Credit rating agency Fitch has said that steel prices in western Europe have decreased in the current year from their peak in 2017-2018 and are likely to remain subdued in 2020.
Fitch stated that steelmakers’ margins have been pressured, but this could ease by the second half of 2020 due to capacity cuts and lower input costs.
Commenting on the European steel market, the agency said that spot steel prices and margins have decreased gradually this year due to weak demand, available supply and higher costs. Also, new registrations in the automotive sector, which is among the key steel consumers, fell by 1.6 percent year on year in the first nine months of the year. Meanwhile, the steel market was well supplied due to high import levels. Fitch also said that safeguard measures like quotas and duties introduced by the EU in February managed to reduce steel imports only by small amounts, while the full effects of announced domestic production cuts have yet to be seen, with most cuts planned for the fourth quarter of this year.
Fitch expects that prices will remain subdued in 2020 due to lower demand, as the European steel market might continue to face challenges. The agency said it expects the pressure in the European automotive sector to continue, affecting steel consumption negatively.
The agency expects the growth in the construction and mechanical engineering sectors to slow down, while a potential fiscal stimulus given by the European Central Bank might lift steel demand in Europe.