EUROFER's October report on the Economic and Steel Market Outlook 2009-2011 shows that, activity in the EU steel using sectors continued to decline sharply in the 2nd quarter of 2009. As a result, output in the 1st half of the year was almost 23% down on the same period of 2008.
Companies had to cope with an unprecedented drop in demand for industrial goods, both in the EU and in global export markets. Despite stabilizing financial markets, financing remained a major bottleneck for most companies. Significantly reduced industrial activity and extremely uncertain business conditions led to sharp inventory reductions in the downstream processing chain.
Business prospects for the coming quarters remain bleak although overall sentiment appears to be improving. Since July, new industrial orders started to recover slightly from the lows reached earlier in the year. The latest PMI survey data for the manufacturing sector also suggest some recovery in output from a low level in the months ahead. This should reduce the overall drop in production in the steel using sectors to 18% this year.
The forecast for 2010 shows a gradual further improvement from Q2 onwards year on year growth could become slightly positive again. On balance, output is expected to register only a very modest growth. Improving economic conditions should lead to a more pronounced recovery in 2011; the first estimate for steel weighted industrial production shows a 4% rise.