The firm has said that while steel customers have been stocking up during the middle part of 2002, demand has been declining as activity in the building and manufacturing segments has slipped.
“We estimate that, at the end of the third quarter of 2002, total EU finished steel production was approximately 500,000 tonnes higher than the figure recorded in the corresponding period of the previous year,” the report said. “However, over the same time span, crude steel output declined by 2 million tonnes. This highlights the massive excess of stock at the mills at the end of last year.”
Tight control of steel production will be a priority in the coming months as anxious steelmakers look to improve the existing position. MEPS research also indicates that finished steel output in 2002 will fall to a level below the figure recorded during the previous twelve months.
The majority of the increase in finished steel during the first nine months was to be found in the flat products segment – mainly as strip mill production. The greatest price hikes took place in these categories and speculative purchases occurred, despite a decrease in real consumption in the manufacturing sector.
EU steel producers have been greatly assisted by third country suppliers so far this year. Imports of flat products at the eight month stage were running at an annualised figure equivalent to a reduction of 1 million tonnes on the value recorded in 2001. This enabled the mills to lift supply to the market without seriously damaging the situation. Export volumes are little changed from last year.
The long products producers are facing the same dilemma as their flat product counterparts. They need to cut production to maintain equilibrium in the market. Foreign suppliers have not been so generous in this sector. Third country import and export volumes so far, this year, have been at similar levels to 2001. MEPS analysts estimate that output in the first nine months has also been at approximately the same values as in the previous year. With a reduction in real demand anticipated in 2002, the mills will need to show restraint in the final quarter.
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