EUROFER: EU steel exports will start to taper off again in H2

The latest customs data on steel trade show that in the first quarter of 2010 steel exports from the EU to third countries remained close to the level registered in the preceding quarters, according to the third quarter report of the ‘Economic and Steel Market Outlook 2010-2011', released by the European Confederation of Iron and Steel Industries (EUROFER).
 
The EU's steel exports in the first quarter of 2010 were almost 25 percent higher than the low level of exports in the first quarter of 2009. Over time, EU steel exports have remained fairly stable in terms of overall volumes, averaging some 26 million mt per year in the 2003-2009 period.
 
The existence of a trade surplus or deficit is largely explained by the prevailing trend in imports. Lower steel import levels since mid-2008 have resulted in the EU running a trade surplus, but basically in long steel products. This has also been the case in the first quarter of 2010.
 
The combination of a construction sector downturn in Europe and demand for construction related steel products holding up significantly better in North Africa and the Middle East resulted in EU steel mills selling more long steel products abroad. This situation is probably not going change in the short term.
 
First estimates for second quarter steel exports in 2010 show exports picking up slightly compared with the first quarter. However, projections for the second half of the year indicate steel exports will start to taper off again. In the key export markets steel buyers are increasingly adopting a wait-and-see attitude due to lack of visibility on project activity, steel prices and consequently, competition heating up. On balance, EUROFER said that this will result in steel exports rising by less than five percent in 2010.
 
EUROFER's forecast for 2011 signals that EU steel exports are expected to remain close to the 2010 level. Improving demand fundamentals in the EU market and particularly construction activity picking up from low levels will result in EU steel mills focusing on supplying domestic markets instead of the international export markets.