Europe’s slow growth to keep stainless prices under pressure

Europe’s stainless steel producers will be targeting a greater share of their domestic markets after import volumes were maintained amid declining consumption in 2024.

MEPS’s research respondents this month highlighted that growing imports into Europe were applying increased downward pressure on prices amid continued low demand. ISSB data shows that imports were down by 1.4% year-on-year (at 787,835 tonnes) at the end of August. However, volumes rose by 4.4% year-on-year in July and by 44.7% in August.

Europe’s shortfall in stainless steel consumption

New stainless steel consumption data published by worldstainless highlighted that these imports were destined for a market suffering a demand downturn. Its Stainless Steel Markets report projected that consumption will decline by 4.7% year-on-year in its Europe/Africa category during 2024. This follows a 19.1% consumption decline in 2023.

The reduction in Europe’s consumption of long products has been most pronounced during 2024, with the full-year forecast showing a 13.9% year-on-year decline. Hot rolled flat products are expected to end the year down by 3.9%, with cold rolled down by 3.8%.

The worldstainless data also projected a 0.4% decline in consumption in its Americas region in 2024, following a 9.4% dip last year. This year’s decline was also largely due to a 5.4% reduction in the consumption of long products.

Nonetheless, global projections indicate that stainless steel consumption will have risen by 4% year-on-year by the end of 2024. This is largely attributed to a 5.3% increase in China and a 6.5% increase in the rest of Asia. Furthermore, worldstainless forecasts that consumption will rise in all regions next year, with increases of 2.2% in Europe/Africa and 2% in Americas and declining rates of growth in China (2.6%) and the rest of Asia (5.3%).

Production surges in Asia

The latest stainless steel production figures show that declining demand in various parts of the world has coincided with rising supply. Stainless steel melt shop production rose by 6.3% globally, to 30.4 million tonnes, in the first half of this year.

Europe’s steelmakers registered the smallest growth of the five regions assessed by worldstainless, rising by 0.3% to 3.14m tonnes. Lost production from the 136-day strike by Acerinox workers, in Spain, is reflected in this.

Output is rising rapidly in Asia, however. China produced 10.1m tonnes in quarter two; a record quarterly output. Consequently, the country’s total production ended the first half of 2024 up by 5.9% at 18.8m tonnes.

In the first half of 2024 production also rose by 9% in the United States, to 1.03m tonnes, and by 9% in Asia (without China and South Korea), to 3.6m tonnes. MEPS estimates that India’s stainless steel production rose by 12.5% to around 2.1m tonnes in the first six months of the year, with Indonesia up by 20.2% at 2.4 million tonnes.

Economic forecasts indicate European weakness

Many MEPS respondents have little hope of a demand recovery until mid-2025 at the earliest. Against a backdrop of rising production, this will continue to apply downward pressure to prices.

Recent reports compiled by the IMF and WTO forecast an improved global economic outlook. The IMF’s World Economic Outlook expects global GDP growth to be 3.2% this year, rising to 4.3% in 2025.

However, the IMF also forecasts that eurozone growth will lag behind the global average, at 1.2%, in 2025. It said that manufacturing production is increasingly shifting towards emerging market economies – in particular, China and India – as advanced economies lose competitiveness.

The WTO’s Global Trade Outlook, meanwhile, said that 2025’s slowest growing region is likely to be Europe, with GDP expected to rise by 1.1%. It described Germany as one of the global economy’s “conspicuous weak points”.

Without strong domestic demand, Europe’s steelmakers may increasingly rely on production cuts and the region’s trade defence measures to maintain stainless steel prices.