In the new report released by the European Confederation of Iron and Steel Industries' (EUROFER) economic committee, analysis of EU industry in general and the EU steel market in particular for the first quarter of 2009 and the forecasts concerning 2009-2010 failed to portray an optimistic picture as regards the current market situation and also as regards the prospects for the near future.
According to the report, while the 2009 first quarter data confirm that the economic downturn in the EU is gathering pace, EU industry has been hit hard by falling exports and tight credit supply. Domestic and international export demand for manufactured goods has continued to fall sharply. Against the extremely difficult business conditions, companies are struggling to survive, cutting investment and reducing operational stocks to the bare minimum as long as the slump in confidence and tight credit availability continues.
"All sectors will be seeing strongly reduced output levels, particularly in the first half of this year," EUROFER said in its report.
The report also details projections for the development of the steel using sectors in the EU, and forecasts that the production of steel using industries will continue to shrink in 2009, but this trend will decelerate in 2010. According to the steel weighted industrial production index, the construction industry is expected to decline by nine percentage points in 2009, and see a slight increase of 0.9 percentage points in 2010, while the automotive sector will drop by 24.3 percentage points in 2009 and will increase by 5.6 percentage points in 2010. Meanwhile, shipyards are expected to show an 8.7 decrease in 2009, and a 4.9 fall in 2010. The tubing industry will also drop by 17.8 percentage points in 2009, but will increase by four percentage points in 2010, all compared to 2008. This will apparently have a reducing impact on the steel consumption figures during the subject periods.
EUROFER forecasts that apparent steel consumption in the EU in 2009 will decline by 45.1 percent in the first quarter, by a further 40.5 percent in the second quarter and by 22 percent year on year in the third quarter, and by almost 30 percent in the whole of 2009. Apparent consumption is expected to recover somewhat in the final quarter of 2009, basically because of the already very low level of consumption in last quarter of 2008.
The report projects that the apparent consumption levels will not register a significant upward trend in 2010 either.
In addition, the EU is expected to see a 24 percent decrease in steel imports and 25.1 percent in exports with third countries in 2009. Although imports from China have stopped increasing, EUROFER says that the imports from other countries are rising despite the weak market. It cites Russia, Turkey, Taiwan, India and South Korea as having increased their deliveries to the EU in January. Imports to the EU are expected to increase 9.1 percent and exports from the EU by 8.5 percent in 2010.