Oct 28, 2020
EU steel producers preparing for no-deal Brexit as demand tumbles
2020-10-30
LONDON (Reuters) - The European Union steel sector, faced with a tumble in demand this year due to the COVID-19 pandemic, is preparing for a potential collapse in talks between the United Kingdom and the EU on a future trade deal, an industry group said on Wednesday.
The two sides resumed talks in London on Tuesday to try to strike a last-minute trade agreement, less than 10 weeks before the United Kingdom leaves the bloc’s orbit.
“Brexit remains a threat because there’s a high likelihood that we will get at the end of the day a no-deal (scenario),” said Alessandro Sciamarelli, an official with the European Steel Association (Eurofer). “We are getting prepared for that.”
“At Eurofer, we are very much against a no-deal Brexit,” Sciamarelli, director of market analysis and economic studies, told a webinar.
He said EU steel consumption is due to fall by about 14.6% this year after the COVID-19 pandemic hit industrial activity, especially the auto sector.
Apparent crude steel demand - which measures steel producers’ output plus imports minus exports - slid by 25.5% in the second quarter, the biggest drop ever recorded, Sciamarelli said.
Steel demand is forecast to bounce back by 13.1% in 2021, but a second wave of the virus makes the timing of the recovery uncertain, he added.
“The outlook for 2021 is very much affected by pandemic developments and the extension of this new wave we’re having.”
Among steel-using sectors, construction has been the least affected, with a 3.6% fall in output forecast for this year. Automotive has been the hardest hit, with the decline seen at 20.6%.
While imports have declined along with demand, Eurofer reiterated its call for stricter EU “safeguarding” measures due to worries that rising output elsewhere, especially China, will lead to a future surge in shipments.
Reporting by Eric Onstad; Editing by Jan Harvey
Source: Reuters
