European steelmakers' lobby Eurofer said Thursday that apparent steel consumption in Europe had fallen 43% year on year in the first half of 2009, but added that leading indicators suggested that the economic downturn could bottom out over coming months, reporting the findings in its Economic and Steel Market Outlook 2009-2010 report.

 

The drop in steel demand has been caused by a combination of a drop in output in steel-using sectors, and continued destocking in the steel supply chain, Eurofer said. Output of the EU’s steel using sectors - such as automotive and construction - fell by almost 25% year-on-year in the 1^st quarter of 2009; a similar drop in output is estimated for the 2nd quarter, Eurofer said.

 

On a brighter note, Eurofer noted macroeconomic data pointing to a bottoming out of the current economic situation. "While hard data has so far continued to provide evidence of the EU sinking deeper into recession, recent surveys and leading indicators suggest that the economic downturn could bottom out over the coming months," the statement said. "We finally see some light at the end of the tunnel," added Eurofer director general Gordon Moffat.

 

But this was tempered with caution: "Any recovery is expected to be fragile and still surrounded by uncertainties and downward risks.

 

Looking forward, destocking and weak activity in the steel using sectors will continue to depress apparent steel consumption in the 3rd quarter of 2009. However from the 4th quarter onwards the market is expected to see a "low-level equilibrium" as the negative effect of the stock cycle starts to ease, according to the report.

 

On average, apparent steel consumption will fall by almost 33% in 2009 compared to 2008. However, in 2010, the stock cycle reversing to slightly positive will result in apparent steel consumption growing by almost 14%, Eurofer forecast. –Platts