Steel production in Europe
Previously, we discussed that the WSA (World Steel Association) expects steel consumption in the EU (European Union) to increase at a rate of 2% this year. In this part of the series, we’ll look at the steel production in Europe (VGK). The data was released by the WSA on April 21.
ArcelorMittal (MT) gets more than half of its revenue from Europe. US Steel (X) also has significant operations in Europe. Currently, it forms 3.24% of the SPDR S&P Metals and Mining ETF (XME). Schnitzler Steel (SCHN) and Reliance Steel & Aluminum (RS), respectively, form 1.15% and 4% of XME.
Steel production falls
The above chart shows the YoY (year-over-year) growth rate of steel production in the EU. As you can see, steel production fell by 0.9% in March on a YoY basis. In February, steel production increased by 0.4%. YTD (year-to-date), steel production decreased 0.6% in the EU.
Germany is the largest steel consumer in the EU. Germany’s steel production fell 4.4% in March. Italian steel production fell 9.8% in March. Italy is the second largest steel consumer in Europe.
The European steel industry has been severely impacted by increased imports from China and Russia. In Russia, steel production increased 4.5%, so far, in 2015. However, Russia’s steel consumption slowed down over this period. Russia’s GDP (gross domestic product) is expected to contract by 3% this year.
Steel companies like Nucor and Steel Dynamics get most of their revenue from the US markets. In the next part of this series, we’ll discuss the WSA’s forecast for US steel consumption.