Romania Metals Report Q1 2011
- ID: 1541189
- January 2011
- Region: Romania
- 54 Pages
- Business Monitor International
Romania Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Romania's metals industry.
BMI is optimistic about the domestic and external outlook of the Romanian steel industry over the medium term, particularly with continued expansion and foreign investor interest in Romanian steelmaking and downstream industries such as carmaking and shipbuilding. However, if the recession drags on longer than currently expected, Romania will find it even more difficult to fund public investment projects, translating into a sharper decline in construction sector activity during 2011. Moreover, a sluggish eurozone market would limit growth in Romanian exports of semi-finished and finished steel products as well as aluminium mill products.
In 2010, Romanian crude steel output grew 41.8% year-on-year (y-o-y) to 3.47mn tonnes. Unlike elsewhere in Europe, monthly steel output held up throughout the period, reaching 370,000 tonnes in July, the highest level since October 2008. However, output was still little over 60% of full operational capacity and the economic recovery is faltering, denting prospects of a fast return to pre-crisis levels of output. While Romania's economy has shown some moderate improvement through recent quarters, we believe its path out of recession is not yet secure, which will dampen prospects for domestic consumption.
On the upside, the steady value of the leu throughout 2010 is expected to hold in 2011 with little volatility, which will ensure that Romanian steel exports can tap into the eurozone market. However, eurozone autos demand (the single largest Romanian export as well as a major consumer of its steel output) is unlikely to be impressive while eurozone households are under pressure from fiscal austerity and generally tepid labour market recoveries. However, the long-term prospects look good, with expansion in automotive capacity by Dacia and Ford likely to boost domestic flat steel and aluminium consumption – the automotive industry consumes 70% of Romania’s CRC output. Ford alone is planning to raise output at its Craiova plant to 300,000 units by 2013, which will provide a major boost to Romanian steel production throughout the value chain.
On the upside, the domestic market for long products is likely to recover. Long products represent around 26% of total hot rolled output in Romania, but poor performance in the construction sector has had a deleterious impact on the production of long steel products such as reinforced bars, construction profiles and cold roll-formed sections. BMI estimates that concrete reinforcing bar output fell 48.7% y-o-y in 2009 to 406,485 tonnes before experiencing a modest export-led recovery of 3.7% to over 420,200 tonnes in 2010. Serious recovery is only likely from 2011, when the domestic market picks up.
Despite the poor prospects for the Romanian steel market over the next few months, investment continues to grow as steelmakers regard the country as well-positioned to cater for a medium-term recovery in EU demand. ArcelorMittal Galati is planning to double its production capacity to more than 4.2mn tonnes per annum (tpa) from January 2011, when the EUR53mn upgrade of its blast furnace No.5 will be completed. It is also proceeding with the construction of a new steel facility in Hunedoara, with the EUR43mn rolling mill due to come online by 2012. The company is also increasing liquid steel production to 700,000tpa to raise output of round semis used at its Tubular Products Roman plant.
Romania’s competitive advantages in steel production should assist rapid growth from an extremely low base from 2011. BMI forecasts 2015 crude output at 7.35mn tonnes – an increase of 200% over 2009 levels and exceeding previous highs – driven by capacity expansion. Hot rolled output should also rise to 6.5mn tonnes, up 183% over 2009 levels. Romania’s aluminium industry is also set to see a recovery from the sharp downturn in output in 2009. Romanian aluminium producer Alro planned to produce 201,225 tonnes of electrolytic aluminium in 2009, down 24% on 2008 with an operating rate of around 70%. This reduction is largely related to the shutdown of one pot line, implemented at the end of 2008. A 30% fall was estimated in 2009, with output down to 185,500 tonnes. A key contributor to the decline was the automotive sector, but car assembly will also secure the sector’s revival, with output set to reach 300,000 tonnes by 2015 with Ford’s production boost at Craiova. SHOW LESS READ MORE >
Romania Metal Industry SWOT
Romania Political SWOT
Romania Economic SWOT
Romania Business Environment SWOT
Quarterly Metals Views
Table: BMI’s Core Views For The Metals Industry
Global Market Overview
Table: BMI’s Nickel Forecasts
Table: Nickel, 2005-2011
Table: BMI’s Aluminium Forecasts
Table: Aluminium, 2005-2011
Table: BMI’s Copper Forecasts
Table: Copper, 2005-2011
Table: Romanian Aluminium Market, 2004-2008
Table: Romania’s Metals Industry (‘000 tonnes unless stated), 2008-2015
Table: Romania – GDP By Expenditure, 2008-2015
Global Assumptions Q1 2011
Table: Global Assumptions
Table: Global & Regional Real GDP Growth % Chg Y-O-Y
Table: Developed States, Real GDP Growth Forecast
Table: Emerging Markets Aggregate Growth
Table: Consensus Forecasts
How We Generate Our Industry Forecasts
Country Snapshot: Romania Demographic Data
Section 1: Population
Section 2: Education And Healthcare
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2005-2010 (US$)
Table: Average Annual Wages, 2006-2010