EUROFER expects EU real steel consumption to rise slightly in 2010
According to the "Economic and Steel Market Outlook 2010-2011" report released by the European Confederation of Iron and Steel Industries (EUROFER), ongoing weak end-user activity in the steel using sectors resulted in EU real steel consumption falling by 24.5 percent in the third quarter of 2009 and by an estimated 15 percent in the last quarter of the year. Thus, the decline in real consumption amounted to almost 25 percent in 2009.
The latest forecasts from EUROFER's Economic Committee signal that the trough in the cycle will be reached during the first half of 2010. The slow but gradual improvement in business conditions during the year will translate into year-on-year growth in real steel consumption, turning slightly positive again from the third quarter of 2010 onwards.
In spite of the upward trend, the low starting point of the upward phase of the steel market cycle in Europe and the still hesitant rate of improvement will keep actual real consumption at a low level for the time being. Even in 2011, real consumption will remain well below the consumption levels registered in the first years of this decade.
On balance, real steel consumption is expected to increase 0.3 percent in 2010 and by a further 4.5 percent in 2011.
Comparison of the projected growth in activity of the Steel Weighted Industrial
Production (SWIP) Index with real consumption signals that growth differentials between SWIP and real consumption will markedly narrow compared to 2008 and 2009. Steel Intensity* is expected to increase again and as such act less as a drag on consumption.
*Steel intensity is the ratio of steel consumption to steel weighted production in the steel using industries (SWIP). History shows that during a recession, steel intensity temporarily becomes weaker due to changes in investment patterns and increased focus on cost reduction via material efficiency
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