The European Steel Association (EUROFER) is claiming that a 'perfect storm' is brewing and it could knock the steel industry in Europe back into a period of severe crisis.

Speaking of surging import volumes and stalling economic growth, combined with high and volatile raw material costs and not forgetting sharply growing carbon costs, EUROFER's director-general, Axel Eggert commented: "The European steel sector has had less than two years of stability, a period which, arguably, ended in mid-2018 with the imposition of the US' Section 232 measures.

According to Eggert, 2017 saw 8,000 jobs return to the sector, with another 2,000 following in 2018, bringing total direct employment in the steel industry back up to 330,000. "However, if this mix of negative conditions persists, these gains could be reversed," Axel warned.

EUROFER claims that steel markets have slowed abruptly, both in Europe and worldwide. Growth in steel demand was 3.3% in 2018 and EUROFER is forecasting a decline of 0.4% in 2019.

Eggert says that stalling demand coincides with import volumes rising at an ever faster rate. "These grew by 12% year-on-year in 2018 – 2017 was already a record – and 2019 might see volumes increase even further," he said, adding that import growth underlines the absurdity of a safeguard which includes programmed periodic 'relaxations' of 5%: in February and July 2019, and again in July 2020, even though demand is expected to be flat. "This is an over-generous gift to steel exporters to the EU."

Meanwhile, says EUROFER, the carbon price has now reached EUR25 per tonne of CO2, which is considerable given the relative size of the steel sector's tight margins. Pared with supply volatility for iron ore in the wake of the Vale/Brumadinho dam disaster in Brazil, alongside high and volatile scrap and coking coal prices, the European steel industry is struggling on several fronts simultaneously.

"Any one of these factors would cause difficulties for the sector," said Eggert, adding that, in combination, they are a perfect storm of negative dynamics beyond the control of the steel industry.

Following the financial and economic crisis, the the European steel industry has struggled to swing back on to an even keel. This has been characterised by depressed demand growth and aggressive targeting by exporters to the EU in a global market awash with excess production capacity.

For Eggert, it's clear: "We have now has as little as 18 months to rebuild – and achieved just as the economic cycle seems to have reached the tail end," he said. "For the European steel industry not to be swept away we need policy makers to handle the primary threat: the surge of imports that has consumed virtually the entirety of the growth in EU steel demand for the better part of a decade."

EUROFER wants the EU safeguard to be more robust and effective and it wants EU policy makers to continue working on WTO reform and international co-operation to remove the causes of subsidised global overcapacity.

Eggert concluded: "Despite being well-intentioned, the current safeguard framework has not prevented surging imports. EU producer margins are on the floor, which undermines their ability to invest in skills, technology and low-carbon development. The alarm bells are already ringing and action is required today to prevent this flood washing the sector away."