EU steel market stuck in slow motion - EUROFER

EU steel market stuck in slow motion - EUROFER
EUROFER's October report on the Economic and Steel Market Outlook 2009-2011 shows that the EU economy most likely turned the corner during the 3rd quarter of 2009. However, the recovery penciled in for the coming quarters will be slow and is still surrounded by high levels of uncertainty.Mr Gordon Moffat director general of EUROFER said that "While the economy probably reached a turning point, the EU steel market will remain stuck in slow motion for the time being."Prospects for the EU’s steel using sectors, such as automotive and the construction sector, remain subdued. Despite stabilizing financial markets, financing is still a bottleneck for many companies. Industrial orders are still weak despite some inventory replenishment. The report shows that while year on year output growth should turn positive again in the 2nd quarter of 2010, it could take to 2011 before a more pronounced rebound in output begins.Weak activity in the steel using industries and sharp destocking in the steel supply chain resulted in steel demand falling by 45% YoY in the first half of 2009 and by almost 32% in the 3rd quarter. The inventory situation is now better aligned with the current weak level of steel demand. Some customers returned cautiously to the market to fill gaps in their stocks, this led to the downward trend in orders at EU mills bottoming out.The stock cycle will also set the stage in 2010. Some inventory build up following heavy destocking in 2009 will lead to a technical recovery in steel demand. With a forward view to 2011 it is expected that rising end user activity should provide a broader basis for steel demand growth. So far this year, imports were at much reduced levels compared with 2007 and 2008.Mr Moffat warns that "Global crude steel production increasing in anticipation of a recovery in steel demand which yet has to materialize remains a major risk for the EU supply demand balance."

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