Alessandro Sciamarelli: Steel demand unlikely to recover until early 2021

Thursday, 14 May 2020 14:34:08 (GMT+3)   |   Istanbul

Steel demand will not see a recovery before early 2021 and by then the EU will have to be ready to face huge import volumes that could flood the market, warned Alessandro Sciamarelli, director of market analysis and economic studies of the European Steel Association (EUROFER) during the webinar session organized by SteelOrbis on May 13. Mr. Sciamarelli stated that the steel-using sectors had been seriously affected already in 2019 before the outbreak of the pandemic due to the worsening conditions of global trade and the weakening of the manufacturing cycle. Only construction showed greater resilience last year, while the automotive industry suffered its second consecutive drop year on year, which was even more pronounced than that recorded in 2018.

Regarding steel imports into the EU, Mr. Sciamarelli said that in 2019 the region’s steel import volume decreased by 11.5 percent, though imports appeared very volatile and the current safeguard system allowed an unusual peak in arrivals in July. The main exporting countries remained the same as in 2018: Turkey, Russia, South Korea, India and China. In February this year, imports from Turkey showed a 57 percent year-on-year drop, while those from China fell by 84 percent due to the Covid-19 emergency with which the Asian country was already fighting. Despite the recent drop in imports from Turkey, in February the arrivals of hot rolled coils from the country remained above the average for the period 2015-2017, encouraging EUROFER to file a complaint for an antidumping investigation against the said product. (At the time of writing of this article, the EU has announced that it has initiated an antidumping duty investigation against HRC imports from Turkey).

According to the EUROFER official, various structural problems remain; weakness in manufacturing caused by the slowdown in exports, possible trade tensions, global overcapacity, coupled with low consumer demand. EUROFER expects the automotive industry to pay the highest price, with double-digit percentage drops, while the construction sector will once again show greater resistance than the others, "also thanks to government interventions aimed at compensating for the negative effects of the pandemic". European steel producers are already severely affected by the ongoing crisis and have come to terms with a collapse in orders, with interruptions in the supply chain, shutdowns or closings of plants, production cuts of approximately 40 percent and huge layoffs. For this reason, the producers themselves cannot afford to face distortions that could derive from massive volumes of low-cost imports once demand shows a recovery, Sciamarelli noted, leading to the request to review the safeguard measures with a possible reduction in quota volumes.


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