EUROFER's October report on the Economic and Steel Market Outlook 2009-2011 shows that third country suppliers withdrew further from the EU steel market forced by the absence of buying interest and low price levels in the second quarter of 2009. This resulted in imports falling by almost 54% YoY and a 45% reduction in imports over the 1st half of the year. Particularly exports from China to the EU have diminished compared with the high levels registered in 2007 and 2008. Meanwhile, depending on the product, other countries such as Turkey, Ukraine, South Korea, Serbia and Taiwan have stepped up their deliveries to the EU market.
Against the background of the continued fragility of the EU steel market, expected to last well into 2010, the import situation remains a major issue of concern. Rising international steel prices in combination with the reported overcapacity in the Chinese steel market could lead to Chinese exporters increasingly targeting overseas markets again. Chinese finished steel exports increased in the June to August 2009 period.
Although Southeast Asia so far remained the main outlet, the continued surge in production could lead to rising exports to the EU. On balance, third country imports are seen falling by 40% in the whole of 2009. This trend is expected to reverse in 2010. Underpinned by the recent rise in import licenses, imports are seen bouncing back from the low levels reached in 2009. Total imports could increase by almost 24% in 2010 and further 10% in 2011.
Global crude steel production being increased in anticipation of a recovery in steel demand which yet has to materialize remains a major risk for the EU supply demand balance.
