EU apparent steel consumption continued to grow rather vigorously in Q2 2011. Growth was just over 11% as compared with 16.5% in the first quarter. Inventory replenishment continued to have an effect on demand, but the key driver for growth was clearly the solid increase in real consumption.

Apparent steel consumption

Customs data confirm the continuation of high imports from third countries entering the EU steel market in Q2. Imports grew 45% YoY and were almost 20% up on the preceding quarter, rising to the highest quarterly level since Q3 2008. The huge rise in imports resulted in EU domestic deliveries in Q2 2011 falling below the Q1 level and imports accounting for a 21% share of the EU steel market.

Supply pressures in the EU steel market have risen during summer. Particularly stocks in the distribution chain have increased further as the market entered the seasonally weaker holiday period while deliveries were still coming in. At the current level of distribution chain sales, this is unlikely to improve towards the end of the year, stocks account for 3 months of shipments. Ample stocks and short delivery times in combination with slowing demand growth and high levels of uncertainty surrounding the business climate in the months ahead imply that bookings will continue on a hand to mouth basis.

Import license data suggest that import pressure could ease to some extent, which appears to be confirmed by July and August import data. In the whole of 2011 apparent consumption is forecast to rise by 7.5%.

In 2012, real consumption will drive apparent consumption growth, but a cooling down is inevitable. The stock cycle effect is expected to be fairly neutral. Imports are forecast to come down from the high levels registered in 2012. On balance, apparent steel consumption is forecast to rise by 2% in 2012.