A European Union industry group again downgraded its outlook for the steel market on Monday, saying demand is due to tumble 5.3% this year amid high inflation and geopolitical tensions.

In July, the European Steel Association (Eurofer) forecast consumption of steel was due to drop 3% instead of the 1% decline it had predicted in May.

"The perspectives for the European steel sector get gloomier every quarter amidst disruptive wars, global tensions, an unresolved energy crisis, high inflation, tightening economic conditions and historically high import shares that are strangling manufacturing," said Eurofer Director General Axel Eggert.

The group upgraded, however, its outlook for apparent steel consumption for 2024, expecting a rebound of 7.6% instead of 6.2%.

"That recovery is conditional on still very uncertain positive developments in the industrial outlook and steel demand," Eurofer added.

Apparent steel demand measures steel output plus imports net of exports and incoming material being further processed in the bloc.

In the second quarter of 2023 - the most recent actual data available - apparent steel consumption recorded its fifth consecutive negative reading, falling 7.6% to 35.6 million metric tons.

Among steel-using sectors, positive performance in autos, mechanical engineering and transport helped to offset weakness in domestic appliances and construction, the latter which accounts for 35% of steel demand.

The EU steel sector produces about 152 million metric tons of steel per year at about 500 sites with turnover of 130 billion euros (Reporting by Eric Onstad, Editing by Louise Heavens)