EU’s steel imports in Q1 return to year-ago levels

As signaled from early 2010 onwards by the steady rise in import licenses, steel imports into the European Union in Q1 2010 rose to levels significantly above those registered in the preceding three quarters of 2009, according to the third quarter report of the ‘Economic and Steel Market Outlook 2010-2011', released by the European Confederation of Iron and Steel Industries (EUROFER). This implies that imports have returned to the Q1 2009 level.
 
EUROFER said that the rising trend for total steel imports hides significantly diverging trends at the product level. Whereas imports of long steel products increased relatively modestly compared with the preceding quarters and actually fell by more than 35 percent year on year in the first quarter of this year, imports of flat steel products and semis - particularly those from China - have been on a rising trend since the third quarter of 2009.
 
Preliminary estimates for Q2
 
First customs data and estimates for second quarter steel trade with third countries point to imports trailing off again compared to the level of the first quarter, while growing by 22 percent on year-on-year basis. On balance, the share of imports in EU apparent consumption remained at close to 15 percent, quite comparable with the market situation in 2009 and still below the significantly higher market penetration rates in the 2006-2008 period.
 
The latest projections for the second half of 2010 signal fairly similar import volumes entering the EU market as in the first half of this year and slightly higher imports in 2011. The weakened euro and the relatively modest pace of recovery in steel demand compared to other regions will reduce the appeal of the EU as an export destination. Moreover, due to the lack of transparency on business prospects and the effect of price developments in raw materials on steel prices, steel buyers will prefer to buy short-term from nearby suppliers to reduce the risk of a misalignment between steel supply and actual business activity.
 
Expectations for 2010 and 2011
 
EUROFER foresees that total imports to the EU will rise by 16 percent in 2010, revising its previous forecast of 12.5 percent growth, and will increase by close to 7.5 percent in 2011, revised from 12 percent. This means that on balance imports will rise more or less in line with the growth foreseen for apparent steel consumption in the 2010-11 period. However, temporary oversupply elsewhere could lead to imports into the EU rising more strongly than currently projected.