurofer issued a statement on Wednesday highlighting the importance of committing to the green transition to save the industry from irreversible decline and calling for urgent action to be taken the EU and its member states, to avoid the steel and manufacturing sectors becoming obsolete.
But Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was unchanged at €610-620 ($642-653) per tonne on Wednesday.
Rebar producers were targeting price rises of around €50 per tonne in the week to November 28, but there has been no interest, sources said.
“Offer prices have gone up considerably, with domestic mills asking for up to €50 per tonne or even more, but these prices have not yet been accepted by the market,” a trader source said.
“But there is a very good chance they will be [accepted] in January, when we are back [after the end-of-year] holidays. And some mills will initiate production stoppages for a longer than normal during the coming holidays to get demand in balance with production,” the source added.
And halting production could put upward pressure on prices, Fastmarkets understands.
International scrap prices have fallen as a result of slow steel sales, sources said, and Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $336.95 per tonne on Wednesday – down from $343.01 per tonne on November 20 and down from $360.32 per tonne month on month.
Turkey only booked half the cargoes it would normally, Fastmarkets understands, because slow steel sales mean inventories have been building up and with the end of year fast approaching that is unlikely to change, so production has reduced and less scrap is required.
Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was also unchanged at €600-610 per tonne.
Stark warning
In its statement on Wednesday, Eurofer said that without definitive action, further production cuts, plant closures and a worsening downturn would be the inevitable consequence.
“How many more plant closures, job losses, and stalled decarbonisation projects will it take before the EU and [its] member states wake up? Europe’s de-industrialisation is accelerating, with steel, automotive, renewables and batteries all on the brink,” Eurofer director general Axel Eggert said.
“We urge the new European Commission and EU governments to stop this bloodshed and adopt swift measures on trade, [the carbon border adjustment mechanism], energy and steel scrap, while working on a structural solution to preserve our industry’s competitiveness,” he added.
Decarbonisation adds to ‘fragile’ EU market facing overcapacity
The “fragile” European steel market is facing a crisis more severe than the financial downturn, with margins shrinking amid growing overcapacity at a time when steelmakers are needing to fund decarbonisation plans, Kallanish learns from a recent webinar.
The webinar, organised by Eurofer and hosted by Euractiv, heard panellists urgently calling for the European Commission to take action to support the sector, which has become uncompetitive amid high energy costs and large investments required to decarbonise.
Mario Arvedi Caldonazzo, vice-president of Eurofer, and chief executive of Arvedi, said: “The European steel industry is experiencing the most severe crisis since the 2009 financial and economic downturn. It is a real existential issue now.”
Caldonazzo pointed to the spillover effects of overcapacity in China into other markets, from where imports into Europe have now surged.
“We can’t compete against the Chinese state, because the Chinese steel industry is basically state owned and is completely subsidised by the central government; this is [an] unfair practice, and we have to react immediately,” he said.
“Europe lacks competitiveness. The high energy costs, the lack of raw materials such as scrap, which is the critical and strategic raw material for guaranteed transformation, conversion for our steel industry,” he added. “On both issues, energy and raw materials, the Commission has to intervene.”
Overcapacity was also noted by Giorgio Gori, MEP and vice-chair of the ITRE Committee. “The overcapacity is a huge threat to the survival of the European steel industry and requires appropriate measures to protect our production,” he observed. He also cited the significantly higher cost of energy than competitors, the difficult access to raw materials and the lack of public investment.
The industry move towards decarbonisation was also putting additional pressure on the European market.
“We added to a fragile situation which is now speeding up the problem. We added a market intervention which is unseen before when we said we want to decarbonise the steel industry in a decade,” said Christian Ehler, MEP and member of the ITRE Committee.
Caldonazzo also noted that public grants were difficult to access for decarbonising European companies despite support being announced as part of the Green Deal in 2019. He added that if decarbonisation is the priority for the EU, then companies need market defence, with the high costs of green steelmaking making the market uncompetitive.
Meanwhile, Judith Kirton-Darling, general secretary of IndustriAll, said of the European steel industry: “This house is on fire and unless we bring in the fire brigade right now the house will burn down.”
She called for action “at pace” and noted the danger of deindustrialisation and the geopolitical consequences of losing the strategic steel industry as a key energy transition material.
“We really need the new Commission to arrive running on the defence of this strategic industry,” she said. “We can’t wait any longer.”
“We are now in the real danger zone where if political decisions are not being taken right now, we risk major investment decisions going elsewhere in the world,” she added.
Kirton-Darling also pointed to the lack of an industrial policy attached to the targets set by the Green Deal. “You can’t have a target without an industrial strategy of how you reach the target.” However, she did see a way forward through the steel action plan. “The elements are there on the table. There is a question of sequencing. We need all the parts of the action plan on the table to have coherence,” she said.
Gori noted that the Commission needs to help create a green steel market and put forward the demand through public procurement and incentivise its use. Kirton-Darling also echoed this, stressing that from day one for the new commission, things like public procurement “are really low hanging fruit”.
Carrie Bone UK
EU steel tube output to drop 2% in 2024
Following a milder-than-projected output decline of 1.5% in 2023, the EU steel tube sector is expected to face a more significant drop of 2% on-year in 2024. This will be followed by moderate growth of 0.8% in 2025, according to Eurofer.
The downturn in the tubes and pipes segment reflects a widespread recession affecting all major EU steel-using industries, including construction, mechanical engineering, domestic appliances, metalware, and automotive, Kallanish notes.
In the second quarter, EU steel tube output fell for the second consecutive period, decreasing by 1.6%, after a 4.4% decline in the previous quarter. This downturn has been exacerbated by war-related disruptions and ongoing supply chain issues that began in the second half of 2022. Additionally, the energy crisis that emerged in 2022 and persisted into 2023 has severely impacted investment in the sector, particularly pipeline project developments in the EU.
In the long term, demand for large welded tubes from the oil and gas sector is not expected to improve significantly as the EU shifts toward LNG shipping, reducing reliance on pipeline gas. Global oil demand is unlikely to drive new pipeline projects in the short term due to geopolitical uncertainty and a weak economic outlook, with oil demand in the EU projected to decline throughout 2024. Demand from the construction sector will also ease, contributing modestly to growth, while demand from the automotive and engineering sectors is expected to remain relatively strong, Eurofer says.
EU steel-using sectors faced a notable decline in Q2 output, which fell 2.1% after declining 2.4% in Q1. This has broken a period of resilience seen until the end of 2023, when growth was recorded at 0.9%.
Elina Virchenko UAE
Eurofer gives up on expectations for demand recovery in 2024
According to Eurofer’s latest report, demand is expected to shrink by 1.8% to 127 million tonnes in 2024. This is a downward revision from the previous forecast from end-July of a slight recovery by 1.4%.
At the beginning of the year, Eurofer predicted a recovery of apparent steel consumption in the EU by 5.6%, rising to 137 million tonnes in 2024. Since then, this has been the third time Eurofer has downgraded its forecasts.
“In 2024, due to poor developments in the industrial outlook and decreasing demand from steel-using sectors, particularly construction and automotive, apparent steel consumption is projected to experience another recession, albeit moderate,” Eurofer said, adding that a modest recovery is foreseen in 2025.
According to the association, apparent steel consumption in the EU in 2025 will increase by 3.8% to 132 million tonnes, still below the pre-pandemic volume of 145 million tonnes in 2019.
After a short-lived rebound of apparent steel demand in January-February 2024 related to restocking, activity in the European flat steel market has been deteriorating, with prices under pressure.
For example, in February, Fastmarkets’ steel hot-rolled coil index domestic, exw Northern Europe averaged €738.28 ($797.86) per tonne ex-works.
Since then, the average monthly HRC price has been decreasing gradually, and for September, it reached €567.22 per tonne. Similar levels were last recorded in November 2020, when the index averaged €530.72.
At the beginning of October, European mills tried to push prices up by increasing their offers.
But demand remained weak, and deals continued to be concluded at lower levels.
“Mills’ attempts for price increases were unsuccessful, but at least the HRC prices stopped dropping further,” a buyer source told Fastmarkets.
Industry sources commented that any hopes for a price rebound would be postponed to the first half of 2025. A potential positive impact on the domestic HRC price could be uncompetitive import offers combined with some output cuts in the local market, Fastmarkets understands.
End-user outlook
Automotive
Eurofer said that automotive output in the EU27 had previously increased by 8.3% overall in 2023, despite the overall subdued investment outlook.
“However, output levels have remained low in historical terms, far below the levels seen in 2018 and 2019,” Eurofer added.
The sector was expected to decline by 6.5% in 2024 (revised downward from a 3% decline in a previous outlook) and to increase by just 1.9% in 2025 (revised downward from a 2.3% growth).
According to Eurofer, the reasons for the negative trend were related to the protracted weakness of the manufacturing sector, overall EV standards uncertainty and lackluster consumer confidence.
“Demand is projected to remain weak until the macroeconomic picture and consumer disposable income substantially improve, given the rather unpredictable economic outlook and uncertain economic growth perspectives”, Eurofer said.
But according to the association, demand has shown some resilience against all the uncertainties around the implementation of EVs and preparing the ground for the ban of petrol cars by 2035.
Negotiations between steel mills and original equipment manufacturers (OEMs) in the automotive industry for HRC contracts for the first half of 2025 were still underway, and OEMs would likely seek substantially lower prices for the next year contracts, sources reported.
Notably, several sources told Fastmarkets that for the first half of 2025 contracts, OEMs were asking for discounts up to €200 per tonne, which were “unacceptable” from suppliers’ point of view.
For the second half of 2024, long-term contracts with automotive OEMs were closed at €730-750 per tonne — and even at €700 per tonne in some cases — in contrast with €800 per tonne in the first half of the year.
Construction
The largest steel-using sector — representing 35% of total steel consumption — construction consumption fell by 0.8% in 2023.
For 2024, Eurofer expected that construction activity would continue to decrease, falling by 1.3% rather than the previous prediction of a 1.4% decline.
The sector is expected to grow by 1.3% in 2025 (revised downward from 1.8%).
According to Eurofer, construction output has been under pressure since the third quarter of 2022.
“This is due to several factors, including rising construction material prices, labor shortages in some EU countries and increasing economic uncertainty. Most notably, higher interest rates in 2022 and 2023, driven by monetary policy tightening, have also played a key role,” Eurofer said.
All these factors impacted the sector negatively, especially the private non-residential sub-sector.
Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe averaged €635.63 per tonne at the midpoint in September, up slightly by €8.13 per tonne from a monthly average of €627.50 per tonne at the midpoint in August. But the assessment was sharply down from a monthly average of €589.38 per tonne at the midpoint in September 2023.
EUROFER calls for urgent trade actions to address Global Steel Overcapacity
The European Steel Association (EUROFER) is calling on countries involved in the Global Forum on Steel Excess Capacity (GFSEC) to take immediate and decisive trade measures in response to rising global steel overcapacity.
Newly released data from GFSEC indicate that this issue continues to worsen, putting thousands of jobs at risk and distorting the global steel market, especially in Europe.
EUROFER’s Director General, Axel Eggert, emphasized that market forces alone cannot resolve the overcapacity problem. He urged GFSEC countries to adopt a comprehensive strategy that includes unilateral trade actions, particularly targeting nations that have withdrawn from the forum or continue to export excess steel. “The open market approach only benefits countries with unchecked overcapacity. We need actions that cover the full range of steel products and address all affected countries,” said Eggert.
At today’s GFSEC Ministerial Meeting, it was projected that global steel overcapacity could reach 630 million metric tonnes by 2026, five times the EU’s crude steel production in 2023. This surplus threatens economies with open markets, particularly in the EU, and undermines efforts toward decarbonization and innovation, which are critical for the green transition.
Eggert stressed that European steelmakers are heavily investing in decarbonization, but these efforts are at risk due to the flood of underpriced, carbon-intensive steel entering the market. “We need emergency measures to address this issue and find a structural solution to its root causes,” he concluded.
InfoAcero magazine for September 2024
Check out the latest issue of our INFOACERO magazine for September!
We highlight some of its contents below:
- Opinion: Mr. José Velasco – UAHE Board of Directors
- Steelmaking: Eurofer Forecast – third quarter report
- Events: 20th Steel Products Forum – Program and registrations
- Metal: Productive Activity and Foreign Trade – Confemetal Current Affairs Report September
- UAHE Training: scheduled courses for October and November 2024
EUROFER: European steel industry and manufacturing at existential risk
The latest developments in the steel sector and across critical value chains are worrying signs of a steady deterioration, endangering the survival and the transition of steelmakers and their key manufacturing customers in Europe, such as automotive. A Clean Industrial Deal including swift and radical measures in EU industrial, energy and trade policies, is the last chance to ensure Europe’s prosperity and shield European industry from cheap imports driven by third countries’ unfair trade practices, overcapacity and lower climate ambition, urges the European Steel Association.
“The risk of de-industrialisation in Europe has never been more evident than today. The latest news coming from Germany and Eastern and Central Europe are only the tip of the iceberg we have been warning about since a decade, and which is now impacting not only steel but also key value chains such as automotive and wind. The situation is explosive; both industry and decarbonisation are at risk”, said Axel Eggert, Director General of the European Steel Association (EUROFER). “Either we get a robust Clean Industrial Deal, or Europe will inevitably become an industrial museum powered by Chinese and American clean technologies”, he warned, adding that: “The key requirements for the EU steel industry to remain in Europe are, firstly, immediate and comprehensive trade action stopping unfair trade practices and global overcapacity being offloaded onto, and destroying, the EU steel market. Secondly, a waterproof Carbon Border Adjustment Mechanism (CBAM) that will not allow steel imports from countries that circumvent climate protection by exporting to the EU from a few ‘clean’ installations and selling their dirty steel in their domestic and non-EU markets. Furthermore, we need affordable clean energy and lead markets for EU-made green products to support the transition”.
“The European steel sector is a litmus test for the entire EU industry’s health. We rang the alarm bell several years ago. Now the symptoms of deindustrialisation have spread to the value chain. We need, as Mario Draghi said, radical change in EU policies to reboot our competitiveness. This is the last train for Europe’s decarbonisation and prosperity”, concluded Mr. Eggert.
EUROFER Press release – EU steel industry at existential risk
Eurofer lowers EU demand forecast amid ‘worsening’ uncertainties
Eurofer has revised down its EU apparent steel consumption forecast for 2024 to 1.4% growth – from 3.2% – amid a steeper-than-expected downward trend. Steel-using sector output is now seen declining 1.6% – versus 1% – while imports’ share in EU steel consumption remains at a historically high 27%, Kallanish notes.
This comes after first-quarter apparent consumption slumped 3.1% on-year to 31.9 million tonnes. Although moderate quarterly improvements are expected throughout 2024, volumes will remain below pre-pandemic levels, with the overall evolution of steel demand remaining highly uncertain, Eurofer observes.
Domestic deliveries contracted 5.8% in Q1, after a moderate, 1.3% increase in the preceding quarter. Imports continued increasing, growing 12% in Q1.
Despite proving resilient in 2023, EU steel demand is suffering from “a worsening combination of uncertainties”, including high energy prices, persistent inflation, economic uncertainty and geopolitical tensions, Eurofer notes. These are exacerbated by a manufacturing crisis affecting the largest steel-using sectors.
Steel-using sector output fell 1.9% in Q1 as a result of a continued downturn in the construction, mechanical engineering, domestic appliances and metalware sectors. Following a strong 2023, automotive output also entered negative territory, a trend expected to continue throughout 2024, with Eurofer revising down the sector’s 2024 forecast to 3% contraction versus the previous 0.4% contraction forecast.
The overall steel-using sector output growth forecast for 2024 was revised down from the previous 1% contraction due to the second consecutive year of recession forecasted for the construction sector, persistent geopolitical tensions, and the lagged impact of high interest rates on manufacturing.
“The situation requires urgent action at EU level, as both European steel production and related clean tech value chains are at risk,” says Eurofer director general Axel Eggert. The association looks forward to the European Commission delivering a European Clean Industry Deal with a Steel Pact at its core, he adds.
Adam Smith Poland
Eurofer trims outlook for 2024 steel consumption
According to Eurofer, approximately 129 million tonnes of steel represented the apparent steel demand of Europe last year. This levels is the same as 2020, when Europe suffered the impact of the first wave of the Covid-19 pandemic. As a consequence, demand fell by more than 6% y-o-y in 2023, the fourth annual decline recorded during the last five years.
In 2024 apparent steel demand is set to recover by about 5.6%, not enough to return to the volumes achieved in 2022.
The slower-than-expected recovery of apparent consumption is caused by the persistent weakness of real steel demand expected for 2024. This year, real demand should drop 0.4% below 2023, folowing the last year’s y-o-y decline of 3.1%.
“In 2024, conditional on more favourable developments in the industrial outlook and improvement in steel demand, apparent steel consumption is set to recover (+5.6%) albeit at a slower pace than previously forecasted (+7.6%). The overall evolution of steel demand remains subject to very high uncertainty,” Eurofer explains.
Within a framework of weak steel demand, in 2023 the market share of imports out of the total consumption in Europe remained high. Eurofer calculated that in Q3 2023, the share was still 27%, including finished and semi-finished products.
Emanuele Norsa Italy
EUROFER welcomes anti-circumvention investigations on imports of stainless CRC
The Commission initiated on 14 August two anti-circumvention investigations regarding possible circumvention via Taiwan, Turkey and Vietnam of the anti-dumping and anti-subsidy measures imposed in 2021 and 2022 against imports of stainless steel cold rolled flat products from Indonesia. EUROFER welcomes the openings and the immediate registration of the imports from those countries towards a possible retroactive application of the existing duties.
“Since the imposition of both anti-subsidy and anti-dumping measures, the direct imports of Indonesian stainless steel cold rolled flat products (SSCR) virtually disappeared”, said Axel Eggert, Director General of the European Steel Association (EUROFER). “However, the unfair practices and in particular the massive support granted to local producers by the Indonesian and Chinese governments through raw material manipulation and financing under the Belt and Road initiative are now exported from Indonesia to third countries as stainless slabs or stainless hot rolled coils that are then re-exported as finished stainless steel, including SSCR, into the EU27 market”.
A massive amount of EU imports of SSCR from the targeted third countries are in fact indirect imports from Indonesia, with Indonesian slabs or hot rolled coils undergoing only limited processing before being re-exported to the Union. These flows of indirect imports constitute a significant share of the exports of SSCR from these countries to the EU, starting to pick up over the course of the investigations in 2021 and skyrocketing after the imposition of the measures in 2022.
“Those indirect imports show clear evidence of circumvention, similar to the practices already recognized and addressed by the Commission in the previous circumvention investigation on imports of stainless hot rolled sheets and coils from Turkey. The immediate registration of the imports from Taiwan, Turkey and Vietnam is therefore crucial to ensure the effectiveness of the existing measures”, concluded Mr. Eggert.