EU machine building sector to experience a 4.1% decline in production in 2024 – EUROFER

In 2025, the industry is expected to recover by 1% y/y

The EU’s machine building sector will experience a 4.1% decline in production in 2024 compared to 2023. This forecast was published by the steel producers’ association EUROFER in its «Economic and steel market outlook 2024-2025, Q4».

The main factors behind the decline are the general downturn in the industry, the continuation of global geopolitical conflicts, and uncertainty due to the ongoing impact of the war in Ukraine. Nevertheless, the sector expects a moderate recovery in 2025 with a growth rate of 1% y/y.

At the beginning of 2024, the EU’s machine building industry was already showing a decline: in the second quarter, production fell by 5.7% after a 4.6% decline in the first quarter. These figures are a continuation of the negative trend that began in the fourth quarter of 2023. Under the influence of a number of negative factors, the sector lost the growth rates achieved in 2022-2023 after the recovery from the pandemic crisis. At that time, the machine building sector showed stable growth, which exceeded even pre-pandemic indicators. However, the situation has changed dramatically due to new economic challenges.

The preliminary growth of 5.7% in 2022 was achieved thanks to an active first half of the year, which was supported by positive results amid a gradual industrial recovery. However, in 2023, growth was revised down from 2.6% to 1.6% as new obstacles to the development of machine building emerged. These constraints included significant shocks in the energy sector and increased global trade tensions.

The realities of 2024 for the machine building sector became much more difficult than previously predicted by experts, which is reflected in the revised forecast: the expected decline was much deeper and amounted to 4.1% instead of the previously forecasted 1.9%. This is due to a number of factors, with the decline in industrial demand taking center stage. In the EU, there is a general decline in economic activity in industrial sectors, which is further complicated by global instability caused by geopolitical conflicts. Lack of resources and rising energy prices also have a negative impact on the industry.

The impact of the war in Ukraine, a significant energy shock, and economic difficulties continue to weigh on the machine building sector, slowing its recovery. The forecasts for 2025 remain cautious – although a slight increase is expected, it will not be enough to compensate for the losses of 2024. The sector is expected to see the first signs of stabilization only in early 2025, when global and regional economic conditions begin to gradually improve and there is confidence in more sustainable economic growth.

As GMK Center reported earlier, EUROFER has downgraded its expectations for apparent steel consumption in the EU in 2024 to -1.8% y/y. The previous forecast assumed a 1.4% y/y increase. Expectations for the growth of apparent steel consumption in the EU in 2025 have also been downgraded from +4.1% to +3.8%.