Final figures for Q1 2013 activity in EU’s steel using industries show output falling by 6.5% YoY in a reflection of a stronger than usual seasonal slow down due to harsh winter conditions, depressed domestic demand and weakened support from exports.

The drop in activity exceeding earlier estimates implies a negative carry over effect from the poor Q1 on the expected development of activity in the remainder of the year and as a consequence, on total output in 2013.

Despite the fact that the YoY decline in activity is foreseen to moderate in coming quarters, the latest forecasts signal that the downward trend in production will ease only towards the very end of the year.

Although also industrial indicators improved lately, their readings are still consistent with a continued albeit moderating downward trend in near term activity. Key factors choking off an improvement of the business climate remain weak sentiment, difficult access to finance and liquidity problems.

Strengthening support from exports and improving credit supply on signs of a stabilizing EU economy should lift the some of the gloom in the remainder of the year. On balance, output in the steel using sectors is forecast to fall 3% in 2013.

For 2014 a moderate recovery is to be expected, owing to a positive contribu- tion from investment and private consumption on domestic demand. Combined with strengthening support from exports, the SWIP index is forecast to increase by almost 2%.