The steel industry will lead trend change from the second half of the yearDemand for steel has picked up, according to updated forecasts from Eurofer, the European industry employers’ association. This business entity considers that “the worst happened after the fourth quarter of last year, when apparent consumption fell 19.3% due to the energy crisis, the second-worst quarterly performance since the 2020 coronavirus pandemic.”
Even if, The exercise will continue to show a 1% drop in demand over the year.Although much lighter than last year (-7.2%), the European steel industry is expected to continue its recovery with an increase in apparent steel for 2024, meaning that the European steel industry will add its fourth annual decline in the last five years. 5.4% consumption.
The turning point, heralded by Eurofer from mid-year, supports the prediction of Aditya Mittal, CEO of world-leading manufacturer ArcelorMittal, which states that “market conditions” have already “improved in the first quarter” in 4 quarters. It expects an “additional increase in profitability in the second quarter”.
The company’s willingness to reopen the blast furnaces that burned in Gijón and Dunkerque at the end of June indicates in part its intention to capitalize on the recovery in demand, which is already confirmed in some cases, according to Eurofer. the recovery of the auto industry and the stability of construction, among other consumer sectors.
The apparent improvement challenges other leading indicators such as the PMI (purchasing managers index), which, unlike the service sector, continues to stagnate in the manufacturing sector in nearly all economies. Germany, a highly industrialized economy, confirmed this Thursday that its GDP had chained negative for the second quarter in a row. Eurofer therefore said that the improvement in the production of steel consuming sectors will be “moderate” this year. A 0.6% increase to gain further momentum in 2024, with a 2.3% improvement.
However, both Eurofer and the Spanish electro-intensive industry association (AEG), which held its annual meeting yesterday, warned of the “high uncertainty” that exists. The Association of Companies with High Energy Consumption (AEGE), of which ArcelorMittal, Azsa and Celsa (present in Asturias) are a part, “The prospects for industrial activity recovery for 2023 are not very optimistic”.
Energy and CO2 cost. Both the organizations and the Spanish association of steel employers (Unesid) once again drew attention to the ongoing energy costs above the pre-Covid era, which, although moderated, have damaged the international competitiveness of the European and Spanish steel industries. “Even though the latest developments reassure us, the price of electricity in April of this year is still 40% higher than in 2019, and gas is almost three times more expensive,” said Alejandro Arnao, from the Department of Economic Studies at Unesid. By contrast, this employer points to the cost of CO2 emissions entitlements at an “all-time high and quadrupled” in the EU. These are “clearly unsustainable” levels, he said.
José Antonio Jainaga, president of the AEGE, who was re-elected for a new term this Thursday, added: “despite recent drop”, “expected” electricity prices “Continue over 100 Euros per megawatt in the wholesale market,” he said, would entail a “clear disadvantage.” According to Jainaga, the price of electricity is no longer just the main factor in the production costs of electro-intensive consumers, but also weighs more than the sum of the remaining production variables.
According to the AEGE, other countries around Europe have “measures to protect their activities” that “help reduce the impact of energy prices”, “avoid production stoppages and displacement”.
The Spanish association of steel employers (Unesid), however, “Extra cost of electricity” Despite the fact that international sales fell 14% to 8.1 million tons last year, “the industry has managed to remain among the main exporters of the manufacturing industry”, which is “almost going up to 2020” when Spanish sales are analyzed. The amount of steel abroad was 8 million tons. This decline came after the “intense recovery in 2021”, when Spain sold 9.5 million tons of steel products abroad.
The European steel employers’ association (Eurofer) states that the industry as a whole is in the EU. facing energy prices, production costs and inflation Eurofer has called for “access to affordable non-fossil electricity” so that the European steel industry can undertake decarbonisation plans.
In the case of Spain, AEGE believes the government-approved electro-intensive industry law is “a viable tool that needs to be strengthened to strengthen industrial policy” and has called for an extension of the 80% cut in electricity in the second half. He said the increase in the budget to offset the tolls currently in place and indirect CO2 emissions would “mitigate” such industries’ high electricity price exposure.
Imports. The entry of non-Community steel imports into Europe is another major problem for the steel industry. Eurofer said their market shares remained historically high (23.4%) even though they declined due to the drop in demand, and they “continue to fill the European market”.
Source: Informacion
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