The European Steel Association (Eurofer) predicts steel demand to pick up in 2021 backed by consumption growth in construction and automotive sectors in European Union (EU).
In Q1 (Jan-March), Europe’s steel consumption slid by 12pc to 37.6mn mt, slightly more than the 10.8pc decline in Q4FY2019 amid COVID-19 related disruptions, Eurofer stated on August 5. The larger impacts of COVID-19 pandemic were visible in Q2 on the back of lockdown measures imposed by the governments.
In Q1, the imports from third countries fell by 20pc to 8.4mn mt following a drop of 24pc in Q4FY2019 and are likely to remain under pressure due to continued stockpiling and capacity expansion by major non-EU exporting countries.
European steel sector was already struggling with difficult conditions back in 2019 amid downturn in the bloc’s manufacturing sector; trade tensions and uncertainty over Britain’s exit from the EU. COVID-19 pandemic further added to the industry’s woes damaging its value chains, mainly construction and automakers due to lockdown which resulted in decline of output in steel-using sectors by 7.2pc more than the 1.3pc fall in Q4 of 2019.
The construction output is expected to drop by 5.3pc in 2020 and rebound by 4pc in 2021 though the EU governments have announced impetus for completion of public construction and infrastructure projects which is likely to support the sector.
Automotive sector is likely to decline by 26pc in 2020 on the back of weak demand from major markets such as the US, China and Turkey along with trade tariff disputes between the US and EU for automobiles and automotive parts and components. The sector is likely to bounce back in 2021 with 25.3pc.
Eurofer expects the slowdown in overseas market to further worsen the challenges that EU economies are likely to face.
As per European Commission’s Summer forecast, eurozone economy is likely to contract by 8.7pc in 2020 and would bounce back in 2021.