(In last paragraph ArcelorMittal corrects that long steel
demand, not production, declined by 30 percent)
* No sustainable recovery yet, says German steel association
* Market uncertainty remains - trade group president
* 2013 European long-steel consumption seen flat
By Maria Sheahan and Tom Käckenhoff
DUESSELDORF, Germany, Feb 13 Signs of recovery
for Europe's steel sector, a bellwether for the broader economy,
may be a mere flash in the pan, a German trade group said on
"I don't see any sustainable recovery of the European
market," Hans Juergen Kerkhoff, president of the German steel
association, told Reuters on Wednesday.
Austerity measures aimed at cutting budget deficits have hit
economic growth across the European Union and proved
particularly painful for the steel industry because of the
accompanying slowdown in demand for cars, appliances and new
Steel consumption in the EU fell by almost 10 percent last
year, and while some economic data has recently fanned hopes of
a pick-up in the economy, European steel producers' lobby group
Eurofer warned this month that the sector remains "stuck in
Germany's steel sector, which accounts for about a quarter
of Europe's crude steel production, has performed better than
its counterparts in France, Italy or Spain, but is still
expected to post only moderate growth this year.
"There is still uncertainty in the markets, just like there
was in the second half of 2012, when both traders and processors
were cautious," Kerkhoff said on the sidelines of a steel
ThyssenKrupp, Germany's biggest steelmaker, this
week reported a 38 percent slump in core profit for the last
three months of 2012, hit by European customers using up
inventories rather than placing new orders.
Customers have now started refilling depleted inventories,
driving up output by 5 percent in January, the biggest monthly
gain since September 2011. However, a 4 percent decline in new
orders raised doubts that restocking would continue.
Europe's steel sector overall has a tough year ahead, with
EU steel demand, including inventory adjustments, seen down 0.7
percent this year before a 3 percent rise in 2014, Eurofer said.
"We were hoping to see a slow recovery year on year, but it
is just not there," Arnaud Poupart-Lafarge, chief executive of
ArcelorMittal's Long Carbon Europe operation, told
ArcelorMittal, the world's largest steelmaker, last week
reported a $3.7 billion group loss for 2012 after writing down
the value of its European steel business by several billion
Poupart-Lafarge said that he expects consumption of long
steel products, such as bars used in high-rise buildings,
bridges or railway tracks, to remain flat this year.
The EU is now working on a proposal to reinvigorate Europe's
steel sector, which employs 360,000 people, with measures
covering trade, raw materials, climate change and energy policy.
"We need more demand from the automotive, construction and
mechanical engineering sectors ... Only if we see growth coming
back will we produce more steel," Poupart-Lafarge said.
Demand for long steel has declined by 30 percent since the
start of the crisis, he said. ArcelorMittal has cut capacity and
idled several plants. Poupart-Lafarge said he does not expect
production to be halted at any more plants for the time being.
(Editing by Dan Lalor, David Goodman and Phil Berlowitz)