Pandemic punctures economic outlook, says EUROFER

Axel Eggert, director general of the EUROFER said that the third quarter of 2020 was a period between two waves of the pandemic. "Some measures had been relaxed and a partial economic recovery occurred in the third quarter, but the fourth quarter was marred by the reimposition of measures. 2020 is likely to be one of the worst years on record, even if we will see positive figures in the fourth quarter”.

According to EUROFER, shutdown measures implemented by governments that began in earnest last March severely impacted manufacturing activity and steel-using industrial sectors. However, some of the measures that had the greatest impact on the economy were loosened as of June 2020, though many measures remain in effect or have been reinforced in recent months.

“The EU should use this crisis as an opportunity to use the recovery fund to support industry in meeting its decarbonisation ambitions – starting with sectors, such as steel, that have already shown how they can help support the aim”, Eggert said, adding that Europe wants to come back from this crisis in a greener, more sustainable way. "The European steel industry is ready – under the right conditions, with the appropriate regulatory framework, and a means to ensure a global level playing field – to roll out new technologies and approaches to revolutionise steelmaking”.

EU28 apparent steel consumption fell (-11.6%) year-on-year in Q3 2020 (that is for the seventh consecutive quarter, after an unprecedented drop (-25%) in the second quarter) and amounted to 32.8Mt.

EUROFER reports that the volume for Q3 2020, albeit higher than the record low seen in Q2 reflects the unprecedented deterioration in steel demand due to severe disruption from the Covid-19 pandemic, in addition to the negative factors that had materialised in the preceding quarters and had already led to a sharp, continued reduction in steel consumption.

As a result, the downturn in steel demand led to the eighth consecutive fall year-on-year in domestic deliveries in the EU in Q3 2020 (i.e. -8%, much lower than -28.1% recorded in the second quarter).

Data for the third quarter showed a continued downturn in imports from third countries. After the severe drop (-16.8%) in Q2 2020, imports from third countries dropped even more severely in Q3 2020, with a year-on-year fall (-25.4%), that is the fourth consecutive quarterly drop of more than 10%.

The pandemic has further hit EU industrial sectors at a time when these had already been experiencing a severe downturn and were coping with serious challenges. Over the course of 2019, business conditions in the manufacturing industry had continued to deteriorate. This downward trend gained speed in H2 2019, particularly in the automotive industry, while the construction sector continued to outperform other major steel-using sectors.

This has resulted in a pronounced slowdown in output growth in steel-using sectors, culminating in unprecedented drops over Q2 2020, mainly because of severe lockdown measures imposed by governments in March and April last year. Total output in steel-using sectors fell (-24.4%) in Q2 2020. In Q3 2020, output in steel-using sectors rebounded compared to the previous quarter – thanks to restarted industrial activity across the EU – but has fallen year-on-year (-6.4%).