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United States Metals Report Q4 2011
Business Monitor International, Nov 2011, Pages: 57
Business Monitor International's United States Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United States's metals industry.
The US metals market is set for a period of stagnation in 2012 as the economy weakens, although a contraction is an unlikely scenario, according to BMI’s latest US Metals Report.
BMI forecasts crude and hot-rolled output to grow 8.4% and 10.0% in 2011 to 87.30mn tonnes and 82.25mn tonnes respectively, while finished steel consumption should grow 18.3% to 98.06mn tonnes.
These are upward revisions from the growth rates forecast in the previous quarterly report, reflecting the strength of the recovery in H111. Nevertheless, it will be some years before production returns to normal with little hope that rebar, heavy section and wire rod will reach 2008 levels by 2015.
A poor structurals market, combined with uncertainty and fears of the impact of a double-dip recession on the housing market, have dented medium sections and beams and rebar. The market will be flat in 2012 with negligible growth across steel sectors, although a contraction in demand is unlikely and domestic steel production will be sustained at 2011 rates.
Domestic aluminium production, which stagnated in 2010, is catching up with demand and is set to grow 13% to 1.95mn tonnes in 2011. In the long-term substitution will boost demand for aluminium, as industries seek cheaper and lighter alternatives to copper, zinc and certain steel products. BMI forecasts consumption growth of 12.7% to 3.73mn tonnes, but a more challenging environment in 2012 will see flat demand.
Copper output is performing far worse than expected. As a result, BMI has slashed its forecast from 2.0% growth to a contraction of 6.5% with output declining to 991,000 tonnes. There is potential for modest 1.0% growth in 2012, albeit from a low base. Nevertheless, BMI anticipates a return to full capacity in 2013 as markets recover from the slowdown in domestic and global growth. Output is also undermined by ongoing problems at the 450,000tpa Asarco refinery in Amarillo, TX, one of the country’s largest copper refiners. Consumption is picking up and will continue to outpace production over the next five years, leading to net imports of well over 1mn tonnes by 2015.
The weak position of the construction sector has depressed zinc consumption, leading to falling prices and dampening production activity. In 2011, galvanising accounted for around 62% of zinc consumption, but fell 0.6% year-on-year (y-o-y) to 325,000 tonnes in the first seven months of the year. Meanwhile, zinc imports rose 1.7% y-o-y to 422,000 tonnes as prices fell, while exports enjoyed a more than four-fold increase to 13,000 tonnes.
Trends in the January-July period have prompted a revision in its full-year forecasts with output growth now projected at 5.0%, down from 12.9%, while consumption growth has been slashed from 10.0% to -1.0%. The short-term outlook is not promising, although BMI anticipates 1.0% growth in consumption and 2.0% growth in production in 2012.
After years of decline, BMI expects strong growth in lead consumption in line with a 25% rise in automotive output in 2010-15. In 2011, BMI forecasts a 2.5% rise in consumption to 1.44mn tonnes and by 2015 the level should reach 1.62mn tonnes. This should prompt a rise in imports from 232,000 tonnes in 2011 to 469,000 tonnes in 2015.
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