Stresa, 29 April 2014
Metal Expert Europe Steel Trade
Conference 2014
Jeroen Vermeij
Director Market Analysis & Economic Studies
EUROFER
EU Steel
Market
A slow but steady recovery
Contents
•EU steel demand: strong enough to
support the steel sector in 2014?
•When will Europe come back to a
sustainable level of demand?
•Demand characteristics by region
•Key Messages
3
Contents
•EU steel demand: strong enough to
support the steel sector in 2014?
• Economic framework
• Steel using sectors
4
The good news….
EU economy: recovery gaining traction
• Indicators & data strengthening
• Steady progress in industry
• Domestic demand supportive to growth
• Reliance on exports remains high
• Synchronised growth advanced economies
• Euro strength show stopper?
• Monetary policies accommodative
• Fiscal drag is easing
• Some evidence of easing credit supply
Economic Framework
The bad news….
Risks remain high
• Less strict implementation EU reforms
• Far-right victory EU parliament elections
• Long-term low inflation
• Slow growth & instability emerging markets
• Escalation Russia-Ukraine conflict
Economic Framework
Steel using sectors: growth is back
Positive growth outlook 2014-2015
• All sectors return to growth
• But levels still low!
Production 2015 compared with:
• 2005: -3%
2007: -12%
•
2005: -1%
•
2005: -17% 2007: -21%
•
2005: +7%
2007: -1%
•
2005: -8%
2007: -17%
•
2005: +2%
2007: -6%
•
2005: +8%
2007: -8%
•
2005: -6%
2007: -15%
Steel Using Sectors
2007: -11%
What does this mean for EU steel
demand?
Average 2000-2005 = 172MT
Moderate growth steel demand in 2014 and 2015
But mind the gap with pre-crisis level!
EU Steel Demand
Contents
•EU steel demand: strong enough to
support the steel sector in 2014?
•When will Europe come back to a
sustainable level of demand?
•Demand characteristics by region
•Key Messages
9
Longer-term demand outlook
Gradual further improvement in demand up to 2020
• Based on bottom-up approach by country and sector
• Base case scenario: from 150MT in 2015 to 170MT in 2020
• By 2020 EU steel demand back at average level 2000-05
• But this could go slower – or faster!
• Forget about the 2007 peak
Sustainable demand level
What about capacity?
Gradual return to better capacity utilisation
• 2013: some 30MT unused capacity
• Gradual increase EU demand: +20% (+30MT) over 7 years
• Trade balance EU?
• Rising – lower cost – capacity outside EU
• EU crude steel output around 185MT in 2020
Sustainable demand level
Contents
•EU steel demand: strong enough to
support the steel sector in 2014?
•When will Europe come back to a
sustainable level of demand?
•Demand characteristics by region
•Key Messages
12
Regional Steel Demand Forecast
Large divergences at the
country level
Best performers 90-100% of
2007 demand
•
Germany, Netherlands, Austria,
Czech republic, Poland, Slovakia
Moderate performers 75-90% of
2007 demand
•
Hungary, France, Belgium
EU at 74% of 2007 demand
Weak performers 60-75% of
2007 steel demand
•
UK, Sweden, Italy
Worst performers below 60% of
2007 steel demand
•
Spain (Portugal, Greece)
Regional demand characteristics
Contents
•EU steel demand: strong enough to
support the steel sector in 2014?
•When will Europe come back to a
sustainable level of demand?
•Demand characteristics by region
•Key Messages
14
EU’s long road to recovery
•
•
•
•
•
•
•
Economic recovery gaining traction
Risks remain high
Positive growth steel-using sectors
Activity mostly still below 2005-level
Gradual rise steel demand: mind the gap!
EU steel demand in 2020 back at average
level 2000-2005
Medium-term: regional divergences
Key Messages
Thank you for your attention
•Questions?
•Remarks?
16