EUROFER: European Steel Market Seeing Some Tailwinds At Last
The EU came out of recession in Q2-2013, as GDP posted its first quarter-on-quarter growth since mid-2011. The further strengthening in leading indicators in recent months suggests that economic growth continued in the third quarter. While confidence data appear to allow for a slightly more optimistic view on the EU economy, the rebound still has to be confirmed by evidence from hard data.
So far the foreign sector remained the key driver of growth. Improving domestic conditions suggest that the recovery will be placed on a firmer and more broad-based footing in coming months.
EUROFER director-general Gordon Moffat said, “Weak sentiment has been one of the factors holding back a recovery in the EU. Companies becoming more optimistic bodes well for the steel using sectors in 2014. EU investment in machinery and equipment is expected to rise again. However, credit needs to ease as well. Improving borrowing conditions for banks, better expectations regarding economic activity and the outlook for industry should support a more pronounced easing in credit conditions in the months ahead.”
Q2-2013 activity in EU’s steel using industries improved compared with the very weak first quarter which had been badly affected by harsh weather conditions and overall weak demand fundamentals. Several steel using sectors - such as the automotive industry - registered better activity levels than foreseen. The year-on-year decline in output eased significantly. This trend is seen continuing in H2-2013, with even a slight growth penciled in for Q4. For 2014 a moderate recovery is on the cards, owing to a positive contribution from investment and private consumption in combination with further gains in foreign demand.
“The EU steel market is in a better shape than it was a year ago: better economic prospects and sentiment levels, evidence of improving business conditions in downstream client sectors, well managed inventories in the supply chain and easing import pressures underpin the scenario of a gradual but cautious market recovery in 2014. We now expect steel demand to rise almost 3% next year,” Moffat said.