The European steel market in the second quarter of this year was better than expected, not only with respect to economic growth but especially to activity in the steel using sectors, said the European Confederation of Iron and Steel Industries (EUROFER) in its fourth quarter report of the ‘Economic and Steel Market Outlook 2010-2011'. Robust export activity and stock replenishment in the supply chain fuelled a robust rebound in the manufacturing sector in the EU.
Commenting, EUROFER's director general Gordon Moffat said, "The recovery clearly shifted into a higher gear in Q2. Despite a further contraction in construction activity, output in the steel using industries grew almost seven percent year on year. However, this positive growth figure hides diverging trends at the country level. Germany is currently Europe's powerhouse; most northern euro zone countries have benefited from its export success. In contrast, the business situation in southern Europe is still quite depressed".
As a result, said EUROFER, steel market fundamentals also gained further strength in Q2 2010. Apparent steel consumption in Europe grew more than 35 percent compared with the depressed level of consumption in the same quarter of 2009. An encouraging sign is that not only the stock cycle contributed to this positive development. Also, improving activity in the steel using industries in the EU has been supportive of steel demand, according to EUROFER.
EUROFER said that the outlook for the remainder of 2010 and 2011 is for a continuation of the rising trend in Europe's steel consumption. While support from the inventory cycle is expected to ease further in the coming period, the positive trend in end-user consumption is seen to be gaining more importance.
"At this point in time the key question is whether the rebound in manufacturing will continue. Despite uncertainties regarding the strength of the global economy and international trade, EUROFER sees the recovery being sustained in 2011. However, there remains a substantial gap to bridge with the pre-crisis levels of industrial activity and EU steel demand. Moreover, steel manufacturers, distributors and users alike are still faced with cash constraints, difficult access to credit and limited visibility on the market situation with respect to imports and raw material prices," Mr. Moffat added.