The EU steel market faces continued decline amid ongoing conflicts and economic uncertainty, reports EUROFER. A 5.2% contraction in steel consumption is forecasted for 2023, marking the industry's fourth recession in five years. Despite this, a 7.6% rebound is expected in 2024 contingent on better industrial prospects.
The EU steel market continues to grapple with various challenges. A grim outlook for 2023 shows a 5.2% contraction in steel consumption, a more severe drop than previously expected. This downturn marks the industry's fourth recession in the last five years.
Factors such as the ongoing Ukraine conflict, uncertainty over energy prices, and high inflation have contributed to the market's decline. Apparent steel consumption decreased for the fifth consecutive quarter, reaching 35.6 million metric tons in Q2 2023. Though better than Q1 2023, these numbers are still well below those seen in prior years.
On the supply side, domestic deliveries have seen a 6.5% drop in Q2 2023, mirroring weak demand. This decline follows an 11.9% rebound in 2021 and comes after a 7.9% decrease in deliveries last year. The picture isn't any brighter for imports, which fell 10.2% in the same quarter.
However, there is a silver lining. Despite the overall negative economic landscape, the Steel Weighted Industrial Production (SWIP) index has shown some resilience. Growing 0.8% in Q2 2023, the index displays unexpected toughness, particularly in the automotive, mechanical engineering, and transport sectors. The construction sector, on the other hand, has entered a recession, with a 2.5% decline this quarter.
The EU steel-using sector's output has been less impacted by the economic challenges than expected. While the European Central Bank's interest rate hike has had a limited effect, the construction sector, which accounts for 35% of steel consumption, is the only major exception.
Various factors, including high energy prices, inflation, and weak demand, will continue to challenge the industry. Nevertheless, the outlook for 2024 is somewhat positive. A 7.6% increase in apparent steel consumption is expected, given more favorable industrial prospects. While SWIP is expected to grow at a slower pace in 2024, the outlook is cautiously optimistic.
The EU steel industry has faced several downturns in recent years, made worse by conflicts and economic uncertainty. While there's little expectation of improvement in the short term, there are signs of resilience in specific sectors. The year 2024 offers a glimmer of hope, with a projected rebound in steel consumption.