EU steel market keeps its strength

In the first months of 2008 the EU economy has been able to keep its strength amid increasing growth fears. This is underpinned by largely stable or even improving confidence levels and still healthy first quarter 2008 economic indicators; particularly the labour market situation looks positive. Nevertheless, it remains to be seen how the EU’s coping mechanism performs in case of a prolonged US recession, further significant Euro appreciation or deepening financial crisis.

The current outlook sees the EU economy growing by 1.9% in 2008 and in 2009.

Meanwhile, the business situation in the key steel using sectors in the EU remained healthy; most companies report strong order books, relatively high capacity utilisation rates and difficulties in finding qualified personnel.

The current outlook shows 2.6% output growth in 2008. This represents a 0.4% downward reduction compared with the previous outlook, basically reflecting increased risks and uncertainties. Going into 2009, growth is seen developing in line with industrial production growth at around 2%.

The latest steel market projections indicate that following the 2006/07 period of exceptional end-use strength, real steel consumption growth will slow down to a more sustainable rate in 2008 and 2009. Steel inventories at the start of 2008 returned to levels largely in balance with the downstream activity situation. In addition, import license applications indicate that for the time being imports coming into the EU27 could remain below the very high levels registered in 2007. All in all, this bodes well for EU steel market conditions in 2008, particularly for the 1st half of the year. Nevertheless, imports disturbing the supply-demand balance remain a risk for the EU steel market.

On balance, apparent steel consumption is forecast to rise by 0.8% in whole of 2008. First projections for 2009 signal a growth in apparent consumption of just below 2% with a fairly neutral impact of the stock cycle over the year.

For the full report, click this link

Represented by EUROFER, the European steel industry is the world leader in its sector with a turnover of EUR 140 billion and direct employment of 370 thousand people, producing 200 million tons of steel per year.

Contact

Gordon Moffat, Director General +32 2 738 79 26 (g.moffat@eurofer.be)

Axel Eggert, Director Public Affairs +32 2 738 79 34 (a.eggert@eurofer.be)