EUROFER: Weak Confidence, Cash and Credit Issues Backfire on EU Steel Demand
07/16/2012 - EUROFER’s third quarter 2012 steel market outlook signals that market fundamentals may remain depressed longer than expected. Only from the second quarter of 2013 onwards is EU steel demand forecast to improve again, the European Steel Association (EUROFER) said this week.
EUROFER’s third quarter 2012 steel market outlook signals that market fundamentals may remain depressed longer than expected. Only from the second quarter of 2013 onwards is EU steel demand forecast to improve again, the European Steel Association (EUROFER) said this week.
EUROFER director general Gordon Moffat said, “Weak confidence in combination with liquidity and credit issues is showing a negative impact on the EU business climate. With global economic growth currently hitting a soft patch, export growth is also cooling down, despite the weaker Euro. This is bad news for the manufacturing sector and for steel consumption in the EU.”
Despite the EU escaping a technical recession in the first quarter of 2012, available data signal that economic momentum continued to slow down in the first half of the year. Moreover, sentiment has come again under pressure in recent months as concerns about the Eurozone crisis and particularly the indecisive way it is being dealt with by EU’s policy makers have resurfaced.
So far, solid order books have softened the manufacturing sector downturn, keeping activity and capacity utilization at satisfactory levels. However, corporate and consumer retrenchment will translate into new orders remaining subdued for the time being. Meanwhile, construction activity across the EU will remain under pressure as well, due to a lack of new publicly or privately funded projects.
This will backfire on steel demand in the EU. Apparent steel consumption is estimated to have fallen by 9% year-on-year in the first half of 2012. Demand in the second half of the year is seen stabilizing around the depressed levels of the first half of 2011. Total apparent steel consumption in 2012 is forecast to fall 5%.
“Our base case scenario is still a moderate improvement of the business cycle in 2013 and a corresponding pick-up in real and apparent consumption. However, confidence and access to finance need to improve to get the market moving upward again,” Moffat stated.
