International credit ratings agency Moody's has announced that low steel prices will hurt profitability, particularly for steelmakers with large US exposure. However, output volumes continue to be supported by strong and growing demand from the European car and construction industries, which together account for more than half of the region's steel consumption.
"Despite falling European steel prices, steel used by the automotive industry and for mechanical engineering has been on an upward trend since the end of 2014 driven by better GDP growth prospects. We expect apparent consumption will rise by one percent to 1.5 percent in 2015," said Hubert Allemani, vice president and analyst for European steel at Moody's.
The average prices for European hot rolled coil (HRC) and cold rolled coil (CRC) products fell sharply from May 2014 to January 2015 and have since stabilized. However, declining raw material prices, sluggish demand growth outside Europe and high levels of imports from Asia will keep prices under pressure in 2015 with limited recovery prospects, Moody's indicated.