Commodity Online
LONDON: Beware! If the Steel makers are eyeing the European market to get big orders for their production, it may not be coming through. The reason is that steel consumption in Europe has come down by around 43 per cent in the first half of the year and China is the only country which is on a construction spree now.

However, indicators suggested that the economic downturn could bottom out over coming months, European steelmakers’ lobby Eurofer said in its Economic and
Steel Market Outlook 2009-2010.

The report added that the slump in steel demand has been caused by a combination of a drop in output in steel-using sectors, and continued destocking in the steel supply
chain.

Output of the EU’s steel using sectors like automotive and construction fell by almost 25% year-on-year in the 1st quarter of 2009; a similar drop in output is estimated for the 2nd quarter.

Eurofer also noted macroeconomic data pointing to a bottoming out of the current economic situation. While hard data has so far continued to provide evidence of the EU sinking deeper into recession, recent surveys and leading indicators suggest that the economic downturn could bottom out over the coming months, the statement said.

Looking forward, destocking and weak activity in the Steel using sectors will continue to depress apparent steel consumption in the 3rd quarter of 2009. However from the 4th quarter onwards the market is expected to see a low-level equilibrium as the negative effect of the stock cycle starts to ease, according to the report.

On average, apparent steel consumption will fall by almost 33% in 2009 compared to 2008. However, in 2010, the stock cycle reversing to slightly positive will result in apparent steel consumption growing by almost 14%.

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