core sector communique

Steel end-users show resilience despite recessionary economic environment

EUROFER’s Q1-2012 economic and steel market outlook shows that while the EU economy probably slipped into a shallow recession in the final quarter of last year, activity of downstream steel-users has remained rather firm.

The latest economic data confirm that the Eurozone’s debt crisis is eating its way into the real economy. Since mid-2011, economic sentiment has come down sharply on the back of the further intensification of the sovereign debt crisis. Risk aversion in the financial sector has led to a contraction in credit supply. While it is widely recognised that austerity is required to avoid the sovereign debt crisis from getting worse, it will also stifle economic growth and affect employment. Investment and private consumption will be subdued until confidence returns to the markets.

EUROFER director-general Gordon Moffat: “When confidence will return to the markets is still difficult to say, but it is encouraging that forward looking indicators such as industrial confidence and manufacturing PMIs appear to have taken a turn for the better in recent weeks. Companies will remain cautious for the time being, but there is no indication that industrial orders will fall off a cliff. Order backlogs are quite strong. The outlook for most steel-users is relatively benign”.

EU apparent steel consumption grew 7.2% in 2011. Steel purchasers waiting at the side-lines after the summer due to rising concerns about the economic situation, downstream business conditions and access to financing and credit together with destocking in the distribution chain caused steel demand to weaken in the 2^nd half of 2011.

Early 2012, reduced domestic and import supply appears to be balanced with softer demand. Rather low stock levels – particularly at distributors – will require some replenishment in H1-2012, which will ease later in the year. Buyers anticipating changes in prices and supply could exacerbate this seasonal pattern, despite the fact that inventories will continue to be managed cautiously.

EUROFER director-general Gordon Moffat sees the market strengthening again in 2013: “The market will take a pause in 2012, but we foresee only a very mild reduction in demand. Real and apparent steel consumption will strengthen again in 2013”.

Represented by EUROFER, the European steel industry is a world leader in its sector with a turnover of EUR 170 billion and direct employment of 360 thousand highly skilled people, producing on average 190 million tonnes of steel per year. More than 500 steel production and processing sites in 23 EU member states provide direct and indirect employment and a living for millions of European citizens.

The European steel industry is the backbone of Europe’s prosperity and an indispensable part of the European supply chain, developing and manufacturing in Europe thousands of different, innovative steel solutions. The European steel industry provides the foundation for innovation, durability, CO2 reductions and energy savings in applications as varied and vital as automotive, construction, machinery, household goods, medical devices, and wind mills.

Steel is 100% recyclable, it can be recycled over and over again without loss of properties. All the steel in collected end-of-life products is recycled, irrespective of the percentage of steel in the products. Steel therefore contributes significantly to the long-term conservation of the fundamental resources for future generations. About 45% of the total EU steel production is recycled steel scrap.