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Belgium Metals Report Q1 2011
Business Monitor International, Jan 2011, Pages: 46
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 steel industry should be stimulated by the effects of higher average trend growth for the Belgian economy through the medium term. The economy forecast to expand by an average 1.9% between 2011 and 2015, compared with 1.1% in the previous five years, according to this latest Belgium Metals Report from BMI.
Belgium is by no means the worst positioned economy in Europe, but weaker external demand on the back of fiscal austerity throughout the continent over the coming years, and spending cuts at home, will limit the industry’s growth potential. Private consumption and fixed investment – which have been the two main drivers of growth in the past decade – will both be hurt by this, with consumer spending and investment in new capacity weighed down through the medium term.
However, Belgium’s relatively competitive external sector should allow it to take advantage of rising demand in emerging markets, boosting long-term growth. Moreover, the steel industry has rebounded faster than many other industrial sectors with crude output up 42% to 7.52mn tonnes and hot-rolled output up 36% to 7.99mn tonnes in 2010, following declines of around 50% in 2009. Domestic finished steel consumption grew 27% to 3.98mn tonnes and apparent aluminium consumption was up 30% to 181,600 tonnes, with aluminium product imports rising 21% to just under 550,300 tonnes and exports growing 20% to over 465,000 tonnes. However, as Belgium’s export sector is dominated by relatively low technology goods, the country will face increasing levels of competition in this area from emerging market exporters as they seek to move up the value chain. This will put downward pressure on Belgian metals industries.
Growth in steel and aluminium production will not return to pre-crisis levels, which will be reflected in the performance of the steel and aluminium sectors. BMI believes it will be 2015 – at the earliest – by the time crude steel output returns to anywhere near pre-recession levels, if capacity is not permanently cut in the mean time.
With total production capacity of 10mn tpa of continuous casting slab and 8.5mn tpa of hot rolling mill capacity, ArcelorMittal’s output will determine Belgian steel production in 2010. The three plants under the control of the Russian-Belgian joint venture (JV) Steel Invest and Finance will also face major difficulties, although they are less dependent on the automotive industry and are expected to see output recover more quickly than at ArcelorMittal’s plants. It will be 2014 before domestic finished steel consumption exceeds 5mn tonnes again. A similar trend will be observed in the Belgian aluminium market. Consumption will be constrained by higher rates of unemployment, thereby dragging down spending on consumer durables and cars. Again, a sharp slowdown in 2011 will mean a four- or five-year period before domestic consumption returns to pre-recession levels, with 2015 consumption reaching around 364,000 tonnes, a level more typical of the years prior to the collapse in demand. This will have a knock-on effect on imports of primary aluminium, which will see a low growth scenario in 2011.
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