DUESSELDORF, Germany Feb 11 An expected
recovery in the European steel sector could be derailed by
fierce competition and rising raw material and energy prices,
the German steel association warned on Tuesday.
Austerity measures aimed at cutting budget deficits hit
economic growth across the European Union in the past two years
and were particularly painful for the steel industry because of
the accompanying slowdown in demand for cars, appliances and new
Though steel producers' lobby group Eurofer last month said
that improving demand from carmakers and the construction sector
should bring a return to growth this year, the president of
Germany's steel association said the European sector is still in
"We currently see slight recovery, albeit in a still
difficult market environment ... This is a recovery from a very
low level," Hans Juergen Kerkhoff said at an industry
European steelmakers have struggled to cope with a slump in
prices and 200 million tonnes of global overcapacity amid the
economic downturn, just as rising energy and environmental costs
weigh on their profits.
Kerkhoff said that steel demand this year will remain far
below pre-crisis levels, with southern countries such as Italy
and Spain continuing to lag behind the north.
Germany accounts for about a quarter of Europe's crude steel
production. The German association, which represents steelmakers
such as ThyssenKrupp and Salzgitter, expects
the country to increase its steel output by 2 percent this year
to 43 million tonnes.
In January, German crude steel output grew by 2.2 percent
from a year earlier - its fifth straight increase - with orders
rising to a two-year high.
(Reporting by Maria Sheahan and Tom Kaeckenhoff; Editing by