Is the European Fabricated Steel Industry in Decline

It’s no secret to Australian fabricated steel producers or to people in just about any other industry – here at home or anywhere else in the world, as well – a global recession is affecting business and profitability – in a big way.

The fact is that the fabricated steel industry in Australia may be healthier than it is on other continents, including Asia, North and South America, just about everywhere.

And, while you, as an Australian manufacturer may believe your situation is difficult because builders and contractors have been shopping overseas, primarily in China, for cheaper steel, the situation may be far worse for competing companies in other countries.

Consider the plight of the European fabricated steel industry. Business is down for the nearly twenty countries that comprise the European Union … dramatically below what has been normal in recent years.

In fact, Moody’s, the global rating agency, has only recently – within the last week – cut its outlook for the entire European steel industry to “negative.”

Clearly, this is not good news for Europe’s manufacturers of fabricated steel products. According to Moody’s, demand for European steel products is likely to weaken by up to 4% over the next twelve months due almost entirely to extremely weak construction and auto markets – in Europe and elsewhere.

That forecast is much gloomier than what can be expected to take place right here in Australia. In truth, it may be even worse than stated by Moody’s in its just-published report because of other contributing factors, not mentioned by Moody’s, that are proving toxic to the European steel industry.

One of those factors is the ongoing debt crisis that seems to be harming most countries “on the continent” with the exception, perhaps, of Germany. Add to the debt crisis the very tight credit conditions currently affecting China which is the world’s largest producer of fabricated steel products and its biggest consumer, too, and it’s easy to see why European companies are struggling … even though the cost of raw materials is low – and falling.

It’s also worth noting the forecast for U.S. and Asian producers, major competitors of Australian steel producers, is for weak demand over the duration of the 4^th quarter for this year … and well into the first two quarters in 2012.

These are serious issues as the entire world struggles with a weak economy that is affecting most industries including, of course, fabricated steel.

The concern is that, for some companies around the globe, perhaps in Australia, as well, Moody’s will lower ratings, making it more difficult and costly for those companies to borrow money to run their businesses.

The silver lining in this ominously dark cloud is that Australia’s fabricated steel industry – and its many producers – seems to be faring better than its competitors throughout Asia, Europe, South and Central America and, yes, even the United States.

It remains to be seen if things will stay that way. Meantime …

For news and information that keeps you up-to-date and current on all that is happening in the fabricated steel industry, “visit” us here at E-fab.com.au. We’re easily accessible and always ready to serve your best interests.