EU apparent steel consumption will now decline on-year in 2024, according to Eurofer’s latest forecast, due to a deteriorating industrial outlook and decreasing demand from steel-using sectors, particularly construction and automotive, Kallanish notes.

The ongoing economic uncertainty is set to continue affecting steel demand in the coming quarters. Despite recent monetary easing, its effects on the economic cycle will not be visible in the short term, the European steel producers' association points out.

Eurofer had forecasted 1.4% growth in its previous, July outlook, but now sees European apparent steel consumption falling 1.8% in 2024 – to 127 million tonnes.

EU consumption in the second quarter is confirmed to have dropped 1.3% on-year, as the negative cycle persisting since 2022 was exacerbated by growing global economic uncertainty, higher interest rates and overall manufacturing weakness. Domestic deliveries fell 1.7% in Q2.

Steel imports nevertheless fell 1.5% in Q2, after surging the previous quarter. This was however due to weak demand conditions, while the share of imports in consumption rose 1 percentage point from Q1 to 28%.

The anticipated contraction in steel-using sector output in 2024 is also now expected to be deeper than previously forecast – at 2.7%, versus the 1.6% decline projected in July. This is due to the second year in a row of construction sector recession and the first since 2020 in the automotive sector. Activity in these sectors is seen dropping 1.3% and 6.5% respectively versus 2023.

The Steel Weighted Industrial Production (SWIP) index dropped for the second consecutive quarter, by 2.1% in Q2. This was driven by a continued downturn in the construction, mechanical engineering, domestic appliances and metalware sectors, as well as a slowdown in the automotive sector.

The latest forecast represents a stark turnaround from the beginning of the year, when increased optimism over the industrial outlook and improving demand led Eurofer to forecast 5.6% consumption growth in 2024.

In 2025, apparent steel consumption and SWIP are projected to rebound 3.8% and 1.6% respectively on-year. These have been revised down from previous estimates of 4.1% and 2.3% growth.