Economic growth in the EU has remained soft so far this year, with a particularly disappointing performance of the euro area in the second quarter, according to the Economic and Steel Market Outlook 2014-2015/Q4 2014 Report from the Economic Committee of the European Steel Association (EUROFER). Exports were the key driver of growth rather than domestic demand.
EUROFER stated that the indicators losing strength over the third quarter suggest that the EU economy will continue to struggle to gain momentum. Confidence has gradually come under pressure again due to geopolitical unrest and more specifically amid concerns about the impact of trade sanctions imposed by Russia. But there are also concerns that the sluggish economic performance of France and Italy could stall the recovery in the EU. Moreover, slowing growth in the large emerging economies is acting as a drag on exports.
According to EUROFER, sluggish final steel demand and destocking will result in a slight drop in apparent steel demand in the second half of the current year. For 2014 as a whole this will result in a year-on-year growth of 2.6 percent. While lower than the July forecast, it still confirms the view of a moderate recovery of the EU steel market. Fairly similar growth is forecast for 2015.
"Steel market conditions are foreseen to remain muted in 2015, although a moderate strengthening of demand is to be expected in line with the mild further rise in activity of the steel using sectors in the EU. However, imports are to remain on a high level, thereby exerting severe margin pressure on EU steel mills. Difficult business conditions for the EU steel sector will continue as long as demand growth remains dull and imports remain on an elevated level," said acting EUROFER director general Axel Eggert.