Q1 2012 apparent consumption down by 8.5%YoY
Steel buyers remain extremely cautious
EU mills regain market share as imports ease
Demand seen falling 5% in 2012
Moderate recovery in 2013

In Q1 2012, EU apparent steel consumption fell by 8.5% YoY due to lower end-user demand and cautious inventory management in the distribution chain which contrasted strongly with the marked stock build-up in the same period of last year. The very moderate restocking in early 2012 did not result in a meaningful change in inventory levels and boosted orders only for a short while.

Since March 2012, bookings are coming down again, reflecting that steel purchasers maintain their cautious buying strategies and that they are keeping stocks as low as possible as long as uncertainties and risks overshadow market fundamentals in the remainder of the year.

Domestic deliveries by EU mills falling 5.5% YoY in Q1 2012 implies that domestic steelmakers regained market share from third country suppliers. Indeed, imports decreased significantly in Q1; they were almost 30% down on the tonnage imported in Q1 2011 due to a combination of weak demand and a weakened Euro.

A fairly similar pattern is expected for Q2-2012. Apparent consumption is estimated to have fallen sharply compared with the same period on 2011, but basically at the expense of imports from 3rd countries. The outlook for H2 2012 is for the downward trend in apparent consumption to gradually bottom out. On average, demand is seen stabilizing around the depressed levels of H2 2011 which were dragged down by heavy destocking and slowing end user activity. Total apparent steel consumption in 2012 is forecast to fall 5%.

On balance, apparent consumption is foreseen to decrease by 5% in 2012. In 2013, improving end-use demand fundamentals and the need to rebuild to some degree inventories in the steel supply chain will be supportive to apparent steel consumption growing by 2.5%.

Source - EUROFER

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