2024 Sparks New Life for European Steel Industry

European Steel Industry & BlechExpo 2023: Challenges & Prospects

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Anticipation is waning that the European steel industry could receive a much-needed boost in the fourth quarter through trade negotiations at BlechExpo 2023.

From November 7 to 10, the industry will convene for Stuttgart's annual fair dedicated to sheet metalworking. However, the demand for steel products continues to remain low in the European economy, which is still facing a decline.

Attendees at BlechExpo, including distributors and stockists, will encounter steel manufacturers who are focusing on production cuts. Mills are already implementing maintenance stoppages in an effort to reduce material availability and stabilize prices.

Despite these challenges, respondents in a recent MEPS survey indicated that the quiet market is unlikely to recover before the end of the year, and concerns are growing about 2024.

Looking at economic indicators, the eurozone Composite Purchasing Managers' Index (PMI) for September, compiled by S&P Global and Hamburg Commercial Bank, remained below the 50 mark, indicating economic contraction. It saw a slight improvement from August's 33-month low of 46.7 to 47.2.

The bank predicts a 0.4% economic contraction for this quarter, pushing the region further toward a winter recession.

In the latest Short Range Outlook for 2023 and 2024 by the World Steel Association (worldsteel), there is a somewhat more optimistic outlook. However, the forecast for global steel demand growth for this year has been revised down to 1.8%, reaching 1.81 billion tonnes, compared to the 2.3% forecast made in April. This comes after a 3.3% contraction in 2022. In 2024, steel demand is expected to increase by 1.9% to 1.85 billion tonnes.

Worldsteel has highlighted the impact of high inflation and rising interest rates on the global steel industry's growth. It also suggests that the conflict in Israel and Palestine could have a negative effect.

The attacks by Hamas militants in Israel on October 7 led to a rise in crude oil prices, with Brent crude surpassing $90 per barrel. While this could impact logistics costs, it's still below the $97 reached in September of the previous year.

Regarding imports, negotiations on a EU-US trade deal were expected to be resolved around the time of this publication. A positive outcome would ensure that European producers continue to avoid tariffs under Section 232 regulations. More details on how US regulations will align with CBAM will also be revealed.

In the current market environment, steel buyers are closely monitoring the impact of fourth-quarter imports into Europe. Large volumes from the "other countries" steel quota category are now beginning to clear customs, entering a market with limited demand.

Worldsteel anticipates that emerging economies will continue to grow faster than developed ones in 2024. It also notes that, as the performance of emerging economies diverges, Asia is expected to maintain its resilience.

This content originally appeared in the October edition of MEPS International's European Steel Review, offering subscribers steel prices, indices, and market commentary from across Europe.

Source : MEPS International