International Steel Mills

Eurofer Forecast Optimistic for 2014

October 30, 2013

The European Steel Association (Eurofer) says the year-over-year decline in the European Union (EU) steel industry is beginning to lessen and should show positive growth in 2014, according to the Eurofer Economic and Steel Market Outlook 2013-2014. The SWIP (Steel Weighted Industrial Production) Index is expected to be down -1.1 percent in the third quarter and show slight growth at 0.3 percent in fourth quarter. The overall index rating for 2013 is forecast at -2.6 percent.

Moderate growth in 2014 is expected due to improved investment and private consumption along with higher foreign demand for EU steel.

Construction output in the EU is forecast to fall 3.5 percent in 2013 but is expected to improve in 2014 with the first half weaker than the second. Investment in machinery and equipment will likely be robust in 2014, rebounding from a forecasted decline of 3.7 percent for 2013.

EU automobile sales fell 5.2 percent year-over-year in the first eight months of 2013 and total production is expected to be down 1.5 percent for the year. A cautious recovery is expected in 2014 due to aging vehicles and slowly improving economic conditions. The appliance sector has been sluggish but, having reached bottom in mid-2013, is expected to accelerate in 2014 by about 2.0 percent.

Total EU steel tube production is expected to decline by almost 4.0 percent in 2013 said the Eurofer report. The outlook for 2014 is looking up due to the South Stream natural gas project starting up in first quarter 2014. Steel tube production is expected to rise 3.5 percent in 2014.

Real steel consumption fell 2.7 percent in the EU during second quarter and will have a similar drop in third quarter. EU steel consumption is forecast to fall just below 3.5 percent for 2013, revised from a previous decline of 4.4 percent forecast last July.

The modest recovery of steel using sectors in 2014 will contribute to a rebound of the EU steel industry. Real steel consumption is expected to rise to 1.5 percent in 2014.

EU apparent consumption dropped 3.8 percent in the second quarter after a drop of more than 7.0 percent in the first quarter. Third quarter is expected to decline as well with total apparent consumption for 2013 to be slightly above 2 percent. Gradual improvement is forecast for 2014 with restocking in the first half with a moderate destocking in the last half of the year. Apparent demand is expected to rise to near 3.0 percent.

Import of steel to the EU is expected to be up 8.5 percent year-over-year for 2013. A mild increase in EU steel demand and prices combined with a stronger Euro are expected to keep imports stabilized for the remainder of the year. Imports for 2014 are expected to be near 2013 levels.

Total net export of steel from the EU in 2013 is forecast to be up 0.6 percent year-over-year. Rebar was the mostly widely exported steel product from the EU, followed distantly by sections and wire rod. Exports are expected to rise slightly in 2014 in tandem with a rise in global steel demand.