The
European steel sector showed a marked slowdown in the first quarter of 2022
compared to 2021, suggesting bleaker prospects for the rest of the year, the
European Steel Association (Eurofer) reports.
A
review of the steel market published in late August indicates apparent steel
consumption is expected to experience its third recession in the past four
years, with a decline of 1.7%.
‘The
evolution of steel demand remains subject to high uncertainty fuelled by the
ongoing energy crisis, inflation, supply chain disruptions and Russia’s war in
Ukraine,’ the Eurofer release says. ‘Import penetration has remained
considerably high.’
Director-general
Axel Eggert says a gloomier outlook for the steel market for the rest of 2022
is consolidating, a mood likely to spill on to 2023.
‘We
have been facing skyrocketing energy prices and bottlenecks in supply chains
for almost a year now, and the dire consequences of Russia’s invasion of
Ukraine for half a year,’ he adds. ‘Yet, there is no sign that uncertainty will
ease any time soon, while steel imports in the EU are still significant: this
is detrimental for a healthy EU steel industry.’
Despite
substantial growth in apparent steel consumption in 2021 (+15,2%) and in the
first quarter of 2022 (+6.5%), the volumes are still below the pre-pandemic
peak of 2018. Eurofer says a declining trend is expected for the rest of 2022,
resulting in a moderate recession and in a further halving of steel-using
sectors’ output growth (+1.1%).
EU overview
Domestic
deliveries had a nearly flat growth in the first quarter of 2022 (+0.2%, after
+1.2% in the fourth quarter of 2021), mirroring the sluggish demand seen since
the second half of 2021.
Even
so, in 2021 deliveries sharply rebounded (+11.3%), after 2020’s slump (-9.6%).
Imports into the EU continued to increase significantly (+28.8%) over the first
quarter of 2022, although less marked than Q4 and Q3 of 2021 (+43.4% and +47.7%
respectively).
Despite
a limited rise (+0.4%) in the second quarter, import penetration remains
considerably high.
EU steel-using sectors
Eurofer
says a more nuanced picture emerges for steel-using sectors in Q1 2022. The
output growth figure of 4.9% is better than the previous quarter’s performance
(+2.6%), meaning a fifth consecutive year-on-year growth.
However,
favourable conditions for construction, mechanical engineering and transport
were offset by negative results for automotive and domestic appliances.
The
organisation says unfavourable conditions stemming from Russia’s ongoing war in
Ukraine, with worsening supply chain issues, energy crisis and high production
costs, are expected to negatively impact on those sectors spared so far.
‘This
is why the steel-using sectors’ output for 2022 has been revised downwards by
half compared to Eurofer’s previous forecasts (from 2% down to 1.2%).’