EUROFER’s Q4/2010 steel market outlook shows a better than expected second quarter 2010, not only with respect to economic growth but especially to activity in the steel-using sectors.
Robust export activity and stock replenishment in the supply chain fuelled a rebound in the manufacturing sector in the EU.
Despite a further contraction in construction activity, output in the steel-using industries grew almost 7% year-on year.
However, this positive growth figure hides diverging trends at the country level. Germany is currently Europe’s powerhouse and most Northern Eurozone countries have benefited from its export success while the business situation in southern Europe is still quite depressed.
As a result, also steel market fundamentals gained further strength in quarter 2. Apparent steel consumption grew by 35% compared to Q2/2009. An encouraging sign is that not only the stock cycle contributed to this positive
development. Also improving activity in the steel-using industries in the EU has been supportive to steel demand.
The outlook for the remainder of 2010 and 2011 is for a continuation of the rising trend in steel consumption. While support from the inventory cycle is expected to ease further in the coming period, the positive trend in end-user consumption is seen gaining more importance.
The key question is whether the rebound in manufacturing will continue. There also remains a substantial gap to bridge with pre-crisis levels of industrial activity and EU steel demand. Moreover, steel manufacturers, distributors and
users are still faced with cash constraints, difficult access to credit and limited visibility on the market situation with respect to imports and raw material prices.
Abridged from the Eurofer report: ‘Economic and Steel Market Outlook 2010-2011’ available at http://www.eurofer.eu/index.php/eng/content/download/387/2316/file/Market Report-2010-October.pdf