European steel industry ‘must halve by 2030 in order to survive’

Europe’s steelmaking industry will have to halve in size over the next 15 years, according to the chairman of the steel industry’s global trade body, heaping yet more misery on workers and companies in the sector, reports The Telegraph.

Wolfgang Eder, who heads the World Steel Association, said the decline was “inevitable” in the face of worldwide trends.

“The problem in Europe is that there is too much capacity,” said Mr Eder in an exclusive interview with The Daily Telegraph. He said Europe’s capacity needed to fall by around half over the next 15 years. “We need to bring down capacity as a precondition for a solid base in the long run.”

The prediction is a worrying development for Britain’s crisis-hit steel industry, which has already shed 5,000 jobs this year as it buckles under pressure from cheap Chinese steel, high energy costs and business rates, which companies say discourage them from investing.

In total, European steelmakers employ about 330,000 people at more than 500 sites with a total capacity of between 200m and 210m tonnes.

Mr Eder, who is also chief executive of Austrian steel producer Voestalpine, warned that the crisis in the UK is a “negative role model” for the wider European industry as it struggles under a “cost structure that is not commercially competitive in the long run”.

He said: “There is no way out, because in the long run we cannot neglect these disadvantages. The only option would be to allow subsidies again in Europe… and that would not be any good. Look back to the 1980s when we had high subsidies – it was a mess for the industry.”

Once unaffordable subsidies were abandoned and the steel industry restructured, European steelmakers were successful until the financial crisis, Mr Eder said.

However, the slower economic growth after the global crash and the poorly-performing Chinese economy have resulted in a worldwide overcapacity of steel.

Industry experts put this at as much as 600m tonnes a year, 300m of which is in China. Europe, unlike other international markets, does not have trade restrictions in place to prevent countries dumping excess production.

Steelmakers across the EU – led by those in the UK – have called for action to stop China flooding markets with cut-price steel. A fortnight ago, the European Competitiveness Council met to discuss how to head off the crisis.

Mr Eder said that, while anti-dumping measures might prove a quick fix to European steelmakers’ current troubles, they were not a permanent solution.

Mr Eder’s forecasts were described as unhelpful by Gareth Stace, director of trade body UK Steel.