Reuters reported that EU steelmakers have restarted nearly half the blast furnaces that were idled in the financial crisis holding back recovery in a sector already hobbled by over capacity and high energy costs.
This year alone, ArcelorMittal, the world’s biggest steel producer, restarted a blast furnace in Spain with annual capacity of 2.4 million tonnes and its furnace in France with annual capacity of 7 million tonnes.
A leading industry player said that demand for EU steel, a sector that indirectly employs millions of Europeans and was decimated by the 2008 financial crisis, is expected to grow by 2% or 3% this year, after two straight years of decline.
Mr Wolfgang Eder CEO of Austrian steelmaker voestalpine and former president of steel association Eurofer said that “Of the fourteen blast furnaces that were idled since 2008, nearly half of those are back on stream. As long as this is the basic approach in the industry, it is impossible to see a structural improvement in prices.”
According to steel producers’ association Worldsteel, output in Europe rose 6.2% in the year to April the second highest growth rate in the world and surpassed only by the Middle East.
Unfortunately, the restarts have come at a time when net steel exports from China, the world’s largest producer, rose 41.5% in the year to May as the country’s growth slowed, while its mills continued to churn out record levels of steel.Also, over capacity in Europe is at an estimated 30 million tonnes, so savvy buyers have opted to shop around for their steel, rebuffing price rises from mills which they well know are incurring lower raw material costs.
Source – Reuters