Austria Metals Report Q1 2010

The Austria Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Austria's metals industry.

The Austrian steel industry is witnessing a steady upturn in its fortunes, with positive month-on-month (m-o-m) crude steel output growth in H209 and an improvement in producers’ earnings in the sector. However, the latest Austria Metals Report cautions that this will be threatened by cheaper imports from Eastern Europe and Turkey over the medium-term.

In 2009, Austria’s apparent aluminium consumption was estimated at 327,000 tonnes (down 26.3% over 2008), with per-capita consumption at 39.1kg (down 26.4%). Apparent consumption of finished steel was 3.57mn tonnes. Nearly 91% of Austria’s steel processing is through the oxygen method, with the remaining 9% using electric arc furnaces (EAFs). In the first 10 months of 2009, Austrian crude steel output was down 31.1% y-o-y to 4.57mn tonnes. However, on a monthly basis, the industry has seen output recover from the February low-point – with crude production – with September and October reporting the best performance for the year-to-date with output at 580,000 tonnes (down 10.6% y-o-y) and 626,000 tonnes (down 11.3% y-o-y), respectively. This mirrored the trends within the domestic and eurozone economies.

The nation’s leading steelmaker Voestalpine expected positive full-year operating earnings in 2009 and to at least break even on its bottom line. Many industry pundits expected the Austrian steelmaker to increase its market share. In the three months to September 2009, Voestalpine reported an operating profit amid signs that the downturn had bottomed out. Although a steep decline in sales volumes and price levels hit year-on-year (y-o-y) earnings, the group beat all estimates in a Reuters analyst poll as demand picked up. Earnings before interest and tax (EBIT) were EUR70.4mn, down by around 85% y-o-y but still double what analysts had predicted. Net income was EUR8.4mn, far above the EUR30mn loss analysts had been expecting. Voestalpine expected earnings at a similar level in Q409. It predicted a slight increase in demand in the automotive sector as prices become more competitive and stable business in the railway and construction sectors.

The publisher estimates total output for 2009 at 5.85mn tonnes, down 22.9% over 2008. Although this is the lowest annual total since 1996, it is an upward revision from the 5.46mn tonnes we had forecast for the year, reflecting the earlier-than-expected restocking of inventories. The beginnings of an economic recovery in the eurozone in 2010 will offer some respite to the export sector and international credit conditions, although the domestic economy will see zero growth in 2010. This will result in a sluggish recovery in the domestic steel industry with production set to rally from Q210 as output reaches 6.32mn tonnes, up 8.0% over 2009. The publisher does not envisage a return to pre-recession levels over the foreseeable future due to increased competition from the Commonwealth of Independent States (CIS) and Turkey. By 2014, output should have recovered to 7.27mn tonnes – still 4.2% down on 2008 levels. Our forecast is supported by Austrian steelmaker VoestAlpine’s recent statement that a return to the production levels of 2007 ‘is likely only over a period of several years.’ At the same time, finished steel consumption will increase at a more rapid rate, exceeding 2007 levels at 4.62mn tonnes by 2014, fuelling a rise in imports which, having fallen 35% to 2.66mn tonnes in 2009, will exceed previous levels at 4.6mn tonnes by 2014.

With export growth failing to reach the same rate as import growth, and the price of imported products at a higher level than exports, the steel trade balance will fall 29.5% from US$4.47bn in 2008 to US$3.15bn in 2014.

Executive Summary

SWOT Analysis
- Austria Political SWOT
- Austria Economic SWOT

Global Metals Market Overview
- Table: World’s Top 10 Steel Producing Countries, 2007 And 2008
- Aluminium Outlook
- Table: BMI Aluminium Forecast
- Table: Aluminium Indicators – Historical Data and Forecasts
- Copper Outlook
- Table: BMI Copper Update
- Table: Copper Indicators, Historical Data and Forecasts
- Metals Price Outlook
- Table: Stock Levels At London Metals Exchange Warehouses, 2001-2008 (tonnes)
- Global Mining Outlook
- Table: Biggest Chinese Acquisitions In Australia Since 2005
- Table: Global Mining – Top Five Companies By Market Capitalisation (US$mn)
- Table: Global Mining – Key Players’ Future Investment Plans (selected projects)

Regional Overview

Industry Forecast Scenario
- Table: Austria Metals Industry, 2006-2014
- Macroeconomic Forecasts
- Table: Austria – Economic Activity, 2005-2014
- Table: Austria Long-Term Macroeconomic Forecasts, 2012-2019

Competitive Landscape
- Company Profiles
- VoestAlpine
- Austria Metall AG

Global Assumptions
- Table: Global Assumptions, 2007-2013
- Table: Developed States GDP Growth, 2008-2010
- Table: Emerging Markets GDP Growth, 2008-2010
- Table: Commodity Prices, 2007-2010

BMI Methodology
- How We Generate Our Industry Forecasts
- Cross Checks

- VoestAlpine

- Austria Metall AG

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