Disturbing Trends In The European Steel Industry



European steel industry

Previously, we analyzed the Chinese steel industry. We’ll now analyze the trends in the European Union (or EU). Please be aware that the EU is the second-largest steel consumer after China. Let’s begin by looking at November steel production data for the EU. The data were recently released by the World Steel Association.

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Steel production falls

The above chart shows the year-over-year change in steel production in the EU. As you can see, steel production fell by 0.8% in November. Steel production increased by ~1.5% in October on a year-over-year basis.

When compared to last year, steel production in the EU is up by 2.3% in the first 11 months. This is mainly because of an increase in steel production in the first quarter of the current year. Steel production has been on a falling trajectory since then. This can be verified on the above chart.

Germany’s steel production

Steel production in Germany was down 1.9% year-over-year in November. This is a troublesome trend for the EU. Germany is the biggest producer as well as consumer of steel in the 28-nation bloc. The slowdown in German steel production is a negative sign for the European steel industry.

ArcelorMittal (MT) gets almost half of its revenues from Europe. This makes ArcelorMittal exposed to the slowdown in the EU. U.S. Steel Corporation (X) also has operations in Europe.

Please be aware that investors can avoid the hassles of picking individual stocks for their portfolio by investing in ETFs. The SPDR S&P Metals and Mining ETF (XME) can give you diversified exposure to this industry. Currently, Nucor (NUE) and Steel Dynamics (STLD) are the ETF’s top holdings.


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