LONDON, January 24, 2018 /PRNewswire/ --
We hold a positive outlook for European steel this year. This is driven by both demand and supply side factors including strong expected output from steel-consuming sectors of the economy and restrictions on certain supply sources. Higher domestic capacity utilisation is expected to result.
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Good demand and restricted supply are forecast
This year looks set to be another strong one for European steel prices and especially margins. There are several reasons why we hold this view. These include:
- A generally positive forward-looking set of macroeconomic indicators, suggesting that demand for steel will increase further from what was already a strong year in 2017
- Likely support in the early part of the year from the inventory cycle
- Trade barriers into the EU against a range of lower-priced offshore supply sources, providing an opportunity for domestic suppliers to incrementally increase their share of domestic orders
Macroeconomic indicators
The years immediately prior to the recession of 2009 are sometimes used as a reference point, against which current performance is measured and generally found to be relatively lacking. But in truth the level that the European economy reached during 2006-8 was an outlier. It is now a long time since that recession and in Europe things have moved on. At a high level, growth in industrial production (IP) was 2.6% last year for Western Europe. Other than 2010-11, when IP was recovering from a very low post-recession base, this was the strongest annual growth recorded for ten years. In 2018 we expect to see a further 2.1% growth in the same index.
Read the full story: http://bit.ly/European-Steel-outlook
Authors: Matthew Watkins
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