Production of all European Union steel-consuming sectors will decline to 2020 and recover only partially from 2021, according to a market forecast published by European steelmakers' association Eurofer Aug. 5. However, activity in construction will fall significantly less than activity in other sectors, due to "rather robust" government support, the association said.
The outlook for investment in construction – the biggest steel using the sector, expected to account for 35% of the market this year – is "less negative" than in some other industrial sectors, but will only partially alleviate the overall blow the EU's steel industry will receive from lower demand this year, with overall market conditions not expected to improve before the fourth quarter of 2020 or early 2021, according to Eurofer.
Total output by steel-using sectors is set to fall by 12.8% in 2020 and to recover by 8.9% in 2021, the association said.
Construction output will drop by 5.3% in 2020 and will rebound by 4% in 2021, Eurofer forecast. The construction sector has in recent years be more resilient than others because it is largely protected from the ongoing weakening dynamics in foreign trade. However, in the first quarter of 2020, the onset of the pandemic led to the first drop in construction output since the fourth quarter of 2016 (down 0.9%), it said.
"The construction sector is set to be more resilient and, to some extent, less exposed to the huge repercussions of the COVID-19 lockdown. It is thus likely to achieve relatively better performance than other GDP components in 2020," Eurofer said. This sector will benefit from government investment and public expenditure which will play a "rather robust, counter-cyclical role," it said.