The EU steel industry is now in "a state of emergency" after the coronavirus hastened a decline in the steel market that was already there in 2019, European Steelmakers' Association (Eurofer) said August 5.
EU-28 apparent steel consumption shrank 12% year on year in the first quarter -- the fifth consecutive quarter of falls -- following a drop of 10.8% in Q4 2019, as EU manufacturing sector business conditions, particularly in the key automotive industry, continued to deteriorate, Eurofer said in a statement. Total Q1 apparent consumption in the EU was 37.6 million mt, it said.
With the onset and continuing impact of the coronavirus, future data was likely to show further sharp drops, as shutdown measures implemented by governments starting from March "hugely impacted" manufacturing activity and steel-using industrial sectors, it said. Steel consumption forecasts as well as the overall economic outlook across the EU and the world had now been slashed, it said.
"The coronavirus pandemic has cut the legs out from under the European steel industry, causing severe damage to the whole sector and its value chains", Eurofer Director General Axel Eggert said. "The data now available confirm that the downturn that had begun in 2019 has been compounded by the crisis -- with the sector now in a state of emergency".
The continued downturn in steel demand led to the fifth consecutive fall year-on-year in domestic deliveries in the EU in Q1 (of 8%, the same rate as in Q4 2019), the association said.
Steel imports into the EU have also dropped: after diving 24% in Q4 2019, the downward trend in imports from third countries continued in Q1 2020, with a year-on-year fall of 20% in the period, Eurofer said. This equated to 8.4 million mt in absolute volumes, accounting for 21.2% of EU consumption, it said.
Total output in EU steel-using sectors fell by 7.2% in Q1 after falling 1.3% in Q4 2019.
On an annual basis, Eurofer has now revised upward its assessment for steel-using sectors' output, which increased by an overall 0.3% in 2019 (up from the previous assessment of a fall of 0.2%), after growing 2.9% in 2018.
The European Commission's Summer 2020 Economic Forecast, published early July, projects that the eurozone economy will contract by 8.7% in 2020 and grow by 6.1% in 2021.
"Even after the return to normal business conditions, the EU economy will still be particularly vulnerable as it is exposed to fluctuations in international trade," Eurofer said. "As the largest contribution to growth during the previous cycle came from exports, a slowdown in export markets will further exacerbate the difficulties that EU economies are likely to face."
Source: S&P Platts