September 18, 2012 / 10:51 AM / 8 years ago

UPDATE 1-German steelmakers cut output forecast on Europe crisis

* German steel association sees 2012 crude steel output down 4 pct

* Says forecast implies demand will bottom out in Q4

* Says Germany still doing better than Europe as a whole (Adds further details, background)

FRANKFURT, Sept 18 (Reuters) - Germany’s steel industry association cut its forecast for 2012 crude steel output in Europe’s biggest economy and said it sees no quick recovery as the euro zone debt crisis hurts demand for steel products more than expected.

Steelmakers globally are struggling with the crisis in Europe, along with weak growth in Japan and a slower pace of expansion in China, the world’s largest producer and consumer.

In Germany, the European Union’s No.1 steel producer, crude steel output is now expected to fall 4 percent to about 42.5 million tonnes this year, compared with a previous forecast for 44.0 million tonnes, the steel association said on Tuesday.

So far this year, crude steel output in Germany - where the biggest steelmakers are ThyssenKrupp and Salzgitter - is down 5 percent from a year earlier, it said, implying that the decline will start to slow later in the year.

“The new forecast implies demand will bottom out in the fourth quarter,” the association’s President Hans Juergen Kerkhoff said in a statement.

But compared with other European markets, Germany’s steel sector is still holding up relatively well. Rolled steel output is seen down about 5 percent at 39 million tonnes this year, the steel association said, compared with a 20 percent drop across the European Union, and utilisation rates are higher.

In the eight months through August, the fastest decline was seen in output of flat rolled steel, used to build cars, household appliances or offshore wind farms, at 8.4 percent.

Among other factors, output is being stunted by a decline in sales in Europe’s auto industry, a major steel consumer. Autos group ACEA said on Tuesday that vehicle sales in the region fell 6.6 percent in the eight months through August.

In Germany alone, auto sales declined by only 0.6 percent in the January to August period, according to most recent data.

But output of long steel - used in reinforced concrete and for wires of any kind - started to recover, with a 3 percent increase in August compared with a 1.1 percent decline over the January to August period.

That echoes comments made by ArcelorMittal, the world’s largest steelmaker, last week. Nico Reuter, ArcelorMittal’s Europe vice-president for long carbon steel, said at an event in Hamburg at the time that he expected Europe’s long steel market to decline by 3-5 percent this year.

“But the German market is still healthier than the rest of Europe, especially southern Europe, in terms of steel consumption,” he told journalists. (Reporting by Maria Sheahan; Editing by Dan Lalor and Hugh Lawson)

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