"We finally see some light at the end of the tunnel," European Confederation of Iron and Steel Industries (EUROFER) director general Gordon Moffat has declared in the new economic and steel market outlook report for 2009-2010 released on June 30 by EUROFER's economic committee.
According to the report, while hard data have so far continued to provide evidence of the EU sinking deeper into recession, recent surveys and leading indicators suggest that the economic downturn could bottom out over the coming months. However, any recovery is expected to be fragile and still surrounded by uncertainties and downward risks.
The report also details that output of the EU's steel using sectors, such as automotive and the construction sector, fell by almost 25 percent year on year in the first quarter of 2009, and that a similar drop in output is estimated for the second quarter. The steep drop in order intakes since early 2009 implies strongly reduced capacity utilization rates for the remainder of the year. On balance, this leads to a very bleak outlook for the steel using sectors for 2009 with output down more than 18 percent on 2008, and a low level stabilization in 2010.
"Due to this dramatic fall in output and continued destocking in the steel supply chain, steel demand (apparent steel consumption) declined by 43 percent year on year in the first half of this year," EUROFER said in its outlook report.
EUROFER forecasts that destocking and weak activity in the steel using sectors will continue to depress apparent steel consumption in the third quarter of 2009. However, the report projects that from the fourth quarter onwards the market is expected to see a low level equilibrium as the negative effect of the stock cycle starts to ease.
In addition, apparent steel consumption on average will fall by almost 33 percent in 2009 compared to 2008, according to EUROFER. However, in 2010, the stock cycle reversing to slightly positive will result in apparent steel consumption growing by almost 14 percent.