Speaking at the 18th SteelOrbis "New Horizons in Steel Markets" annual conference, Alessandro Sciamarelli, EUROFER's director of economic research and market analysis, said that a recession is ruled out in the entire EU region, with the exception of Germany, adding that the GDP growth forecast by the European Commission stands at 0.6 percent for 2023 and 3.5 percent in 2024, with the region remaining exposed to persisting geopolitical shocks and downside risks, namely, war, inflation and higher interest rates. He stated that the latest leading economic indicators show the deterioration of the overall economic outlook, adding that the impact of monetary tightening will continue to affect the industrial outlook in the coming months.
Commenting on the steel using industries, the EUROFER official indicated that orders from the main steel using sectors proved resilient in 2022, despite high energy prices and war-related disruptions, but have been decreasing sharply during 2023 reflecting the deterioration of the outlook. Only automotive orders were in positive territory in October 2023. According to Mr. Sciamarelli, output from steel using sectors continued to slow down until the second quarter of 2023. As expected, orders from the construction industry were in the negative zone amid the construction output recession in 2023 due to the severe interest rate-led housing downturn. On the other hand, the automotive sector rebounded for the last five quarters, but a downturn is expected in 2024.
Looking at steel production in the EU, Sciamarelli pointed out that crude steel production decreased sharply in 2022, by 11 percent, due to the impact of the war in Ukraine and the energy crisis, down to 136 million mt, while another drop of around 3.5 percent is expected for 2023. Meanwhile, apparent steel consumption in the region showed a clear slowdown since the first quarter of 2022 and the downturn is expected to continue up to the fourth quarter of 2023. Regarding apparent steel consumption, EUROFER expects a 5.2 percent decline in 2023 and a 7.6 percent increase in 2024. The EUROFER official underlined that the EU’s steel trade balance with third countries has been negative over the last six years, with the deficit widening to 12 million mt in 2022, while he pointed out that the EU has become a net importer of finished steel products.
Speaking about the CBAM transition period, Sciamarelli said that many technical details are yet to be settled and that effectiveness is yet to be proven, indicating that, although it will have trade repercussions which are impossible to foresee, it should not be seen as a “trade measure”, but as an environmental tool.