The European Steel Association (EUROFER) has warned that surging import volumes, stalling economic growth, high and volatile raw material costs, and sharply growing carbon costs are coming together to form a perfect storm that could knock the European steel industry back into a period of severe crisis. The impact of this combination of factors has already begun to affect European steel producers, with facilities being idled and production being cut back significantly across Europe.
According to EUFOER, growth in EU steel demand was 3.3 percent in 2018 and there will be a decline of 0.4 percent in steel demand in 2019. On the other hand, the carbon price has now reached €25/ton of CO2, which is considerable given the relative size of the steel sector’s tight margins. Together with supply volatility for iron ore in the wake of the Vale dam disaster in Brazil, alongside high and volatile scrap and coking coal prices, the European steel industry is struggling on several fronts at once, the EUROFER statement noted.
“For the European steel industry not to be swept away, we need policy makers to handle the primary threat: the surge of imports that has consumed virtually the entirety of the growth in EU steel demand for the better part of a decade,” said Axel Eggert, general director of EUROFER, adding, “Despite being well-intentioned, the current steel safeguard framework has not prevented surging imports. EU producer margins are on the floor, which undermines their ability to invest in skills, technology and low-carbon development. The alarm bells are already ringing and action is required today to prevent this flood washing the sector away.”