LONDON – Steel demand in the European Union is expected to drop 1.6% this year, hit by raging inflation, supply chain problems and cheap imports, industry group Eurofer said on Thursday.
That is slightly more optimistic than the 1.9% drop in apparent steel demand the group forecast when it last updated its outlook in October.
Apparent steel demand measures steel output plus imports net of exports and incoming material being further processed in the bloc.
However, it downgraded its estimate for demand in 2022 to a slide of 4.6% compared to a previous forecast of 3.5% fall.
“We are witnessing what we have been warning against in the past months,” said Eurofer Director General Axel Eggert.
“Energy crisis, inflation, supply chain issues (and) unparalleled decarbonisation costs, combined with massive cheap imports from third countries, are a toxic cocktail for industry.”
In the third quarter of last year – the most recent actual data available – steel consumption tumbled 11.2% year-on-year to 32.2 million tonnes, the lowest reading since the COVID-19 pandemic, a statement said.
The sector is expected to recover in 2024 with a 1.6% rise in demand, but this was very uncertain, depending on energy prices, the war in Ukraine, inflation and supply chains, Eurofer added.
The weaker demand persisted despite resilience in industries that use steel, including auto and construction, which saw production activity rise 4% year-on-year in the third quarter, Eurofer said.
Total steel imports fell 17.2% year-on-year in the third quarter due to the faltering demand, but this was the first decline since 2021.
Imports have surged by 35% from 2020 until 2022 using annualised figures for last year, according to data on the Eurofer website.