Reuters quoted Mr Wolfgang Eder president of steel body Eurofer as saying that rising real demand for steel, not just restocking after the crisis, will drive some sectors of the European steel market in 2010 and overall volumes should rise by some 5% to 10%.
He said that "We do see some areas, like the automotive industry, and in the course of the year I think also the energy industry, should at least partly recover. Then we would see some drivers in demand as well, so not just from the restocking and (recovery) from the poor situation but also from intensifying demand at least in some areas."
Mr Eder, who is also CEO of Austrian steel group voestalpine, said that steel demand would likely stay stable in the automotive industry despite the end of government stimulus measures such as car scrapping schemes. He added that "For sure we will see some decline in the demand for smaller cars. On the other hand we see an upturn in the demand for the larger cars. There is a need in Europe to do some restocking. We think there is some pressure on the rental car companies but also car companies in general to do some replacement of the old fleets and this is one of the drivers of the improved situation in the upper class cars. I think that in total over the year this should at least compensate for it."
Mr Eder said that Chinese and Indian imports would not pose a big problem for the European market in 2010. He added that Asian steelmakers would see in the longer term that they would lose a significant amount in transport costs if they tried to sell their product to the European market.
He said that "Steel is sensitive to transport costs. I have a different opinion from many of my colleagues and I think that in the long-term China will learn this lesson. Chinese steelmakers are still fairly new in international business and you have to allow for a learning curve."
He further added that "The steel industry cannot afford, due to the current earnings situation, to take over the risk. We still have 210 million tonnes of capacity and only need 170 maybe 175 million tonnes. We have 15% overcapacity. This will be a challenge for the next eight years."
He also urged European steelmakers to continue tackling overcapacity, despite progress at sites in Bulgaria and Britain.