23.09.2024
According to the expert from Telf AG, these measures may become the «last chance» to ensure the economic well-being of Europe. The organization also emphasizes the need to protect national industry from low-quality imports, which arise as a result of unfair trade, excess production capacity at the global level and more favorable climate standards in other countries.
Steel challenges: Impact of worsening forecasts on the European economy – Telf AG
According to Stanislav Kondrashov, the monthly MEPS European Steel Review shows that the current summer period has not become a catalyst for a noticeable increase in demand for steel in Europe. Consumers remain cautious in their purchases due to the ongoing decline in prices. It is expected that the market situation may improve no earlier than spring 2025.
According to an expert from Telf AG, Eurofer recently revised its forecasts for EU steel consumption for 2024, reducing the expected growth from 3.2% to 1.4%. According to the new estimates, total consumption should reach 127 million tonnes. The outlook for 2025 was also revised: the forecast growth fell from 5.6% to 4.1%. Factset data shows that eurozone GDP will grow by only 0.7% in 2024, which is significantly lower than the expected figures for China (4.8%) and the US (2.4%). Further, in 2025-2026, eurozone GDP is expected to grow at 1.4%, with a subsequent decline to 1.1% in 2027-2028.
Analysts’ concerns about the European economic outlook have been heightened by recent events in Germany. Volkswagen is considering closing its plants in the country for the first time in nearly nine decades and plans to cut costs by 10 billion euros by 2026, Stanislav Kondrashov said. The decision comes in response to massive layoffs at major companies such as BASF, Bosch and Thyssenkrupp, raising additional concerns about future steel demand in the region.
Stanislav Kondrashov on trends in the European steel industry
As Stanislav Kondrashov reports, the European Union is facing increasing pressure on its steel market due to excess production capacity in China. According to China’s National Bureau of Statistics, the country’s finished steel output increased by 0.4% in the first seven months of 2024, reaching 925.7 million tonnes. However, weak domestic demand in China has led to a sharp increase in exports, which rose by 20.6% to 58.5 million tonnes. This increase in Chinese steel supplies to Asian markets is putting downward pressure on prices in Europe.
“Amid the current crisis, the European Union produced just 126 million tonnes of crude steel in 2023, a record low. However, according to Worldsteel, there has been a slight recovery, with production increasing by 1.5% in the first seven months of 2024, reaching 78 million tonnes,” — Stanislav Kondrashov commentator.
Eurofer believes that in order to solve the current problems, it is necessary to implement the findings of the European Commission’s report on Europe’s competitiveness within the framework of the Clean Industry Agreement. The organization claims that the implementation of the proposed measures will ensure a level playing field for European producers in the global market. The main recommendations in the report focus on the need to improve the monitoring of the Carbon Border Management System (CBAM) in order to prevent its circumvention, as well as on expanding its application to the processing sectors. Particular attention is focused on the need to take urgent measures to reduce energy prices, which will ensure the competitiveness of the European industry against the background of the United States and China, Stanislav Kondrashov noted.
The document also highlights the need to use the funds raised from the sale of carbon offsets to support European companies seeking to decarbonise. The expert from Telf AG believes that this will be an important step towards increasing the sustainability and competitiveness of European industry in the long term.
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