Steel makers face another tough year ahead, says Moody’s
European steel makers have been dealt a gloomy forecast for next year, as Moody’s ratings agency predicted slowing demand and deteriorating profitability for the industry.
Key sectors using European-made steel such as the automotive industry are likely to need less of the material next year amid a wider market slowdown, it said.
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Meanwhile, escalating global trade tensions and a looming Brexit disrupting supply chains and stifling consumer confidence are major risks, it added.
Europe’s steel makers have suffered a torrid 2019, with British Steel, UK’s second-largest, teetering on the brink of going bust, while Thyssenkrupp has issued one profit warning after another. Tata Steel has also cut jobs across the board.
Britain’s industry has also been in decline for years, because of overcapacity in the wider EU market and Chinese state-subsidised firms undercutting the market with their cheaper product.
The UK industry employed 323,000 people in the early 1970s, but now employs less than a tenth of that.
Meanwhile, the European Commission is planning a carbon border tax aimed at shielding European steel producers and other energy-intensive industries against cheaper imports from countries with less strict climate policies.
The EU executive’s president Ursula von der Leyen, who took office on 1 December, is due to unveil a first outline of her “Green Deal” on Wednesday, a package of regulations meant to drastically reduce carbon emissions of the bloc.
The package will include a proposed “carbon border adjustment mechanism” for selected sectors to be introduced by 2021, according to a leaked Commission document, although design and feasibility details are still being worked out.
The plan could initially be tested on industries including steel, cement and aluminum, a second EU document said.