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Home > MEPS Steel News - 22.01.2013

EU STEEL SECTOR HAS RESPONDED WELL TO LOWER CONSTRUCTION DEMAND

MEPS International Ltd. estimates that demand for steel from the EU construction industry has declined by between 45 and 50 percent over the last five years. The market remains tough but the steelmakers have made significant progress in minimising the impact of the reduction.

The mills have been able to limit the price decreases over the period to 5.3 percent. The MEPS Steel Purchasing Price Index for the EU construction industry averaged 111.2 in the boom year of 2007. The figure in 2012 was 105.3.

The percentage reduction conceded by the producers supplying construction is slightly less than the amount relinquished to customers across the whole of the EU steel sector’s customer base.

Unfortunately, for the producers, the price prospects for sales of steel to the construction industry are likely to show only a marginal improvement in 2013 and beyond. The EU economy is expected to remain sluggish over the next few years. Bank lending will, almost certainly, continue to be tight. This will restrict investments in construction projects.

Domestic demand for rebar across the EU 27 has fallen by more than 50 percent, over the past five years. That figure will have been even greater in the southern member states, where house building has been reduced dramatically.

Consumption of structural shapes has been severely hit. This product has been, in part, supported by better economic conditions in the north of the region. Steel framed building construction is more popular in this part of the European Union.

The reason that most steelmakers have continued to stay in business is their strong selling activity in foreign markets. Solid demand from the MENA region has helped to offset some of the collapse in domestic consumption. Significant rationalisation across the industry has also been a major factor.

Rebar production has decreased by 30 percent and structural sections by 20 percent over the past five years. A much greater reduction in apparent consumption has occurred over the same period. Moreover, the mills have lowered their costs to enable them to be competitive against third country suppliers – particularly, in recent years.

Source:
MEPS - European Steel Review

Also See: MEPS Construction Industry Steel Purchasing Price Index - Forecasts available

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