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Belgium Metals Report Q1 2010
Business Monitor International, Jan 2010, Pages: 47
The Belgium Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Belgium's metals industry.
The Belgian steel industry faced an historic collapse in output in 2009, but there were signs that a slow revival in production was underway in H209, although producers still face the long-term challenge of competing with low-cost Eastern European and Turkish manufacturers, according to the latest Belgium Metals Report.
In 2009, Belgium’s per-capita steel consumption was estimated at 388.3kg, while aluminium consumption was 21.8kg. The publisher estimates that apparent aluminium consumption fell 55.5% year-on-year (y-o-y) to around 233,000 tonnes in 2009, leading to a similar fall in imports. Belgium has no primary aluminium smelting capacity. Just over two-thirds of steel processing is through the oxygen method, with the rest using electric arc furnaces (EAFs). Belgium-Luxembourg is the world’s seventh largest exporter and eighth largest importer of steel, with trade largely focused on re-exports.
In the first 10 months of 2009, Belgium steel production plummeted 57.2% y-o-y to 4.22mn tonnes. Although the monthly output level had recovered to 640,000 tonnes in October from a low of just 235,000 tonnes in February, it was still down 31.9% y-o-y. The trends in the steel industry mirror the overall trend within the Belgian economy, which contracted by 3.7%, 4.2% and 3.5% in Q1, Q2 and Q3 respectively. The export-oriented nature of the steel industry, as well as domestic steel-consuming sectors, was hit by a collapse in exports, mostly to the EU.
Despite the resumption of operations at ArcelorMittal’s Ghent unit, the report estimates a 48.5% drop in crude steel output to 5.59mn tonnes in 2009. This is a revision from the forecast 45% reduction and is due to a fall in hot-rolled production downstream, particularly flats which was depressed by the effects of the collapse in the automotive industry, with car scrappage schemes throughout Europe having only a modest and temporary effect on demand for Belgian steel. While Belgium is unlikely to see the kind of monthly output reported in Q1, any growth will largely be the result of inventory building. Actual demand growth is not expected until Q210, with 2010 output set to rise by around 16.1% above 2009 levels to reach 6.49mn tonnes, although this is still a low level.
The publisher believes that the Belgian steel industry should stage a recovery from 2010 as key export sectors see an improvement, although performance will not be outstanding. Growth will be constrained by the fact that most of Belgium’s exports go to other eurozone countries, whose growth will remain lacklustre throughout 2010. We do not believe that annual steel production will approach 9mn tonnes again until 2014. The decline in output is related to the collapse in the export market, which fell by an estimated 43.9% to 12.29mn tonnes in 2009. At the same time, the import market fell by around 47.8% to just under 8.28mn tonnes. The value of net exports fell from US$10.26bn to US$5.34bn. Aluminium consumption, which is heavily influenced by trends in the automotive industry, fell even faster than demand for steel in Belgium, by 55.4% y-o-y to under 233,000 tonnes, although it should recover to around 413,600 tonnes by 2013.
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