The European Steel
Association (Eurofer) is citing “the lingering impact of several downside
factors” from 2022 “continues to feed uncertainty and pressure the steel market
outlook for 2023” on that continent. The “outlook deteriorates for 2023 as
uncertainty persists,” adds the federation.
Regarding the 2022
factors, the Brussels-based association cites high energy prices, production
costs and Russia’s invasion of Ukraine as contributing to “a
deeper-than-expected recession in the second quarter of this year.”
Adds Eurofer, “This would
mark the fourth negative performance in the past five years.”
On a more positive note,
the steel federation adds, “A stronger recovery is projected in 2024,
contingent on more favorable conditions in the overall industrial outlook.”
The high cost of making
steel in Europe has been noticeable, says Eurofer, remarking that in a climate
of overall weak demand, imports to the continent retain “historically high
demand market share,” at 22 percent.
“The European steel
industry has been navigating through numerous challenges for a long time now,
from the pandemic to the energy crisis and other ongoing disruptive factors,”
says Axel Eggert, director general of Eurofer.
Eggert says the industry
needs to stay on track with investments despite the disappointing business
climate, some of which are tied directly to the use of ferrous scrap.
“The EU is at a critical juncture to achieve its decarbonization, circularity
and strategic autonomy targets, for which steel is a key enabler. Supporting
European green steel becomes therefore crucial to drive the uptake of
renewables, hydrogen and the cleantech economy in the EU.”
In the first quarter of
this year, apparent steel consumption in the EU dropped by 11.7 percent,
continuing a downward trend, says Eurofer. An improvement in the apparent steel
consumption figure is not expected for the second quarter.
Industry sectors that
consume steel are not necessarily unhealthy, says the association, citing the
automotive, mechanical engineering and transport sectors as performing well.
Lackluster performers include “domestic appliances, tubes and metalware,”
according to Eurofer.
The construction sector, meanwhile, “is
anticipated to enter a recession in 2023 owing to a contraction in the
residential construction sub-sector, due to the rise in interest rates
impacting demand,” states the association.