Sheffield-based consultants MEPS this week said that the Eurofer optimism contrasted with its own forecasts contained in the latest issue of World Steel Outlook in certain key aspects of the market.
In the report, Eurofer predicts real consumption in 2001 rising by 3.1% compared to the previous year. Crude steel production is foreseen to be 1% up year on year. The report indicates exports expanding by 15% and imports decreasing by a similar amount.
The improvement in real consumption projected by Eurofer is based on a positive outlook for construction, despite the problems in Germany. Automotive demand is foreseen to be turning up in the second half of the year. Increasing consumer confidence is expected to expand sales of domestic appliances substantially. A gain is anticipated in the mechanical engineering sector. Tubemaking is predicted to be extremely firm over the second half of the year.
If Eurofer's assessment is accurate, MEPS say that it would be a real success story for the EU steel sector as the global economy is slowing down. The consultants say that growth, in 2001, is likely to be minimal in the other two major world economies – United States and Japan. “With the exception of China, the main Asian economies will be substantially weaker, this year, compared to 2000. The European Central Bank President's assertion that the US slowdown would have limited impact on the euro-zone will be proved to have been accurate.”
MEPS says it is more cautious about the short term prospects for steel. “We believe that, in the prevailing economic conditions, a 3% increase in real consumption is unachievable. GDP growth will be no higher than 2.5% and industrial production is in decline. Furthermore, year on year car production was down 5.2% in the first four months. Moreover, part of the substantial improvement in manufacturing within the EU in recent years has come from higher exports of machinery etc. in a booming economy. This situation is unlikely to continue.”
The consultants forecast for crude steel output, this year, is near 160 million tonnes – down approximately 2% (over 3 million tonnes) on the year earlier figure and it exepcts substantial cutbacks in the next six months.
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