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EUROFER - Update on Apparent Steel Consumption in EU in Q1 of 2019

Steel News - Published on Wed, 15 May 2019

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Apparent steel consumption concerns the supply of all steel products delivered to the EU28 market by domestic producers in the EU and by third country exporters.EU28 apparent steel consumption rose by 1.8% year-on-year in the third quarter of 2018 and amounted to 38.7 million tonnes. In line with the usual seasonal pattern of steel demand and inventory changes over the year, the fourth quarter of 2018 was characterised by destocking in the steel supply chain.

Total apparent steel consumption over the whole year 2018 grew by 3.3%. On balance the inventory change over the year was slightly positive, which was reflected by higher than usual stock levels for most finished products at distributors and merchants at the end of the year.

EU domestic and foreign supply - In the final quarter of 2018 domestic deliveries from EU mills to the EU market decreased by 2.1% compared with the same period of 2017. This was the result of third country imports growing by 16.3% YoY within a context of flattening steel demand growth over that timeframe. Imports amounted to 9.6 million tonnes and accounted for 24.7% of EU steel demand.

Over the whole year 2018 third country imports rose by 12.6% which contrasts sharply with the 1.7% rise in domestic deliveries. The preliminary safeguard measures imposed by the EU Commission in July 2018 were supportive to limiting import volumes in the second half of the year compared with the extraordinary high import volumes that landed in the EU in the first half. However, the sharp year-on-year rise in the second half of the year also illustrates that the threat of deflection of tonnage due to the US’ Section 232 tariffs on steel imports and market distortions due to the global overcapacity problem and other countries’ protectionist measures is still very much alive.

Apparent steel consumption forecast 2019-2020 - The outlook for EU steel demand is subdued. The base case scenario for the development of final steel use shows only marginal growth in 2019 and 2020. Given the uncertainty that currently surrounds the EU steel market in terms of demand and supply fundamentals, steel inventories will be managed with care. With reportedly relatively high inventories in the steel distribution chain at the start of 2019, apparent steel consumption is forecast to fall by 0.4% over the whole year 2019. Apparent steel consumption may grow by 1.3% in 2020.

Meanwhile, the relaxation of the final safeguard measures, with an enlargement by 5% In February and another upwards revision of 5% in July, appears to be completely out of step with the anticipated evolution of the EU steel market in 2019. As such, the 10% increase in import quota allowed in the final safeguard measures risks squeezing the EU steel sector between rising import pressure and a depressed market.

EU apparent steel consumption - in million tonnes per year
Year2010201120122013201420152016201720182019 f2020 f

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Posted By : Rabi Wangkhem on Wed, 15 May 2019
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