Apr 27, 2023
Europe-Ukraine Steel and Raw Materials Conference: EU copes with energy crisis, steel consumption seen bottomed
2023-05-11
The European economy has proved to be resilient in 2022 despite very gloomy predictions made in the first half of 2022 after the first consequences of the invasion of Ukraine were seen. The current economic situation, outlook and an impact on the European steel sector were described by Alessandro Sciamarelli, Eurofer’s director of economic and market research, at the Europe-Ukraine Steel and Raw Materials Conference organized by Metal Expert in Warsaw on April 24-25.
Recession in Europe did not materialize in 2022, particularly due to a strong contribution from the service sector which returned to full speed growth after covid restrictions. The European economy has performed better than expected despite the war in Ukraine, a record-high inflation and the energy crisis, Sciamarelli noted. He is ruling out a technical recession between Q4 2022 and Q1 2023, with no recession expected in 2023 either. For Q1 2023, Eurofer forecast GDP growth of 0.6% in the EU. “We will achieve growth, albeit in a context of continued and growing uncertainty, particularly related to possible developments of the war,” Sciamarelli said.
Europe seems to have secured energy supply for the time being in its effort to diversify energy sources. This has become possible due to several factors. Europe is now more integrated than during the previous crises in the 70s, which helped it set up some intervention mechanisms that did not exist before. Besides, the energy intensity (tonnes of oil equivalent per unit of GDP) has decreased significantly. And the third point is that the EU reacted very quickly and effectively with its short-term measures to fight the crises, including the RePowerEU programme and successful stock replenishment.
Despite this resilience, the industry has felt the impact of the war and a consequent energy crisis. Speaking about steel-using sectors, particularly, Sciamarelli pointed that all major sectors experienced declined throughout 2022. And the outlook for 2023 is very uncertain. According to Eurofer, total steel weighted industrial production will show growth of 0.3% in 2023 and 2.3% in 2024 after 3.1% growth in 2022.
As for apparent steel consumption, which was progressively declining during 2022, it reached the lowest point on record in Q4 2022 (118 million t) after Q2 2020 which had been severely hit by the Covid-19 pandemic. “Q4 2022 should represent the lowest point of the cycle. So, we should see some short-time improvement in Q1 2023,” Sciamarelli said. For the whole 2023, Eurofer still expects a minor drop in apparent steel consumption of 1%, but in 2024 the figure should rebound by 5.4%.
Source: Eurometal
