EUROFER: EU Steel Demand May Grow in 2016, But Uncertainty Abounds
01/27/2016 - Steel demand is relatively weak, prices are low and imports are continuing to pummel the European market. And with more than enough to go around, producers will be fighting for orders, creating uncertainty as the industry heads deeper into 2016, according to EUROFER, the European Steel Association.
In a market forecast for 2016 and 2017, EUROFER said that present circumstances aside, it expects to see some modest demand growth, about 1.5 percent on average, as the EU’s overall economic recovery appears ready to broaden and become self-sustaining.
The association said that capital investment is likely to take the baton from private consumption as the key driver of overall economic growth. Therefore, investment-driven steel markets, such as construction and mechanical engineering, are expected to gain momentum.
Still, 1.5 percent is “unspectacular,” it said, and it remains to be seen whether EU mills are able to capitalize on any of that growth.
“The key uncertainty with respect to actual market conditions for EU steel mills is third-country exports,” said EUROFER director general Axel Eggert in a statement.
“China should stop exploiting the export channel for its overproduction due to domestic steel demand having peaked. If this continues, EU mills will lose further market share, not only in the EU but also in their key export markets.”
The association also noted that risks to the global economic outlook are substantial, especially including the potentially negative impact from weaker-than-expected growth among major emerging markets.
The association said that capital investment is likely to take the baton from private consumption as the key driver of overall economic growth. Therefore, investment-driven steel markets, such as construction and mechanical engineering, are expected to gain momentum.
Still, 1.5 percent is “unspectacular,” it said, and it remains to be seen whether EU mills are able to capitalize on any of that growth.
“The key uncertainty with respect to actual market conditions for EU steel mills is third-country exports,” said EUROFER director general Axel Eggert in a statement.
“China should stop exploiting the export channel for its overproduction due to domestic steel demand having peaked. If this continues, EU mills will lose further market share, not only in the EU but also in their key export markets.”
The association also noted that risks to the global economic outlook are substantial, especially including the potentially negative impact from weaker-than-expected growth among major emerging markets.
