Market Insight
SPRING 2017

Annual report
Year 2017

Market Insight
FALL 2017

The Market Insight Winter 2017-2018 report is not yet available and will be published in February 2018

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Economic context in Europe

Quarterly real GDP growth rate (%) and outlook for the Eurozone

Source : OECD – Economic Outlook January 2017 and June 2017

 

 

  • Real GDP growth in Q4 2016 and in the first half of 2017 was higher than was expected in the January 2017 Outlook. For the second half of 2017, the OECD forecasts an average quarterly growth rate of 1.9 % for the Eurozone, and 1.7 % for the entire year 2018.
  • In Germany, economic growth is supported by low unemployment and rising private consumption, and is therefore higher than in the Eurozone on average. However, in many other European countries, high levels of unemployment and weak real wage growth are constraining domestic demand.

 

Exports from European Union (EU) countries to countries outside (Extra-EU-28) and inside (Intra-EU-28) the EU

Source : Eurostat

 

 

  • World trade has improved substantially since the second half of 2016, benefitting from rising commodity prices and the pick-up of demand in emerging market countries. This has lead to an increase in exports of manufactured goods from EU countries to Extra-EU emerging markets economies.
  • Intra-EU-trade is also on an increasing path (1.2 % higher in Q1 2017 than in Q1 2016), albeit less dynamic than trade between the EU on the one hand, and the rest of the world on the other hand (3.2 % higher in Q1 2017 than in Q1 2016).

 

Industrial activity and inland navigation

Index of industrial production in the EU-28 and goods transport in the EU

Source : Eurostat

Index of industrial production in the EU-28 and goods transport in the EU

Source : Eurostat

 

 

  • Global trade and industrial production strengthened continuously in 2016 and 2017.
  • However, having almost recovered from the low water period in autumn 2015, the IWT sector was again hit by a low water period in late 2016 and at the beginning of 2017.
  • This low water effect was further aggravated by a second effect: ice periods on rivers and canals in Q1 2017, both in Western and in Eastern Europe, hindered vessel movements over a certain stretch of time. Inland shipping transport activity suffered from both of these effects.

 

 

Economic situation of inland navigation-related sectors

Mineral oil products segment

 

Refinery output in the EU and crude oil price

Source : Eurostat

Refinery output in the EU and crude oil price

Source : Federal Reserve Bank of St. Louis

 

 

  • Since spring 2016, oil prices have been fluctuating in a range of 50-55 US-$ per barrel. Although OPEC-backed production cuts are providing some support, the increase in output from US shale producers is acting as a drag on prices.
  • The low oil price level enabled sufficiently high profit margins in the refinery sector, which explains the level of refinery output in the 2nd half of 2016 and in the 1st half of 2017.
  • Oil prices are expected to remain within a range of 50-60 US-$ per barrel also in 2018 (source: EU Commission/European Economic Forecast).
  • Overall in line with oil price movements, fuel costs in inland shipping increased modestly in Q1 2017; they were 12 % higher than in Q1 2016, but still 12 % lower than in Q1 2015.

 

 

Development of fuel prices in the IWT sector

Source : CBRB

 

Steel industry segment

 

  • The German steel production increased by 1.8 % in Q1 2017 compared to Q1 2016, and by 1.5 % in Q2 2017 compared to Q2 2016.
  • The  German Steel Federation assesses the economic situation of the German steel industry as rather positive, as demand from the main steel-using sectors is picking up. This concerns especially the demand from the construction sector. However, risks remain, due to the high pressure coming from the rising steel production capacities worldwide.
  • Looking at the steel industry in the Danube area, there was a strong increase in Austria, both in Q1 2017 (+5.8 %) and in Q2 2017 (+11.7 %) (source: World Steel Association).

Construction sector segment

 

Evolution of building permits for residential homes in the EU (Index 2010=100)

Source : Eurostat

 

  • The transport of sand, gravel and other building materials on inland waterways is promoted by rising and accelerating construction investments in 2017 and 2018.
  • The investment climate in the housing sector is currently very positive, both on the demand side (rising household income, low mortgage rates) and on the supply side (rising price level attracting more investment).

 

 

Agricultural products segment

 

  • The exceptionally bad harvest results in Western Europe in 2016 were still weighing on the transport of agricultural products during Q1 2017. But new harvest figures from the first half of 2017 show a recovery.
  • According to statistics from the French ministry for agriculture (Agreste), the French grain harvest in 2017 is 23 % higher than in 2016 and 3 % above the average of the period 2012-2016.
  • For Hungary, an important agricultural producing country in the Danube region, projected harvest results of 2017 are lower than those of the previous year (-16 %) (source: EU 28 – 2017 Production Forecast – EU Cereals Balance sheet 2016/17 and forecast 2017/18).

Market Insight
FALL 2017

A project co-financed byEuropean Commission

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