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EUROFER Sees 13% Fall in EU Steel Sector Output in 2020

Steel News - Published on Mon, 10 Aug 2020

Image Source: European Steel Association EUROFER
European Steel Association EUROFER recently said that Total production activity in EU steel-using sectors increased by a meagre 0.3% (which is a revision from the former drop of -0.2%) in the whole year 2019, further to an increase of 2.9% in 2018,-which was the first drop in output| since 2013. The negative growth in 2019 was the result of an increase in construction output and a drop in all other steel-using sectors (the most pronounced being recorded by the automotive sector). This negative trend continued at a faster pace in the first quarter of 2020. This quarter was impacted, albeit only from mid-March, by the lockdown measures implemented almost all over the EU due to the Covid-19 pandemic that de facto prevented industrial production.

Further to the downturn already observed in the preceding quarters. Production activity in steelusing sectors of the EU experienced an even steeper fall in the first quarter of 2020. Since the second quarter of 2019 (with flat growth), manufacturing output has been slowing down considerably compared to the bullish cycle of 2017 and the first half of 2018, due to international trade tensions and lower exports to third countries, decreasing industrial confidence and growing business uncertainty.

As a result, in the fourth quarter of 2019 steel-using sectors' output dropped by -1.3% year-on-year, although 2019 annual growth was still positive (i.e. a mere 0.3%). In the first quarter of 2020, total steel-using output dropped by -7.2% as a result of the pandemic-related lockdown exacerbating the existing negative trend.

In particular, since mid-2018, automotive production activity has been under severe pressure. Meanwhile, total production activity in the steel-using sectors has held up somewhat better thanks to the resilience of the construction sector because it is largely protected from the ongoing weakening dynamics in foreign trade, but has also been largely affected by the disruptive impact of the Covi-19 pandemic in the first quarter 2020.

Overall output in the steel-using sectors in the first quarter of 2020 registered negative growth in all EU economies, at different rates across countries, with the only exceptions of the Czech Republic and Poland.

Segmentwise Consumption Growth
Construction% Share2019Ql'20Q2'20Q3'20Q4'202020Q1'21Q2'2Q3'21Q4'212021
Mechanical engineering14-0.3-8.6-21.5-13.7-9.6-
Domestic appliances3-1.2-5.2-20.2-9.9-8.5-
Other Transport29.5-3.7-23.5-13.7-14.5-13.6-
Metal goods14-1.4-5.5-18.6-9.0-5.9-9.80.516.

Total steel-using sectors forecast 2020-2021 - The Coronavirus outbreak and the related industrial and economic lockdown experienced since March this year are having a massive impact on steel-using sectors' output, with plant closures, capacity reduction (permanent and/or temporary) and huge supply chain disruption. These conditions are expected to continue to weigh their negative effects on industrial activity even once lockdown measures are either loosened or removed in their entirety. Economic growth and global trade are set to remain weak until early 2021, with repercussions for export-oriented sectors (automotive in particular). This will also affect EU investment via severely weakened business confidence levels. Continued resilience in construction (that is: probably less negative output growth than other sectors in 2020) may cushion negative trends in other steel-using sectors. Total steel-using sectors output is set to fall by -12.8% in 2020 and to recover by 8.9% in 2021.

Source :

Posted By : Yogender Pancholi on Mon, 10 Aug 2020
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