Eurofer says 2023 steel picture in Europe “deteriorates”

The European Steel Association (Eurofer) says the lingering impact of several downside factors from last year continue to feed uncertainty and pressure the steel market outlook for 2023 in Europe. "The outlook deteriorates for 2023 as uncertainty persists," it notes.

Regarding the 2022 factors, the Brussels-based association cites high energy prices, production costs and Russia’s invasion of Ukraine as contributing to “a deeper-than-expected recession in the second quarter of this year.”

“This would mark the fourth negative performance in the past five years," Eurofer says.

On a more positive note, the steel federation says a stronger recovery is projected next year, contingent on more favorable conditions in the overall industrial outlook.

The high cost of making steel in Europe has been noticeable, Eurofer says, adding that in a climate of overall weak demand, imports to the continent retain historically high demand market share at 22 percent.

“The European steel industry has been navigating through numerous challenges for a long time now, from the pandemic to the energy crisis and other ongoing disruptive factors,” says Axel Eggert, director general of Eurofer.

Eggert says the industry needs to stay on track with investments, some of which are tied directly to the use of ferrous scrap, despite the disappointing business climate. “The EU is at a critical juncture to achieve its decarbonization, circularity and strategic autonomy targets, for which steel is a key enabler," Eggert says. "Supporting European green steel becomes, therefore, crucial to drive the uptake of renewables, hydrogen and the cleantech economy in the EU.”

In the first quarter of this year, apparent steel consumption in the EU dropped by 11.7 percent, continuing a downward trend. An improvement in the apparent steel consumption figure is not expected for the second quarter, Eurofer adds.

Industry sectors that consume steel are not necessarily unhealthy, the association says, citing the automotive, mechanical engineering and transport sectors as performing well. Lackluster performers include domestic appliances, tubes and metalware.

The construction sector, meanwhile, “is anticipated to enter a recession in 2023 owing to a contraction in the residential construction subsector due to the rise in interest rates impacting demand,” the association says.