Europe Steel Industry Declines Due to the Rise of the Asian Markets

2013-06-10

The European Steel Association (Eurofer) indicates from an annual report that the 2012 capacity of European steel industry continues to decline (by 3.5%) due to the reduction of purchase orders. Steel capacity once rebounded in 2010 and 2011; however, in 2012 it dropped again to below 170 million tons, a 7.5 million ton drop from the previous year. The worst scenario was in 2009 when the capacity was less than 140 million tons. However, Eurofer thinks the European steel industry is unlikely to reach the capacity level (200 million tons) prior to the financial crisis. The largest steel manufacturing country in Europe is Germany (42 million tons annually), followed by Italy, France, Spain, and England; Belgian ranks 7th. In fact, the reduction in steel capacity is a result of the decreasing demand in the European market, which especially in 2009 dropped substantially and slightly rebounded in 2010 and 2011, and dropped once again in 2012. On the other side, unfavorable balance of trade showed up in 2008, and turned into trade surplus as a consequence of export increase outside of Europe. Steel export reached 27 million tons and import reached 13 million tons. Eurofer also indicates that the steel industry employment decreased gradually. In 2008 the employment was 416,198 people, and it dropped to 350,656 people in 2012. German steel industry has the most employment of 88,000 people, and Belgian ranked 7th by 13,319 people. According to World Steel Association, the global steel capacity once decreased in 2009 but it quickly bounced back with substantial growth and increased to 1,547 million tons in 2012. China is the largest steel manufacturing country on the globe, followed by Japan, US, India, and Russia. Capacity in Asia takes 60% of global production, over-running Europe that takes 11%. China is the largest steel exporting country, while the US is the largest importing nation. ArcelorMittal is the world's largest steel manufacturer, followed by Nippon Steel, Sumitomo Metal Corporation, and Hebei Group. Eurofer holds a pessimistic view that the industry is less likely to turn good in 2013.