European steel market: Declining demand and rising imports

The European steel industry is facing ongoing challenges, shaped by a continued decrease in demand and persistently high levels of imports. According to the European Steel Association (EUROFER), economic uncertainties, geopolitical tensions, and rising energy costs relative to other major regions are expected to weigh on the sector throughout 2024, compounding a downward trend that began in previous quarters.

EUROFER's latest Economic and Steel Market Outlook reveals that apparent steel consumption, initially projected to rise by 1.4% in 2024, is now anticipated to decline by 1.8%, though less sharply than in 2023. Forecasts for 2025 indicate a moderate recovery, with expected growth of 3.8% in apparent steel consumption. Output for steel-using sectors is also expected to see a decline in 2024, projected at -2.7%, with a modest recovery of 1.6% in 2025.

“The data confirms an urgent need for EU-level actions to support sustainable steel production, quality employment, and investments in decarbonisation. Addressing global overcapacity, trade practices, high energy prices, and access to ferrous scrap, along with fostering markets for green steel, remains critical,” said Axel Eggert, Director General of EUROFER.

Market Overview

In the second quarter of 2024, apparent steel consumption declined by 1.3% year-over-year, totaling 34.8 million tonnes. This contraction in demand, coupled with slight decreases in imports, has driven import shares to a record high of 28%. Domestic steel deliveries also experienced a reduction of 1.7%, though this was a slower rate of contraction compared to the first quarter of the year.

Impact on Steel-Using Sectors

Steel-using sectors, such as construction, automotive, and domestic appliances, have also been affected by a downturn in activity. Overall output in these sectors decreased by 2.1% in the second quarter, following a prior 2.4% decline. This downturn has halted growth in the automotive sector after a seven-quarter period of expansion and reflects a more significant recession across key steel-using industries.

Despite recent interest rate cuts by the European Central Bank (ECB), economic uncertainty remains high. The Steel Weighted Industrial Production index (SWIP), which reflects steel demand in industrial production, is projected to fall by 2.7% in 2024, with only modest recovery anticipated in 2025.

Outlook and Policy Implications

The European steel sector’s outlook continues to depend on various global and regional economic factors, with current trends indicating that steel demand will remain below pre-pandemic levels. EUROFER has urged policymakers, including the European Parliament and the incoming European Commission, to prioritize a comprehensive European Steel Action Plan aimed at supporting sustainable production and a stable market environment.

Source: Eurofer, Photo: Fotolia