Economic data confirm that the recovery in the EU is taking hold, although growth momentum remains rather modest, according to the Economic and Steel Market Outlook 2014-2015/Q3 2014 Report from the Economic Committee of the European Steel Association (EUROFER).
EUROFER stated that activity in the steel using sectors rose in the first quarter more robustly than foreseen. The forecast for the remaining quarters of this year shows activity steadily increasing further, with total growth of the steel using sectors projected at 3-3.5 percent in 2014 and 2015. A key factor in this growth scenario is the expected rebound of EU investment following underinvestment in the recent past. Especially investment in machinery and equipment is seen picking up, but also construction investment will rebound moderately.
EU steel demand growth in the first quarter of the current year was revised up to seven percent year on year, reflecting improving end-user activity and the corresponding need for distributors and end-users to adapt inventory levels. The second quarter estimates signal a continuation of this positive trend.
"The problem is that, while demand is strengthening moderately, so far this year imports have been growing more rapidly than domestic deliveries, which means that they are taking a larger share of the market. Imports look set to remain high in the remainder of this year and in 2015, if third countries continue to aggressively offload overproduction on the international markets. That would be a bad message for the EU steel sector which is already suffering from extreme margin pressure," commented EUROFER director-general Gordon Moffat. Particularly this year but also in 2015, higher growth of third country imports may result in imports, at least partially, absorbing the expected rise in demand, he said.
