Eurofer evaluates market conditions and growth in the EU

Eurofer evaluates market conditions and growth in the EU

Looking at the global economic conditions, and taking into consideration the gloomy forecasts of economic growth for 2003 in Europe, the European Confederation of Iron and Steel Industries (Eurofer) expects only a small recovery in the EU for consumption in the first half of 2003. The weakness of aggregate demand, low consumption growth the unemployment rate is weighing heavily on consumer and business confidence. According to Eurofer, the industrial production in the EU is still low, even though slightly above the level reached at the beginning of last year. The best growth to be expected could be moderate for the rest of the year even if an improvement in industrial activity is expected in the second half of the year. Under current circumstances, with a depressed business confidence, a proper pick up in manufacturing output growth is not foreseen. Industrial production has stopped falling however; the domestic demand still remains weak. Depending on the current events, the output by steel using sectors is expected to show a modest improvement in the second half. This situation is a result of the depressed business confidence and slow investment growth. According to Eurofer, year 2004 might be fairly positive with the improving global economic conditions leading to more active world trade, reviving demand for investment goods. For construction sector, particularly the weak state of Germany influencing the forecast, output is expected to moderate with business conditions. The automotive sector did not grow but still remained high due to strong export demand. Being still strong, the export markets are however still under threat by the falling consumer confidence worldwide. On the other hand commercial vehicle and heavy truck demand is suffering due to the low investment levels. Demand for tubes are again depending on the consuming sector conditions, particularly the manufacturing sectors. Demand from the oil and gas sectors sustained the seamless tube activity last year and with the help of new projects the present poor situation may recover. Domestic appliances output is expected to increase slightly in the first half of the year over the last year's low levels. However with the effect of the low consumer confidence and unemployment, same is expected to drop again in the second half. According to a forecast by Eurofer, the real consumption will remain flat in the first three quarters of the year with buyers hesitant to place substantial orders lacking recovery of business conditions under current circumstances. Steel consuming sectors might improve slightly in the second half however, the steel purchases are expected to remain flat for the first nine months of the year. A sharp increase in the fourth quarter need to be experienced in order to secure positive figures of real consumption by the end of the year Eurofer's apparent consumption forecast calls for a 2% increase in the third quarter and 1.6% for the entire year due to a restocking in the first half. Crude steel production levels appear to be in line with demand situation which is believed to prevent market imbalances unless pressure of imports is not felt. In case Chinese demand slows down, increased imports might put pressure on EU market. The current Euro exchange rate could also be another factor to attract further imports here.