Steel demand in EU set to drop around 2% in first half of 2023 - Eurofer

Apparent steel consumption in the European Union (EU) is set to decrease in the first half of 2023 by 1.9% as demand from the steel-using sectors is predicted to remain severely undermined, the European steel association, Eurofer, has predicted. Disruptions due to the Russia-Ukraine war, poor demand outlook amid inflation and severe rise in energy prices and production costs impacted steel consumption in the second half of 2022 ending the post-COVID positive dynamic.

These downside factors are expected to impact demand up until the second quarter of 2023. In the third quarter of 2022 apparent steel consumption fell by 11.2%, after a drop of 4.7% in the second quarter, totalling a volume of 32.2 million tonnes (mnt). Industrial production and steel demand may increase modestly by 1.6% in 2024 only if energy prices stabilise and supply chains recover from the impact of the war, Eurofer predicts.

Domestic steel deliveries in the EU showed weak demand over the third quarter of 2022 and saw a sharp decrease of 10.5%. Paralleling the continued deterioration in steel demand, imports into the EU - including semi-finished products - sharply decreased by 17.2% in the third quarter.

Steel-consuming sectors

Despite persisting supply chain issues affecting the automotive sector and the war in Ukraine, the steel-using sectors marked the seventh consecutive y-o-y quarterly growth of 4% in Q3 of 2022, with the positive trend continuing ever since the removal of the COVID-related lockdown measures.

Apart from the strong developments of the construction, mechanical engineering and transport sectors, automotive sector output recorded a remarkable rebound of 20.7% in Q3 of 2022.

The output of the steel-using sectors is expected to continue to expand in 2022 at 2.1% but the rapid deterioration of the global industrial and economic outlook coupled with the long-lasting effects of the rise in energy costs is expected to affect output in Q4 of 2022.

Due to the likely continuation of these downside factors into Q1 and Q2 of 2023, the output of steel-consuming sectors is expected to fall by 0.6% in 2023. This would be the second steel weighted industrial production index (SWIP) recession since 2013, after the one experienced in 2020 due to the pandemic.