The drop in apparent steel consumption in the European Union is likely to be lesser at 14.6pc than earlier estimated at 16.6pc, according to the European Steel Association (Eurofer). The region’s consumption could reach 131mn mt in 2020. The year 2020 marked a challenging year for steelmakers with unprecedented falls not only in production but also demand from major steel consuming sectors.
In Q2 2020, apparent steel consumption in the EU dropped by 26pc from the prior year, higher than a drop of 12pc in Q1.
In 2021, Eurofer believes steel consumption could recover by 13.1pc.
Construction sector output is forecast to fall by 3.6pc against the earlier estimated drop of 5.3pc, before rebounding by 5pc in the coming year. In the automotive sector, the revised forecast estimates a 20.6pc decline against a previously estimated 26pc; consumption in mechanical engineering to drop by 11pc against 13.4pc anticipated earlier.
In 2021, steel consumption in the construction, automotive, and mechanical engineering sectors could rebound by 5pc, 18pc, and 7.4pc, respectively. The association predicts total steel-using sectors’ output will fall by 10.4pc in 2020 against a 13pc drop estimated earlier and will rebound by 8.2pc in 2021.
International trade uncertainty
Steel demand in the European Union is forecast to recover by 13.1pc in 2021. However, a new wave of infections could bring uncertainty to recovery predictions. Moreover, a lowered demand has also weighed down import volumes.
To safeguard the domestic industry, Eurofer also supports stricter measures against Chinese lower-priced shipments flooding the market.
No-deal Brexit adds to worries
Eurofer is also concerned about the repercussions of a possible no-deal Brexit for the European steel sector. Should the EU and UK fail to strike a trade agreement, it could threaten the domestic steel industry.