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Italy Metals Report Q4 2009
Business Monitor International, Oct 2009, Pages: 41
Italy Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Italy's metals industry.
Italian metals industries failed to see any revival in production through much of 2009, despite signs of stability and growth in key steel consuming sectors such as the automotive and construction industries. BMI foresees the beginning of a slow recovery in 2010, but steel and aluminium production will fail to return to pre-recession levels over the next five years, according to our latest Italy Metals Report. In the first seven months of 2009, Italy’s crude steel output fell 43.1% year-on-year (y-o-y) to 11.26mn tonnes. Monthly output averaged around 1.61mn tonnes. In July, monthly crude output slipped to 1.52mn tonnes (down 44.5% y-o-y), which, even allowing for seasonal effects, indicated that the Italian steel industry was failing to show signs of any recovery and restocking had yet to kick in. Further down the production chain, steel product manufacturers have been radically cutting output amid plummeting orders. Flat product orders had almost dried up in H109 and longs were also struggling as the steel industry experienced a stronger than expected fall in demand.
BMI forecasts crude steel output of 18.92mn tonnes in 2009, down 38% y-o-y. Output is expected to remain at an average of just over 1.5mn tonnes. Although a seasonal downturn is expected in August, the market is already bouncing along the bottom of a trough and no significant further downturn is expected in H209. The domestic metals market is being dragged down by a sharp recession. BMI forecasts Italy’s economy to contract by 4.5% this year, followed by modest 0.2% growth in 2010. The still-weak global equity and credit markets have also made it more difficult for firms to raise the necessary funds to invest. The recovery for investment spending is going to be slow, with only a 2.0% expansion forecast by BMI for 2010, before a jump to 3.6% in 2011.
By 2010, GDP growth should reach an underwhelming 0.2% before making a relatively strong recovery of 2.0% in 2011, after which average growth will be 1.4%. These trends, which are expected to be repeated throughout Europe, will help revive Italian steelmaking, although BMI does not envisage output levels returning to pre-recession levels. It is likely that inefficient Italian industries will have cut production or closed completely during the recession, while prices will be kept down by rising supply from more competitive Eastern European producers, particularly in Turkey and the CIS. Growth in domestic and external demand, albeit tentative, in 2010 should lead to a 7.1% growth in hot-rolled steel products output from a very low base, with crude steel rising 5.7% to 20mn tonnes. BMI expects the effects of the recession to have a long-lasting impact on the Italian steel industry. By 2013, crude output should rise further to 27mn tonnes, which is still 11.5% down on 2008.Having fallen by an estimated 37% to 1.44mn tonnes in 2008, aluminium consumption is set to recover strongly in coming years as industry seeks to utilise this lightweight substitute for steel in automotive and consumer products manufacturing. By 2013, aluminium consumption should near the 2.36mn tonne record set in 2007, leading to imports of 1.82mn tonnes. However, domestic production will lose out to more competitive imports and remelting and BMI does not foresee a return to pre-recession smelting rates over the next five years. By 2013, Italian primary aluminium output should be just under 170,900 tonnes, down 5.6% over the 179,900 tonne mark in 2008. In fact, aluminium production was in decline well before the recession hit, down from around 194,000 tonnes in 2004-06.
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