Extremely weak activity in the steel using sectors and very sharp destocking in the steel supply chain resulted in apparent steel consumption in the European Union falling by 45 percent year on year in the first half of 2009 and by a further 33.8 percent in the third quarter - according to the "Economic and Steel Market Outlook 2010-2011" report released by the European Confederation of Iron and Steel Industries (EUROFER).
The downturn in the EU steel market bottomed out after summer as business conditions started to improve somewhat, supported by an upturn in international trade and stimulus measures from EU governments.
Figures for the final quarter of 2009 confirm a continuation of this trend. Inventory information shows stocks at stable low levels; the effect of the stock cycle has switched from strongly negative to neutral. Orders and deliveries have been rising compared with the depressed levels registered in the same period of 2008 and the first half of 2009. Relatively low imports and reduced levels of domestic EU deliveries have resulted in the EU steel market supply being much better aligned with still significantly reduced demand levels. Apparent consumption is estimated to have fallen by around eight percent in the last quarter of 2009 and almost 35 percent in the whole of 2009.
According to EUROFER, low inventory levels at the start of 2010 will be supportive of market dynamics gradually gaining strength during the year. Any further improvement in demand side fundamentals should trigger a corresponding need to replenish inventories from their current low levels. This will provide the major boost for the 12.5 percent rise in apparent consumption expected in 2010.
The rebound in real steel consumption in 2011 will broaden the basis for growth in apparent consumption. This will also lead to a further positive stimulus from the stock cycle. Apparent steel consumption is projected to rise by 7.6 percent next year.