The European Steel Association Eurofer believes that the recovery in demand for steel products will take some time, in addition to the restart of industrial production, which is currently taking place in Europe.
The association decided not to publish forecasts for 2020 and 2021. Apparent and real demand for steel as the extreme impact of the coronavirus has yet to be fully appreciated.
“Market conditions are not expected to improve until the fourth quarter of 2020 or early 2021. Much will depend on the duration of the industrial lockdown in the steel sectors, which has almost halted new orders for steel (on the supply side) – although there are already signs of some restart in the automotive and other sectors, as well as the ability of governments to reduce the huge economic and social costs of the pandemic in order to support demand, ”comments Eurofer. “Consumer demand due to the huge social upheaval caused by the pandemic will remain depressed throughout 2020; therefore, it will take some time before the end of the industrial blocking will lead to a significant increase in production, ”the association says.
However, once the economy returns to normal, the association believes the downside risks that existed prior to the coronavirus pandemic will also persist, such as fail-safe Brexit and trade concerns. “All downside risks that significantly weakened the steel industries and steel demand during 2019 will continue to persist, namely import distortions and persistent global overcapacity and weakness in the global production cycle,” continues Eurofer.
Since the beginning of April, the association has asked the European Union to significantly reduce protective quotas for the second half of 2020 in order to bring them in line with declining demand. While the review of measures is ongoing, it is clear that further tightening of import measures in Europe could lead to retaliatory measures from other countries, as Eurofer is also aware of. “The new escalation of protectionist trade measures will also contribute to a sustained negative outlook,” the association adds.
In its latest report, Eurofer showed that apparent steel demand fell 5.3% year on year in 2019 to 154 million tonnes, the lowest level since 2015. Imports of steel products to Europe decreased by -11.5% yoy, while exports fell by only -1.5% yoy.