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Austria Metals Report Q3 2011
Business Monitor International, June 2011, Pages: 42
Business Monitor International's 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.
BMI’s latest Austria Metals Report anticipates a record-breaking year for Austrian steel-making, which has witnessed a rapid rebound from recession having taken advantage of key growth areas in the European economy.
In the first four months of 2011, Austria crude steel output was up 15.1% year-on-year (y-o-y) to 2.59mn tonnes. This follows a strong performance in 2010 when production grew 27.3% to 7.21mn tonnes. BMI believes the industry is on course for output of 7.95mn tonnes in 2011, representing an increase of 10.2% y-o-y. This is an upward revision from the 8.0% growth forecast in the previous quarter.
Austrian production has undergone a dramatic bounce back from the 25.5% decline reported in 2009, largely due to Voestalpine’s product mix, which favours steel-using industries that have undergone strong recoveries, such as the automotive and machine-making sectors. Other specialisations, such as aviation, railway infrastructure and wind turbines, have ridden out the recession with no significant drop in demand. It is also less reliant on the construction sector than German peers such as ThyssenKrupp and adds value to its production through its stainless steel business, which supplies welders and tool and turbine makers, though it suffered badly during the economic downturn. The steelmaker also managed to improve margins by successfully achieving efficiency savings and cost reductions in 2010.
BMI believes the current economic environment will lead to stable full capacity in the Austrian steel industry in 2011, with a relatively secure price level in all divisions. However, capacity constraints will prevent any further significant growth in crude steel over the medium term, although BMI expects investment in downstream sectors.
Compared with pre-recession activity, domestic demand has yet to return to normal. The outlook for the Austrian economy in 2011 remains fairly positive, with rising external demand, higher capacity utilisation and improved confidence about the strength of the recovery likely to see exports and investment continue to drive growth. Moreover, falling unemployment on the back of this should improve consumer confidence and see household spending contribute more strongly to growth in the coming quarters. While pronounced sovereign debt ructions in the eurozone are not part of our core scenario at present, we highlight that should events take a turn for the worse, Austrian government borrowing costs would spike, posing downside risks to growth. Nevertheless, finished steel consumption should reach 4.27mn tonnes by 2015, an increase of around 7% on pre-crisis levels. In the aluminium market, trends will mirror steel consumption although the trend will be stronger, with growth in of 8.2% to 384,200 tonnes in 2011, following growth of 11.9% to 355,100 tonnes in 2010 and a contraction of 17.1% in 2009. By 2015, consumption rates should be exceeding 500,000 tonnes.
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