In 2017, the EU manufacturing industry and construction sector benefited from an investment-led domestic upturn and improving exports, according to the Economic and Steel Market Outlook 2018-2019/Q1 2018 Report from the Economic Committee of the European Steel Association (EUROFER). A healthy outlook for these steel users bodes well for EU steel demand in 2018 and 2019. The supply-side situation could, however, continue to be negatively affected by import distortions.
According to EUROFER, apparent steel consumption of EU-28 countries grew by 1.1 percent year on year in the third quarter of 2017, with domestic deliveries rising by 4.4 percent year on year. By contrast, the second quarter had been characterized by a contraction in domestic deliveries from EU suppliers due to a sharp increase in third country imports. Imports grew by around eight percent year on year over the first half of 2017, but the trend turned negative in the third quarter. Total steel imports in 2017 fell by almost 14 percent year on year.
The decline in imports has occurred in the context of improving global steel prices - largely driven by the Chinese market - which narrowed the gap between EU domestic prices and imports. Other restraining factors include the tempering of imports, particularly from China, but also other countries affected by the imposition of antidumping and countervailing measures by the European Commission. However, other third country suppliers have increased exports to the EU, substituting for this drop.
According to the EUROFER report, similar market conditions are expected to have shaped the supply-demand situation in the fourth quarter of 2017.
Overall, apparent steel demand in the EU-28 is estimated to have risen by 1.9 percent in 2017. Prospects for the continued recovery of EU steel demand are positive. The expected strength of most steel-using sectors bodes well for the demand side of the EU steel market. The supply-side situation could, however, continue to be negatively affected by import distortions.