Austria Metals Report Q4 2011
Business Monitor International, September 2011, Pages: 41
Specialisation in the main growth areas of domestic and export markets has assisted sustained growth in the Austrian steel industry in 2011, according this latest Austria Metals Report from BMI. Austrian crude steel output was up in 2010 – domestic steelmaker Voestalpine has thrived on strong demand for the special steel used in tools and turbines, which have largely ridden out the recession. The growth in its key market specialisms – alloy products used in the automotive, railway and pipeline industries – has enabled Austria to buck the trend seen elsewhere in the EU. The company 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, which had suffered badly during the economic downturn. However, a significant risk factor is the effect on the economy from turbulence in the financial markets and the European sovereign debt crisis.
Voestalpine is predicting more than EUR1bn in earnings before interest and tax (EBIT) in FY2011/12, exceeding the EUR985mn reported in FY2010/11. The steelmaker also managed to improve margins by successfully achieving efficiency savings and cost reductions in 2010. Sales rose by 20% to just over EUR3bn in Q1FY10/11. However, Voestalpine has warned that it would reduce crude steel output by 12% in Q2FY10/11 due to expansion and renovation work at its mill. As a result of this and base effects in H211, BMI forecasts 5.1% growth in crude steel output to 7.58mn tonnes in 2011. This is a downward revision from the 7.95mn tonnes and 10.2% growth forecast in the previous quarter. Nevertheless, the industry should be posting new highs in 2012 as Voestalpine returns to full capacity. Capacity constraints will prevent any further significant growth in crude steel over the medium term, although BMI expects investment in downstream sectors.
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, this would see the Austrian government borrowing costs spike, posing downside risks to growth. Nevertheless, consumption should reach 4.29mn tonnes by 2015, an increase of around 4% on pre-crisis levels. In the aluminium market, trends will mirror steel consumption although the trend will be stronger, with growth in aluminium consumption of 15.0% to 315,000 tonnes in 2011, following growth of 22.5% to 274,000 tonnes in 2010 and a contraction of 21.7% in 2009. By 2015, consumption rates should be exceeding 380,000 tonnes.
Executive Summary
SWOT Analysis
Austria Political SWOT
Austria Economic SWOT
Global Market Overview
Steel To Average US$580/tonne In 2011
BMI Steel Forecast
Steel Prices
Cost Push On The Supply Side
Few Supply Constraints In Sight, For Now
Commodity Strategy
Monthly Metals Update
Gold
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Regional Overview
Forecast Scenario
Table: Austria Metals Industry, 2008-2015 (‘000 tonnes unless stated)
Macroeconomic Forecasts
Austria – Economic Activity
Competitive Landscape
Company Profiles
VoestAlpine
Austria Metall AG
Global Assumptions, Q4 2011
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y)
Table: Developed Market Exchange Rates, 2010-2013 (average)
Table: Emerging Market Exchange Rates, 2010-2013 (average)
Developed States
Table: Developed States’ Real GDP Growth, 2010-2013 (% change y-o-y)
Emerging Markets
Table: Emerging Markets’ Real GDP Growth Forecasts, 2010-2013 (% change y-o-y)
BMI Methodology
How We Generate Our Industry Forecasts
Cross Checks
- VoestAlpine
- Austria Metall AG
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