The challenges of the steel industry in Europe in 2020 and the reduced consumption of steel

In 2020, the COVID-19 pandemic reduced steel consumption and economic prospects in the EU and the world.

The „lockdown” measures implemented by governments since March 2020 have severely affected production activity and industrial sectors that use steel.

However, some of the measures that have had the greatest impact on the economy have been relaxed since June 2020. Although many social measures remain in force or have been consolidated in recent months. As a result, both sectoral production using steel. As well as steel demand, they registered a considerable rebound in the third and fourth quarters.

Although the overall economic recovery in the EU appears to be uneven and exposed to risks. The recovery in steel-using industries and steel demand should continue in 2021.

The entire year 2020 was, as expected, considerably affected by the pandemic. And it recorded an apparent decrease in steel consumption in the EU (-11.1%). It is expected to rebound (+11.7%) in 2021 and grow more moderately (+4.9%) in 2022. When it is expected to return above 2017 levels.

Apparent steel consumption in the EU28 increased (+3.3%) year-on-year in the fourth quarter of 2020. That is, the first quarterly increase in the fourth quarter of 2019.

Reflecting the improvement in demand, domestic deliveries in the EU in the fourth quarter of 2020 increased (+4.5%, after -6.8% recorded in the second quarter).

The data for the fourth quarter also showed the continued recession of imports from third countries. After the severe decrease (-25%) in the third quarter of 2020, imports from third countries decreased – although less severely. And in the fourth quarter of 2020, with a decrease from one year to another (-7%). That is the eighth consecutive quarterly decrease.

Reduces steel consumption

Total production activity in the sectors that use steel decreased (-10.4%) throughout 2020. The COVID-19 pandemic hit the EU’s industrial sectors at a time when they had already faced a severe recession and were facing serious challenges. During 2019, business conditions in the manufacturing industry continued to deteriorate.

This downward trend started in the second half of 2019, especially in the automotive industry. This led to a pronounced slowdown in production growth in steel-using sectors, which then culminated in unprecedented declines in the second quarter of 2020. The main cause was the severe lockdown measures imposed by governments in March and April 2020.

Industrial activity remained around historically low levels and is still exposed to fragility and risks. As a result, despite the quarterly recovery, production fell year-on-year (-6.7%) in the third quarter.

The new wave of the pandemic that hit Europe at the beginning of the fourth quarter of 2020 led to new blockages (although without affecting industrial activity itself) that cast a shadow over the general recovery. However, in the fourth quarter of 2020, industrial production across the EU recorded a second consecutive considerable quarterly rebound, driven by a faster-than-expected recovery of production in some sectors (household appliances and automobiles in particular).

In the first quarter of 2021, economic uncertainty persists due to the ongoing pandemic throughout the EU.

Article source: https://www.eurofer.eu/publications/economic-market-outlook/economic-and-steel-market-outlook-2021-2022-second-quarter/