The European Steel Association (Eurofer) forecasts a challenging outlook for apparent steel consumption in 2022 and the first half of 2023, citing several downside factors. These include war-related disruptions, a bleak demand outlook, and significant increases in energy prices and production costs. The prolonged effects of Russia’s war in Ukraine and mounting economic uncertainty due to inflation are expected to exacerbate the situation.
As a result of these factors, apparent steel consumption is projected to contract further in 2023, with a steeper rate of decline than previously anticipated (-3pct instead of the previous estimate of -1pct). However, a potential recovery is foreseen for 2024, with an estimated increase in apparent steel consumption of 6.2pct (revised from +5.4pct), contingent on more favorable developments in the industrial outlook and steel demand.
Eurofer emphasizes that the overall evolution of steel demand remains highly uncertain, and this uncertainty is likely to continue undermining real demand from steel-using sectors, at least until the third quarter of 2023. Quarterly positive developments in apparent steel consumption are expected to emerge only from the third quarter of 2023.
During the first quarter of 2023, apparent steel consumption in the EU experienced a significant drop of 11.7pct, following a major contraction of 19.3pct in the previous quarter. While there was an improvement compared to the fourth quarter of 2022 (which had recorded the lowest level since the pandemic-induced drop in the second quarter of 2020), the volumes remained relatively low compared to 2021 and the first half of 2022.
Domestic deliveries mirrored weak demand, declining by 6.2pct for the fourth consecutive quarter, though at a slower pace than in the preceding quarter (-15.1pct).
Furthermore, imports into the EU, including semi-finished products, sharply decreased by 28pct in the first quarter of 2023 (following a 33pct decline in the preceding quarter). Although total imports from third countries in 2022 fell by 6.7pct, the share of imports out of apparent consumption remained considerably high historically, reaching 22pct in the first quarter of 2023.
Despite the challenges posed by Russia’s invasion of Ukraine and rising energy prices, the EU steel-using sector demonstrated unexpected resilience and continued to grow until the first quarter of 2023, according to Eurofer.
