LONDON (Reuters) – Apparent steel consumption fell by 7.7% year on year in the second quarter of 2019, after a drop of 1.6% in the first quarter, and is likely to remain subdued next year, European steel industry association Eurofer said on Thursday.
It blamed ongoing weakness in the European Union’s manufacturing sector caused by lower exports and investment and said trade tensions and uncertainty over Britain’s departure from the European Union were adding to the downward pressure.
Leading indicators forecast the downturn to continue for the remainder of the year, with no rebound before the second quarter of 2020, Eurofer said.
“The current downslide of the manufacturing sector in the EU is not likely to bottom out soon,” Axel Eggert, director general of the European Steel Association (EUROFER), said.
“Escalating trade disputes between the U.S. and several of its main trading partners and persistent uncertainty regarding Brexit could further impact the EU steel industry.”
The European Union has already approved limits to the amount of incoming steel to protect its own industry following Washington’s imposition of steel tariffs, but Eggert said tougher restrictions were needed.
“We see an urgent need to further improve the quality of the safeguards and align them with current market conditions,” Eggert said in a statement that coincides with LME Week industry events.
Apparent steel consumption measures how much steel producers are selling to industry and is the number that impacts steel company’s results.
Real consumption also reveals how much stock is being used.
Eurofer said worsening business conditions had led to a steeper than expected reduction in stocks as manufacturers drew on inventories. It predicted some stabilisation next year and modest restocking.
The world’s biggest steelmaker ArcelorMittal <MT.AS> has also cut its forecast for global steel demand and reduced its output in response.
(Reporting by Barbara Lewis, additional reporting by Eric Onstad; editing by Jason Neely and Kirsten Donovan)