European apparent steel demand is set to continue remaining below real consumption this year, exacerbating challenges for the European domestic industry, Heather Wijdekop, director commercial Ijmuiden at Tata Steel Europe, said at Tuesday’s Kallanish Europe Steel Markets conference in Amsterdam.

Wijdekop noted that until the Covid outbreak in 2020, apparent and real demand patterns for steel were following strictly seasonal movement, giving the opportunity for the industry to plan and strategise accordingly. Since 2020, the seasonality has been lost and volatility in demand patterns has increased.

During the second half of last year, strong destocking activity started in the European steel sector. This has pushed apparent demand below real steel consumption. This trend is ongoing and expected to continue further this year and the next, forcing suppliers to change their attitude towards the market, Wijdekop added.

According to Eurofer, apparent steel consumption in Europe this year is set to move down 1% year-on-year after a 7.2% y-o-y contraction in 2022. Real consumption, on the other hand, will rise 0.3% y-o-y after 0.2% y-o-y growth last year.

Other speakers at the conference concurred, pointing out there are some bright spots for steel demand, such as automotive, but low stocks in the supply chain and slow recovery of apparent demand are creating issues.

Francois-David Martino, chief executive of Becker Stahl-Service, confirmed that automotive demand has recovered faster than expected since the end of last year, creating disruptions in the supply chain. “Last year, the service centres and distributors reduced stock levels, but now we find ourselves in a difficult spot due to the recovery of demand in the automotive sector,” he explained.

Further challenges could come from European domestic supply of steel products, currently facing delays due to ongoing issues at blast furnaces as well as finishing lines on the continent. “From our side, we have turned the corner on the supply constraints and our situation is improving,” Wjidekop noted, referring to the cold rolled coil supply disruption that triggered a force majeure declaration at Ijmuiden in February. “There will nevertheless continue to be some supply constraints for sure in Europe.”

On the conference sidelines, an executive from another European steelmaker noted that if a sudden improvement in sentiment in Europe would trigger better-than-expected demand, this could push the continent back into a scenario similar to the one seen during the 2021 recovery following Covid production disruption.