During the second quarter of 2015 apparent steel consumption in the EU grew by 5.5% year-on-year; the first quarter had seen rather subdued growth. The year-on-year increase in steel demand can be largely explained by greater levels of real steel consumption in the EU. This increase is also aided by some inventory replenishment which was well aligned with the normal inventory cycle over the year.
Eurofer Director General Axel Eggert said, “Third countries’ imports have swollen to the highest quarterly level since the second quarter of 2011. This ballooning of imports confirms our fears that third country suppliers are the main beneficiaries of current market conditions. Their increase in market share is coming at the expense of domestic producers”. “EU producers are not winning from demand growth in their own market, domestic orders are under pressure” advised Mr Eggert.
This year, apparent EU steel consumption is expected to increase by 1.5%; around 2% growth is foreseen for 2016. EU steel companies will continue to be exposed to difficult market conditions, even as imports are predicted to experience some moderation in 2016. However, this moderation must be seen in the context of three consecutive years of relentless growth and aggressive pricing strategies by trade partners.
Output in EU’s steel using sectors rose by 2.1% year-on-year in the second quarter of 2015. As expected, output growth picked up some speed following a rather muted start in the first quarter of this year. Steel using sectors benefited from continued – albeit mild – pick-up in EU domestic demand, particularly in consumer-related market segments.
Mr Eggert commented, “The automotive sector remains the star performer, but construction activity is also showing signs of rebounding. In spite of slowing demand from the emerging markets, the weaker euro also helped Eurozone exporters to benefit from robust demand in the US, South Korea and India”.
Total activity in EU steel consuming sectors is predicted to rise by 1.9% in 2015 and by 2.5% in 2016.
In the second quarter of 2015, private consumption remained the key driver of GDP growth. The current strength of domestic economic fundamentals – as signalled by real activity data and forward-looking indicators – suggest that economic activity will sustain its steady growth pace into 2016.
Investment growth is expected to gain some traction next year owing to strengthening global trade and the euro remaining relatively weak for the time being. Low oil and other commodity prices should help the corporate sector to improve profitability. National and cross-border investment initiatives could also help in bridging the current EU investment gap.