Boston, MA -- (SBWIRE) -- 04/11/2014 -- After a strong year for the UK steel industry in 2013, we are forecasting a muted recovery going forward. In line with its European counterparts, the UK metals industry has been rocked by low profitability that has led to capacity reductions and disinvestment. However, the worst is probably over for the UK, as slightly stronger domestic demand and recent investment from international firms such as Sahaviriya Steel Industries and Tata Steel should arrest the decline in sector fortunes.
We expect the UK autos industry to provide a much needed boost to domestic steel demand, as both vehicle demand and production continue to recover. However, conditions for firms in the steel industry will remain challenging due to a combination of low output prices, high input costs, regulation and weak external demand for UK steel exports. Opportunities for local firms exist in servicing domestic manufacturing such as autos and demand for high end steel products in fast growing but lower technology emerging markets.
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On an intercontinental level, in February 2014, the European Parliament passed a resolution backing a plan to revive the bloc's steel industry, calling on the European Commission (EC) and member states to adopt "economically feasible" climate and energy targets. The resolution came just two weeks after the EC scaled down its 2030 climate and energy targets and underlines a new sense of pragmatism in Brussels at a when European growth is slow. In a move unlikely to be popular with the green lobby, the resolution said the most energy efficient steel plants in Europe should not have to bear any additional costs resulting from EU climate policies. It was not immediately clear how the resolution will tally with attempts by the EC to prop up the EU carbon prices by delaying the sale of, or backloading, carbon permits - a major additional cost for industries like steel.
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