>Economic and Steel Market Outlook 2010-2011

In the first quarter of 2010, the EU economy continued to move forward at a snail’s pace, growing by just 0.2% quarter-on-quarter. Export growth and inventory replenishment remained the main drivers of the still hesitant recovery. While so far this year also government expenditure contributed positively, internal momentum lost further strength, reflecting sluggish private consumption and investment, particularly in construction.

At the country level there were marked differences in growth performance. Italy surprised on the upside compared with other large EU countries, whereas Sweden and Portugal outperformed
the smaller member states. GDP growth in most countries appears to be stuck in slow motion.
Industry is clearly showing the strongest dynamics of all economic sectors during this stage of the recovery. Supported by the marked improvement in international trade and particularly the rapid rebound of the Asian emerging countries, orders have been improving across a wide range of manufacturing sectors. Output is steadily recuperating from the deep fall in industrial activity in 2009. The rebound in production had been signalled by the improvement in industrial confidence indicators from Q2-2009 onwards. Since late last year, the pick-up in activity appears to have shifted into a higher gear.

Meanwhile, confidence surveys and other forward looking indicators for the industrial sector such as the EU Purchasing Managers’ Indexes point to activity forging ahead in the coming months. EU manufacturing looks well positioned to benefit from business opportunities opening up abroad given its strong position in those industrial sectors where customer focus, high service and skill levels are determining factors. Further support to the competitive position of EU industry in the international export markets is provided by the further depreciation of the Euro during the 2nd quarter.

To read the full report: STEEL MARKET