Editor's note: European Steel Association recently released its first quarter outlook report said that with the gradual recovery of the EU economy this year and next, the major EU steel industry production will also be made to grow steadily, especially in the automotive and construction industry performance relatively good, so the next two years, the EU steel demand recovery optimism.

European Steel Association latest report predicts that 2016 EU real steel consumption grew by 1.4% in 2017 is expected to further increase by 2.1%, higher than the 2015 estimate of 1.3% growth level; and 2016 and 2017 apparent steel consumption in the EU the amount is expected to increase by 1.1% and 1.7%, respectively, and were lower than the 2015 estimate of 2.3% growth.

2015 EU steel exports fell an estimated 9%, and in 2016 and 2017 exports are still great uncertainty, is expected to continue in the doldrums. At the same time, in 2015 the EU steel imports increased by an estimated 20% or more, and is expected in 2016 and 2017 will still be a large number of steel imports into the EU market.

1 EU macroeconomic situation Retrospect and Prospect

2015 third quarter, the EU economy is still in the recovery track, the 28-nation EU GDP growth of 0.4%. However, the euro zone economic growth growth of only 0.3%, mainly due to the trade deficit drag. In the meantime, the main driver of economic growth in the EU is still in private consumption, public spending but also make some contribution to economic growth, while the contribution of total investment to GDP growth will be negligible.

At the national level, three quarters of 2015, Spain, Sweden and Poland's economic growth continues to exceed the EU average economic growth; and trade deficit dragged Germany, Italy and the UK economic growth; in the second quarter of 2015 after economic growth stalled, three quarters of the French economic recovery to gain some momentum; most Central European countries is still relatively strong GDP growth. Broken down by industry gross value added shows that three quarters of 2015 production is quite weak manufacturing and construction, industry and services related to all the other hand, continue to maintain strong growth.

Investigation economic confidence index in December 2015 the European Commission about the display, the index rebounded and reached the best monthly level since October 2007, particularly with regard to the current industry level of orders and production expectations more optimistic, while consumer services and retail trade and the construction industry have indicated a slight improvement in confidence. December 2015 Markit Eurozone manufacturing PMI index reached 53.2 points, the highest since April 2014's. At the same time, representatives of the manufacturing and service industries Markit Eurozone PMI Composite Output Index in the third quarter of 2015 to four and a half high.

Since 2014, a modest recovery in the EU economy is mainly driven by private consumption. By contrast, European investment remains sluggish, there is a big difference compared to the investment levels before the crisis. The key factors leading to insufficient investment in the EU is that the global financial crisis and slow economic recovery in the euro zone crisis EU financing costs, highly leveraged companies, government austerity measures, regulatory uncertainty, and uncertainty about the business. However, the above-described drag on investment in the past two years has slowed. Economic fundamentals and steadily improving business support the view that the 2016 capital investment conditions improve, and gradually taking over private consumption has become the driving force of economic growth in the EU.

The EU needs to improve the local and global demand growth is expected to drive recovery in the EU industrial capacity utilization to rise, partially competitive backward countries is expected to accelerate with more advanced equipment replace outdated equipment to improve productivity. By profit improved, easier access to credit and lower interest rates continued support in 2016 and 2017 the EU machinery and equipment investment growth is expected to grow by 3.8%, 3.4%.

In 2016-- During 2017, the EU will continue to be a solid private consumption growth. Consumer confidence improved, the labor market improves, real wages, low interest rates and low inflation, is expected to urge the EU to increase consumer spending and reduce savings. For 2016-2017, the projected public investment will also make a positive contribution to the EU's total investment growth. Due to the economic recovery in almost all EU countries will gain momentum, as well as the quantitative easing policy will allow government borrowing to reduce costs and stimulate economic growth measures EU governments focus will gradually shift to implement the austerity.

Currently available data show that the EU merchandise exports to third countries in September 2015 and October showing a moderate recovery. Although the larger emerging economies, lower economic growth is still concerned by the EU, but in 2016 import demand in emerging economies is expected to be a modest recovery. With China's economic growth and recovery in Russia, Brazil's economy back on the growth track in 2017 the major emerging economies, economic growth is expected to strengthen. At the same time, the EU accounted for a large part of EU trade in developed countries commodity exports are expected to remain quite strong, particularly due to the weak euro against the dollar, making European goods exports to the US will be strong.

The EU economy is growing at a solid foundation to enter in 2016. With consumer spending, government investment and exports to the EU continued to support the economy, economic growth in the EU will become more widespread and sustainable. According outlook in January 2016 made by the Economic Commission for Europe Steel Association predicted that 2016 EU GDP growth of 2.0% in 2017 will reach 1.9%.

2 major EU steel industry review and outlook

The third quarter of 2015, EU steel industry production activity slightly lower than expected, a substantial decline in the production of steel industry for the EU steel industry production grew by 1.8% only have a significant impact, in contrast, consumer goods industries such as automotive and white goods industrial production due to increased consumer spending and better than expected. Consistent with the previous forecast, the EU promote housing construction improved construction production rebounded. In addition, these positive change likely to continue in the fourth quarter of 2015. Overall, in 2015 the EU steel industry SWIP index is estimated an increase of 2.0%.

2016 (especially in 2017) investment in the EU is expected to start may gradually replace private consumption as the main driving force of economic growth in the EU, in addition to the EU are more vulnerable to the impact of international trade will benefit the industry expects a modest improvement in the global economy and currently at least benefited from the euro, it is expected that in 2016 the EU steel industry SWIP index will grow by 2.2% in 2017 and further growth of 2.6%.

2.1 Construction

As expected, the third quarter of 2015, further modest recovery in the EU construction industry. Especially in Spain, the Netherlands, Sweden and construction production of relatively strong growth, building the other hand, other EU countries, the production has grown relatively sluggish or stagnant, EU countries still produce a marked decline in the construction industry in France and Austria.

Up to now, the key driver of growth in the European construction industry growth in residential construction. That consumer confidence improved, easier access to loans, the government has taken measures to stimulate the housing market, the support of the recent European housing market has a positive performance. Meanwhile, the EU is still relatively weak non-residential construction, mainly the lack of large-scale private and public projects. Currently, there are some small projects are under construction, but mainly innovation and improvement projects. EU civil engineering activity is also very low. However, the third quarter of 2015, the Polish civil engineering activity has improved, mainly EU funds for infrastructure projects in place. In view of the fourth quarter of the EU construction sector production activities further recovery in 2015 the EU construction industry is estimated an increase of 1.8%.

Outlook 2016 and 2017, the European construction industry growth will steadily rise. In residential construction continues to grow, and continue to be the main driving force for growth in the European construction industry, the EU non-residential building and civil engineering construction seems to be better. EU economic growth, improve profitability and business confidence, easier access to low-cost loans is expected to promote the EU private and public investment in infrastructure and non-residential areas. 2016-2017, the EU construction industry in most countries is expected to show a positive trend is expected in 2016 will be the EU construction industry grew 2.3 percent in 2017 and further growth of 2.5%.

2.2 Automotive Industry

2015 EU car market with a strong trend ends. November 2015 EU passenger car registrations rose 13.7% in December, an increase of 16.6%, thereby making the year, passenger car registrations increased by 9.3%. In addition, in 2015 the European Union in all major automotive markets showed a sharp increase.

November 2015 EU commercial car sales up 17.8% year on year increase, and is an increase of 11 consecutive months. 2015 11 months the EU new car registrations of commercial vehicles rose 11.4%. In the meantime, the EU new car sales in all major markets for commercial vehicles have increased, especially in Spain, Italy and the United Kingdom. Optimistic about sales in recent months, the French new car sales of commercial vehicles also showed a positive trend.

Data currently available show that in 2015 the EU major car exporters, such as Germany and the UK car exports were moderate growth. However, Russia and China to weak demand for imported cars hit European luxury carmakers production. The third quarter of 2015, EU car production surged 9.5%, supporting the EU car market strength. Among them, the EU has a number of new vehicles registered in six countries in the third quarter of 2015, showing a double-digit growth. Preliminary estimates show that the fourth quarter of 2015, EU car industry still continues to improve. Thus, the year 2015, EU car production is estimated an increase of 7.8%.

Outlook 2016 and 2017, the EU automobile industry is expected to continue to show a positive trend, but in production growth for two consecutive years to maintain a high level of background, the next two years the EU automotive production growth is expected to slow down, but the future EU demand for passenger cars will remain bullish. Showing a positive trend in the labor market, wage increases, lower fuel prices and borrowing costs will continue to decline in the EU to promote strong demand for cars. In an increasingly competitive auto market, the EU car manufacturers will continue to introduce new models and aggressive pricing policy responses to promote consumers to replace old vehicles and raising the level of consumption. EU car exports outlook seems brighter, mainly due to the continued strength of the US and Chinese auto demand small cars reduced purchase tax support.

EU economic fundamentals improved and lower fuel prices will support demand for transport is expected to increase, so this will help the EU commercial demand has picked up. More stringent fuel consumption and carbon dioxide emissions standards will continue to drive the EU car industry to innovate and introduce new models of energy saving. Overall, the 2016 and 2017 EU car production (including spare parts) are expected to increase by 3.2%, respectively, 2.9%.

2.3 Mechanical Industry

The third quarter of 2015, the EU machinery industry output fell 1.2 percent, also in different EU countries can see the machinery industry has a very different performance. Germany (especially Britain) machinery industry production rather depressed, and are subject to export demand downturn. In addition to weak global demand for machinery and equipment, the United Kingdom of machinery and equipment exports also affected by the weak pound appreciation. Other EU countries, such as Spain in the third quarter 2015 production machinery industry showed a good trend, output growth year on year, but the other hand, production in other countries is relatively low.

Under the assumption that the fourth quarter of 2015, the EU machinery and equipment products market situation did not change significantly, the annual EU machinery industry production fell an estimated 0.4 percent in 2015 and therefore the performance of the EU machinery industry rather disappointing. As in previous years, the EU demand for machinery and equipment investment in machinery and equipment fell by a heavy blow. EU economic growth came mainly from private consumption to increase, rather than from industrial growth.

At the same time, the EU exports of machinery and equipment demand has been weak global demand pressure, weakness, particularly the larger emerging markets (such as China and Russia) demand shocks, while US demand for machinery and equipment products and strong depreciation of the euro only can partially compensate for the decline in exports to China and Russia.

Outlook 2016 and 2017, the EU machinery industry is expected to rise steadily. EU domestic demand will push the European Union to improve the mechanical industry capacity utilization to rise, the EU is expected to accelerate in some countries will replace the old equipment with more efficient equipment. Increase profits by lowering borrowing costs and support the EU users' investment in machinery and equipment is expected to increase. Weak euro will help the EU machinery industry benefit from the global demand for machinery and equipment is expected to rise moderately in. Overall, the 2016 and 2017 EU production machinery industry will return to growth path, it is expected to grow 1.3% and 2.6%, respectively.

2.4 steel industry

The third quarter of 2015, EU steel production fell 10.6%, far higher than previously expected. Almost all EU countries decreased steel production, including Germany, France, Britain and Sweden were shown a double-digit decline in steel production. French steel production drop is the highest in the EU steel producing countries, mainly due to structural and

Cyclical factors.

The key factors leading to demand from the EU steel output decline is the lowering of oil prices make the oil and gas sector investment fell. An adequate supply of oil to reduce the demand for oil pipelines, and at the same time, in 2015 began construction of the oil pipeline project (such as Turkey project) required major oil pipeline from non-EU countries.

European small-diameter welded pipe market is still sluggish, adequate supply and import pressure from third countries so that EU small diameter pipe users do not rush to purchase, especially in the commercial grade small-diameter pipe market, such as structural pipe (hollow sections). In addition, the seamless steel pipe market competition is fierce. The fourth quarter of 2015, EU steel market continued to slump, the EU steel output fell 5.1 percent estimate. Therefore, the estimated 2015 annual EU steel production is likely to decline by 5.6% year on year.

Outlook 2016 and 2017, EU steel production is expected to moderate growth. Expected manufacturing and construction increased production will lead to higher demand for small-diameter welded pipe and seamless steel pipe. In addition, demand from the automotive industry for special steel will remain strong, while the construction industry production recovery will lead to more demand for welded structures.

But the future remains uncertain demand for large-diameter pipe EU. Sharp decline in oil prices will continue to affect oil transportation pipeline construction. Although future demand for large diameter pipe in Russia is expected to increase, but the European steel production plant is able to derive a certain supply orders remains to be seen. Overall, in 2016 the EU steel production is expected to increase by 2.1% in 2017 and further growth of 2.9%.

2.5 appliance industry

The third quarter of 2015, the EU appliances production increased by 3.5%, an increase of nearly 2015 and the first two quarters. At the national level, three quarters of 2015, the French production of home appliances increased by double-digit year, while Italy, Spain, Sweden, the Czech Republic and Poland are also strong growth in the production of household appliances.

The third quarter of 2015, output growth was mainly benefit the EU appliances in consumer confidence and enhance EU housing market recovery. By improving the labor market, low inflation and oil prices supported EU private consumers of their current and future economic situation are more confident. Together with lower interest rates and easier access to credit, the European Union household final consumption expenditure increased access to support, and in 2015 became a key driver of economic growth in the EU, in addition to the residential sector synchronization recovery also increased the demand for home appliances. In the fourth quarter is estimated EU appliances production growth with the previous quarters close to the background, in 2015 the EU annual production is estimated household appliances increased by 3.7%.

Outlook 2016 and 2017, EU production of home appliances to remain on a positive trend. The EU will remain private consumption growth, mainly due to a further decline in the unemployment rate and economic fundamentals support further improvement. In addition, continued low interest rates, inflation is expected to rise only moderately and easier access to loans will continue to give support to the EU household spending.

At the same time, the EU is expected to further improve the housing market, in turn lead to more demand for white goods. However, the EU will continue to fierce competition in the home appliance market, but the smart appliance technology and energy-saving products will help European appliance manufacturers gain a competitive advantage. Overall, the 2016 EU appliance production is expected to grow 2.4% year on year, further growth in 2017 of 2.2%.

3 EU steel consumption

3.1 The actual steel consumption

The third quarter of 2015, EU real steel consumption stabilized at the level of the same period last year, which reflects the basic EU steel industry production growth weaker than expected. In addition, it also reflects the EU's economic growth was mainly driven by private consumption and services, rather than industrial production growth drivers. Two key EU steel industry, steel industry, namely the production of mechanical and industrial production fell sharply in the doldrums is the key drag on the EU real steel demand.

Preliminary estimates for the fourth quarter of 2015, real steel consumption in the EU shows that the negative impact of mitigation factors, as well as key industries of steel production (such as the automotive industry and construction) production continued to show a positive trend, which in the fourth quarter real consumption of steel is also the EU showing positive recovery trend. Overall, the EU is estimated that in 2015 real steel consumption grew by 1.3%.

Outlook 2016 and 2017, EU real steel consumption is expected to grow moderately, and it is expected the EU steel industry production will steadily rise. Since taking over private consumption is expected investment will be the main driving force of economic development in the EU, and therefore the next two years, the EU actual steel consumption will grow, but the actual strength steel steel consumption in the EU still has a negative impact. Overall, in 2016 the EU real steel consumption is expected to increase by 1.4% in 2017 into a

Step increase of 2.1%.

3.2 Apparent steel consumption

The third quarter of 2015, the EU apparent steel consumption grew by 2.7%, a moderate increase of apparent steel consumption reflects a slight increase in steel distribution chain inventory impact. Since 2015 three quarters of the EU steel imports rose by 29%, the EU market can not be eliminated entirely satisfied steel imports. As previously feared, the EU steel market due to excess supply and impact, and makes up the EU steel mill delivery fell 1.3%.

Between global excess steel supply and suppliers to compete for market share in the highly competitive steel prices weighed on the market and making steel has become more uncertain. In addition, the fourth quarter of 2015, EU steel imports steel market remains distorted. Customs data show that in October 2015 and November EU steel imports rose 51 percent, and far more than in the second quarter and third quarter, the already high monthly average import volume. By the user to increase inventory velocity affects an estimated fourth quarter of 2015, the EU apparent steel consumption up almost no growth, which in 2015 annual EU apparent steel consumption is estimated an increase of 2.3%.

Outlook 2016 and 2017, the EU apparent steel consumption is expected to gradually improve, apparent steel consumption is expected to increase the key driving force is the actual steel consumption has steadily increased end-user productivity brought about by growth. However, users and distributors of steel stocks continued prudent management will to some extent limit the increase in apparent steel consumption. Overall, in 2016 the EU apparent steel consumption is expected to increase by 1.1% in 2017 and further growth of 1.7%.

EU steel import and export 4

4.1 steel imports

The third quarter of 2015, EU steel market steel imports from third countries for further growth. Customs data show that in the second quarter after an increase of 16% in the third quarter, the EU steel imports rose 29%. The third quarter of 2015, EU steel imports is the highest growth rate of finished steel, up 32%, while in the second quarter year on year increase of 17%. Currently available data show that in October 2015 and November EU steel imports year on year growth rate of a staggering 51 percent, finished steel imports up 61%.

In the second half of the substantial increase in EU imports of finished steel background, full-year 2015 estimated EU finished steel imports rose 26%, of which imports of sheet metal up 29%, imports of longs increased by 18%.

2015 The EU is still the main source of imported steel in Russia, China and Ukraine, estimate steel imports from the three countries together accounted for 60% of total EU steel imports. Russia and Ukraine continue to be the main source of EU imports of semi-finished steel, semi-finished steel products from these two countries accounted for 75% of the EU total of semi-finished steel imports.

China, Russia and Ukraine is the main source of EU imports of finished steel. Finished steel products from the three countries accounted for 54% of total EU finished steel imports, while the board from the three countries accounted for 59% of total EU imports of sheet metal. In the long steel imports, the EU import sources are relatively dispersed, there is not a major source of imports, China, Belarus, Ukraine, Turkey and Switzerland and other countries have a large number of long steel exports to the EU.

In the second half of 2015 EU steel imports strong growth in 2015, the year the EU imports of steel (including finished steel and semi-finished steel products) is estimated an increase of more than 20%, and is expected in 2016 and 2017 will still be a large number of steel imports access to the EU market. In addition, China will continue to play a key role in stabilizing the global steel supply and demand.

4.2 steel exports

In the second quarter of 2015, EU steel exports to third countries fell by 3% after three quarters of EU steel exports to third countries fell 13% decline significantly expanded. Customs data show that in October 2015 and November EU steel exports up to third countries decreased by 20%, which reflects the international steel market competition is very fierce. 2015 11 months, the EU semi-finished steel exports fell 28%, lumber exports fell 7% and long steel exports fell by 3%, and therefore the EU total steel exports to third countries decreased by 9%.

Due to accelerated growth of steel exports to the EU and imports from third countries to a third country steel fell sharply in 2015, three quarters of the EU to increase net imports of steel per month to 574,000 tons, while in October and November, the average net imports reached 900 000 ton, much higher than the second quarter of the average monthly net imports of 369,000 tons. October 2015 and November, the EU trade surplus longs relatively stable, a monthly average of 326,000 t; the average monthly deficit of semi-finished steel products was 693,000 tons (461,000 tons for the third quarter), the trade deficit per sheet May was 53.2 million tonnes, higher than the third quarter of 41.5 million tons.

Key destination for the EU steel exports, Turkey and the United States is the main export market for the EU sheet, plate exports to the two countries accounted for 50% of the EU total exports of the plate. The main European markets are still longs exports to Algeria, about 40% of the EU's total exports of long products, in addition to Switzerland, the United States and Turkey, the EU is also a major market for long products exports.

The last two months of 2015, assuming that the EU steel exports stabilized at the level of the third quarter, the full-year 2015, the EU steel exports fell an estimated 9%. Outlook 2016 and 2017, EU steel exports are still great uncertainty. If some emerging market countries due to the economic downturn and the slump in steel demand it, the international market competition will remain intense. If we do not carry out the necessary control steel production, the remaining production will be inevitable in some way to enter the international market.