European steel market supply and demand and future trends

1. EU steel market The EU economy in 2007 has maintained a steady and sustained growth as in 2006. In the first quarter of 2007, the EU economic climate index hit a record high in six years. In 2007, the EU's annual economic growth rate will reach 2.6%, similar to 2.8% in 2006, and the economic prosperity index for 2008 will be maintained. In 2007, the growth rate of EU investment in fixed assets was equal to that of 2006, reaching 5.8%. In 2007, the average growth rate of steel consumption per capita was also similar to that of 2006, reaching 2.3%. In the industrial sector where the European Union mainly uses steel, the growth rate of the construction sector in the first quarter of 2007 reached 8.3%. The main growth areas were Poland and Slovakia, but it dropped to 3.1% in the second quarter and declined to 3.7% in the third quarter. Public infrastructure and non-residential construction are the main driving forces for the growth of the construction sector in China and Europe.

In the automotive manufacturing sector, the growth rate of automobile sales in 2007 was 1.1%, in the second quarter it was 1.0%, and in the third quarter it was 2.9%, of which Italian and German vehicle production increased, while France, the United Kingdom, Belgium and Sweden cut back. In 2006, the EU’s original steel production maintained a steady increase, but in 2006, the EU’s apparent steel consumption fell by 1%. In 2006, the EU’s steel exports increased by 8%, North American steel exports increased by 40%, and South Korea increased by 13%. In terms of exporting steel products to the European Union, it decreased by 11.5% in 2006. In 2007, the European Union continued to trim the inventory of steel supply stocks. In 2007, the apparent consumption of EU steel will only increase by 1.5%; the original steel production will increase by 1%, reaching 115.3 million tons.

2. Russia's steel market In recent years, the annual growth rate of Russia's GDP has reached 6%. The reason is that due to the continued high oil prices in the world, Russia’s investment, trade, and industrial production all show rapid growth. In 2006, Russia’s gross domestic product exceeded 1 trillion U.S. dollars, and its per capita GDP exceeded 7,000 U.S. dollars. In 2006, Russian crude steel output reached 70.80 million tons.

The original steel production in 2010 will reach 75 million tons. In 2007, the apparent steel consumption per capita in Russia will reach 264 kilograms. The ratio of continuous casting in Russia to 2015 will increase to over 95%. In 2006, the consumption of steel and the annual growth rate of Russia’s steel industry sector were as follows: 17.8 million tons in the construction industry, 15.7% in the construction industry; 7.7 million tons in the steel pipe industry, 27.6%; 2 million tons in the automobile manufacturing sector, 3%; Manufacturing sector 6 million tons, 4%. In 2006, Russian steel exports reached 31.84 million tons, of which steel billets accounted for 50% of total steel exports, 20% for hot-rolled coils, 8% for cold-rolled coils, 12% for cold-rolled products, and 5 for steel pipes. %. The top five steel export markets are as follows: the EU accounts for 25%, Turkey accounts for 12%, the United States accounts for 11%, the Commonwealth of Independent States accounts for 11%, and China accounts for 6%. In 2006, Russian steel imports reached 5.77 million tons, of which hot rolled coils accounted for 33%, long profiles accounted for 33%, and coated coils accounted for 19%.

3, Turkish steel market Turkey's steel industry is developing very fast. In 2002, the original steel production was 16.5 million tons, reaching 23.3 million tons in 2006. Its current steel production capacity reaches 26.8 million tons. In 2002, labor productivity was 620 tons per person, and in 2006 it was 747 tons. In 2002, the per capita steel consumption was 200 kg and in 2006 it reached 310 kg. It is predicted that Turkey's steel consumption will be 26.5 million tons in 2007 and will reach 38.5 million tons by 2011. In 2007, the original steel production capacity was 31 million tons, and by 2011 it will reach 42.5 million tons.

In 2007, labor productivity was 828 tons per person, and by 2011 it would have reached 1,116 tons. In 2007, the per capita steel consumption was 340 kg, and by 2011 it will reach 420 kg, which is close to the level of the major steel-producing countries in the West. From the perspective of steel import and export trade, in 2006, Russia’s domestic steel demand was strong, so that Russia’s exports to Turkey’s steel products decreased. At the same time, Turkey exported steel products to Russia for the first time. In addition, China’s large steel imports into Turkey’s traditional steel export markets such as the United States, Europe, and the Middle East have put Turkish steel mills under competitive pressure.

At present, the Turkish steel industry is facing difficulties. First, the cost of steel production remains high. Turkey's furnace steel accounts for 76% of the original steel production, but Turkey's electricity price is higher than the EU, Russia and Ukraine. Taking Europe as an example, electricity prices are divided into four levels: small users, medium-sized users, large-scale users, and extra large users. Small users pay 50% more for large users, but the price of extra-large users such as Turkish steel plants is only higher than domestic electricity consumption. The electricity price is 10% lower, which is one of the reasons why Turkey's steel production costs remain high.

Second, after Turkey's accession to the European Union, in the face of the plight of huge environmental investments by steel plants, the European Union banned the government from subsidizing the environmental protection investment of steel plants. This is also a burden on the cost of Turkish steel plants. Third, insufficient scrap resources. At present, scrap is imported from the Commonwealth of Independent States. However, with the expansion of domestic demand for scrap, the Commonwealth of Independent States will also become a net importer of scrap steel by 2010. In addition, the Commonwealth of Independent States will impose strong export tax on scrap steel. This will not only cause Turkey to face a more severe scrap situation, but also that scrap prices will remain at a high price level for a long time to come.

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