Poor EU steel demand hits recyclers's margins

LONDON, Oct 3 (Reuters) - Low steel consumption in Europe is eating into ferrous recyclers' margins, an EU industry body said on Wednesday.

"The general situation of the EU steel industry remains worrying; steel demand is 25 percent below its 2007 level and with a current 25-30 percent overcapacity," the European Ferrous Recovery and Recycling Federation (EFR) said in a statement.

"...Scrap prices dropped, thereby discouraging scrap collection and processing because of little, or sometimes even no margins at all."

Among the largest metals scrap recycling groups operating in Europe are Australia's Sims Metal Management , EMR, a privately-owned British company whose turnover was around 1-3 billion pounds ($1.61 billion-$4.84 billion)in the last few years, and Germany's TSR.

Closures of some steelworks and mergers reduced demand for steel scrap in Europe, EFR said, while high energy costs and strict CO2 emission regulations make EU mills less competitive and likely to move crude steel production abroad.

"The short-term market outlook is certainly not very positive for EU steel producers and recyclers," the association said. ($1 = 0.6196 British pounds)

(Reporting by Silvia Antonioli; editing by William Hardy)

((silvia.antonioli@thomsonreuters.com)(+44)(0)(20 7542 1755)(Reuters Messaging: silvia.antonioli.reuters.com@reuters.net))