Poland Metals Report Q4 2011
Business Monitor International, October 2011, Pages: 49
In terms of growth, the Polish steel industry is one of the best performing in Europe, but output remains well below pre-recession levels and is not likely to return to normal for several years, according to this latest Poland Metals Report from BMI. In the first seven months of 2011, Polish crude steel output grew 7.2% year-on-year (y-o-y) to 5.12mn tonnes. This continued the recovery trend seen in 2010 when output grew 12.3% to 7.99mn tonnes on the back of 12.8% growth in finished steel consumption to 9.65mn tonnes and despite lacklustre growth in exports to 4.24mn tonnes.
By mid-2011, ArcelorMittal was operating three of its four blast furnaces, with the remaining one offline since H208. The company was operating its Polish facilities at around 80% operational capacity following the resumption of operations at the blast furnace at Kraków in March, seven months after it was taken offline for repairs. The No.3 blast furnace at Dabrowa, which was idled in October 2008, was expected to resume operations in 2011 or 2012, when the steel market was forecast to pick up. However, the company now says it will take several years to return to pre-crisis production levels. The delay has been complicated by rising wage demands with the company stating that it may resort to downsizing its workforce by no more than 300 workers. The growth rate seen in 2010 was not repeated in 2011 as domestic consumption and fixed investment is failed to make up for the expected shortfall in exports, which were forecast to grow 8.0% to 4.58mn tonnes in 2011. Exports are still 18% below the 2008 level and insufficient to prompt a fast return to pre-recession output levels.
The Polish steel industry’s outlook for 2012 remains challenging, with the country’s monetary authorities planning interest rate rises to combat inflation. This will both limit domestic consumption growth and put upward pressure on the zloty. However, while BMI maintain that BMI see the zloty on an appreciatory trajectory versus the euro over the medium-to-long term, BMI now forecast less appreciation than previously in 2011 and 2012. BMI expect the zloty to average PLN3.96/EUR in 2011 and PLN3.83/EUR in 2012, versus their previous forecasts for the currency to average PLN3.82/EUR and PLN3.75/EUR respectively. Nevertheless, the appreciation is raising the price of hot rolled coil (HRC), thereby adding costs for downstream steel-consuming industries. At a time of heightened competition and rising raw material costs, this would weaken the competitiveness of Polish steel and significantly squeeze production margins.
BMI continue to consider Poland’s macroeconomic trajectory among the most solid in Europe. At the present juncture, BMI are holding to their above-consensus real GDP growth forecast of 4.6% for 2011, underpinned by solid domestic demand dynamics. However, BMI acknowledge that downside risks to their growth expectations are on the rise and a weaker-than-expected Q211 growth print could see us revisit their assumptions. In the mean time, BMI retain their forecast of 18.7% growth in finished steel consumption to 11.46mn tonnes, although economic headwinds in 2012 have led to a reduction in their forecast from 13.53mn tonnes to 12.15mn tonnes.
Executive Summary
SWOT Analysis
Poland Metals Industry SWOT
Poland Political SWOT
Poland Economic SWOT
Poland Business Environment SWOT
Global Market Overview
Steel Forecast
Steel To Average US$620/Tonne In 2012
BMI Steel Forecast
Steel Prices
Cost Push On The Supply Side
Few Supply Constraints In Sight, For Now
Commodities Forecast
Monthly Metals Update
Gold
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Regional Overview
Forecast Scenario
Polish Aluminium Market, 2004-2015
Table: Polish Metals Industry, 2008-2015 (‘000 tonnes unless stated)
Macroeconomic Outlook
Table: Poland – Economic Activity, 2008-2015
Competitive Landscape
Aluminium
Steel
Energy
Company Profiles
Impexmetal
ArcelorMittal Poland
Zlomrex Group
CMC Zawiercie SA
Global Assumptions, Q4 2011
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y)
Table: Developed Market Exchange Rates, 2010-2013 (average)
Table: Emerging Market Exchange Rates, 2010-2013 (average)
Developed States
Table: Developed States’ Real GDP Growth, 2010-2013 (% change y-o-y)
Emerging Markets
Table: Emerging Markets’ Real GDP Growth Forecasts, 2010-2013 (% change y-o-y)
BMI Methodology
How We Generate Our Industry Forecasts
Cross Checks
Country Snapshot: Poland Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
- Impexmetal
- ArcelorMittal Poland
- Zlomrex Group
- CMC Zawiercie SA
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