(Minews) - European economic growth is expected to power a 1.5 percent rise in EU steel demand this year but local producers will see little benefit due to rising imports, steel body Eurofer said on Thursday.
Overall steel imports into the European Union are expected to rise 5 percent, hurting domestic mills.
For 2016, Eurofer, whose members include top global steelmaker ArcelorMittal, ThyssenKrupp and Voestalpine, said it expects apparent steel demand growth of 1.9 percent.
"EU steel imports are again rising significantly, thereby fuelling price competition and eroding margins. Massive and increasing overcapacity in China in an era of slowing growth is the root cause of this," Eurofer director-general Axel Eggert said in a statement.
"As long as Chinese mills continue to offload their products rather than cut production, we foresee the continuation of difficult market conditions," he added.
Eurofer estimates that Chinese exports to the EU rose 49 percent year-on-year over the first five months of 2015.
The EU has this year taken some measures to protect domestic steelmakers, including its imposition in March of anti-dumping duties on imports of cold-rolled flat stainless steel from China and Taiwan.
Protectionist measures have also been imposed in countries including Indonesia, India, Turkey, Mexico and Iran as China continues to sell record levels of cut-price steel to overseas markets.
"Our downstream clients are generally seeing muted business conditions. They see little impact from apparently brighter macroeconomic conditions, and headwinds and uncertainties persist," Eggert said.
"That is why the corporate sector remains cautious about larger-scale investment in fixed assets."
Eurofer said activity in European steel-consuming sectors had remained sluggish this year with only the automotive industry experiencing steady growth.
