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Europe’s Steel Production Falls for 4th Consecutive Month

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Europe steel production

Previously, we analyzed the trends in the Chinese steel industry. In this article, we’ll discuss the latest steel production data in the European Union (or EU), which is the world’s second largest steel-consuming region. ArcelorMittal (MT) and US Steel (X) have operations in Europe. In contrast, companies like AK Steel (AKS) and Nucor (NUE) get most of their revenues from US markets.

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Steel production falls

The previous chart shows the year-over-year (or YoY) growth rate of steel production in the EU. As you can see, steel production has decreased for four consecutive months. In the latest reading in February, steel production decreased 1.8% on a YoY basis. In January, steel production had decreased 1.1%.

The decrease in European steel production is negative, especially for ArcelorMittal, which gets more than half of its revenues from Europe. The Vanguard FTSE Europe ETF (VGK) gives investors access to European equity markets.

Production details

Steel production in Germany, which is the biggest steel consumer in the EU, decreased 1.6% in February. Steel production in Germany grew by 0.5% in January. Some of the world’s largest automobile companies are based in Germany.

On a YoY basis, February steel production dropped by ~10% in Italy, which is the second biggest steel consumer in the EU. However, steel production in France increased by 3.5% in February.

The steel industry in Europe has been severely impacted by increased imports from China and Russia. To date in 2015, steel production in Russia has increased 6.6%. However, its domestic consumption has slowed over this period.

Along with steel production, investors should also track how steel demand is shaping up. In the next article, we will analyze the latest indicators of steel demand in Europe.

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