Stronger steel demand is still foreseen in 2015 - EUROFER

Economic growth in the EU remains weak in 2014, with particularly disappointing performance in the eurozone in recent months. This is because exports are the main driver of growth, not domestic demand.

In the third quarter, the numbers are weakening, but show that the EU economy will continue to struggle, gaining momentum. The EU economy is now under pressure from geopolitical tensions and concerns about the impact of trade sanctions imposed by Russia. In addition, there are fears that the sluggish economic development of France and Italy could impede the recovery of the EU. Also, slowing growth in large emerging economies complicates conditions for steel exports.

Steel demand growth in the EU slowed in Q2 2014 to 4.4 percent YoY. However, demand growth was favorable for steel imports, which rose 26 percent YoY, with long product imports growing even 49 percent YoY. Meanwhile, supplies of EU factories to the domestic market have stabilized at the level of two years ago, which suggests that they are surrendering their positions to suppliers from third countries.

Sluggish steel demand and reduced inventories will lead to a slight drop in steel demand in the second half of 2014, which will lead to an overall growth of 2.6 percent year-on-year. At the same time, the forecast still confirms the possibility of a moderate recovery in the EU steel market in 2015. The challenging business environment for the EU steel industry will continue as long as demand growth is sluggish and imports remain strong.