EU Steel Recovers in 2017

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GALWAY, IRELAND--May 23, 2018--Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The European Union's (EU's) steel sector had a healthy 2017 after years of struggling thanks to improved business conditions.

The European Steel Association (EUROFER) reported that the sector benefitted from increased investment and exports, and that while the outlook is positive, it is overshadowed by the increasing threat of protectionism policies in the U.S. and the potential of retaliatory measures that could lead to a global trade war.

Production activity in EU steel-using sectors ended 2017 "on a strong footing," with output rising by 5.8% year-on-year in the fourth quarter. Total output was up by 5% over the whole year, with most sectors reporting their best performance since 2011. The main exception was the automotive industry, where output growth slowed down due to an expected lowering of demand in the EU and in key export markets.

Total production activity in the steel-using sectors is estimated to have grown by 2.7% in the first quarter of 2018, thanks largely to a negative trend in steel tube output in the EU. Prospects for 2018 and 2019 are "quite healthy," with forecasts to grow by 2.8% overall in 2018 and by 1.9% in 2019.

In the EU's 28 member states, apparent steel consumption fell by 0.3% year-on-year in the fourth quarter of 2017. Domestic deliveries to the EU market rose in the fourth quarter--3.4% year on year--similar to the trend in supply flows registered in the third quarter of 2017. Imports from third countries were 9% lower than in the same period of 2016. Total steel imports fell by 1.8% in 2017, reflecting a 7.9% year-on-year rise over the first half of the year and an 11% year-on-year drop over the second half.

"The latest data shows that the European steel industry has finally struggled its way back towards a firmer footing", said Axel Eggert, director general of EUROFER. "Worryingly, this recovery is being put at risk by the U.S.' Section 232 action and the resulting global economic fallout. Surges of deflected imports to the EU market could cause irreparable damage to the EU steel industry if adequate safeguards are not put in place".

EUROFER said that the "prospects for a continued recovery in EU steel demand are positive," but that the supply side situation could be "negatively affected by import distortions". It warned that there is an increased risk of a sudden surge of imports in the wake of the decision by the U.S. to impose blanket tariffs on foreign steel. "This may cause a significant deviation of otherwise U.S.-bound steel trade flows towards the EU market", it stated.

Industrial Info has been tracking the proposed tariffs and at the start of May reported on the 30-day delay by the U.S. government on a final decision over proposed steel and aluminium tariffs. For additional information, see May 7, 2018, article - U.S. Postpones European Steel and Aluminium Tariffs.

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