By Philip Blenkinsop
BRUSSELS (Reuters) - European steel consumption is set to stagnate this year as the industry needs to reduce inflated inventories and faces the threat of even more cheap imports from China, European steel body Eurofer said on Thursday.
"The outlook for the EU steel market in 2016 is dull," Eurofer said in its quarterly outlook published to coincide with its hosting of a steel conference in Brussels.
Eurofer president, Geert Van Poelvoorde, a senior executive of ArcelorMittal (AS:ISPA), told a news conference that overcapacity was the sector's most pressing problem, with echoes of the 1970s and 1980s when it undertook massive restructuring.
"Forty years ago it was regional, today it is global and the root cause is overcapacity in China," he said.
Britain, in particular, has felt the squeeze as its largest producer Tata Steel (NS:TISC) has announced plans to pull out of the country, threatening 15,000 jobs. Van Poelvoorde said the sector had lost 85,000 jobs in Europe since 2008.
China's critics say it has built up massive excess steel capacity, which Eurofer puts at 400 million tonnes or more than double annual EU steel demand, by subsidising loss-making producers and building new plants even now.
The European Union has imposed a series of tariffs on different grades of steel mostly following Eurofer complaints. Asked what products Eurofer would want investigated next, Van Poelvoorde replied; "Everything".
"Every time you have a trade case, the volume reduces, but it goes to another product, from cold-rolled to hot-rolled to galvanised steel. With Chinese overcapacity, every door left open will be used," he said.
Eurofer has forecast growth of apparent steel consumption, which includes inventory changes, of zero in 2016 after a 3.5 increase in 2015 and sees 1.6 percent expansion in 2017.
In January, it had forecast modest growth this year and next, describing prospects as "mildly positive".
Steel imports as a whole rose 22.5 percent last year, limiting the normal end-year clear-out of stocks.
Imports of semi-finished and finished steel rose 30 percent year-on-year in the first two months of 2016, with signs of an 18 percent hike in finished product arriving in March.
China remained the largest exporter, its imports increasing year-on-year, although easing from the levels of the fourth quarter of 2015. Imports from Turkey, South Korea and Ukraine rose quarter-on-quarter while those from Russia were flat.