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Italy Metals Report Q4 2011
Business Monitor International, Oct 2011, Pages: 43
The Italian steel industry continues to enjoy one of the strongest performances in the EU, contributing 22% of overall EU growth in output, but BMI’s latest Italy Metals Report warns of a slowdown in growth in H211 due to base effects coupled with a loss of momentum in economic growth.
In the first four months of 2011, Italian crude steel output grew by 8.5% year-on-year (y-o-y) to 9.42mn tonnes, representing 22% of the increase in EU steel output over the period. Output is set to rise further through the rest of 2011 following the restarting of No.4 blast furnace,operated by Riva Group subsidiary Ilva, in Taranto in April 2011. The blast furnace has been completely rebuilt with new technology, reducing its energy consumption and coking coal needs thereby raising profitability. The rebuild cost EUR240mn.
The state of the Italian metals industry will mirror that of the overall industrial sector. Italy has thus far been unable to counter the losses in production endured during the global economic crisis, unlike Germany, which has enjoyed somewhat of an industrial renaissance on the back of strong demand from emerging markets.
Longs consumption appeared to hold up in Q111, with output and imports both up, although growth remained stronger in the flat segment. A lacklustre performance in the construction sector will continue to weigh on Italian steel consumption. Italian metal production has some way to go before recovering to previous levels and is likely to lag behind domestic consumption, with imports benefiting from any growth in the market. As such, there is still plenty of potential for the domestic metals market to grow.
According to the Federazione Imprese Siderurgiche Italiane (Federacciai)’s statistics, in Q111 Italy’s overall steel imports reached 5mn tonnes, a rise of 25.4% y-o-y, while its steel exports totalled 4.4mn tonnes, up 16.2% y-o-y. Italy’s semi-finished steel product imports reached 1.05mn tonnes, up 19.9% yo- y, while semi-finished steel product exports amounted to 213,000 tonnes, down 11.2% y-o-y. In Q111 Italy’s imports of long steel products increased by 26% to 674,000 tonnes, while its long product exports totalled 857,000 metric tonnes, up 10.3% y-o-y. Flat steel imports reached 2.89mn tonnes, up 27.4% y-oy, while flat product exports amounted to 1.89mn tonnes, an increase of 18% y-o-y.
The Italian economy remains anchored on the road to recovery, but a return to previous trend growth rates seems unlikely for now. The Italian economy continues to distance itself from recession, although the latest data highlight the weakness of the recovery with growth rates lower than trend growth before the global financial and economic crisis and compared with the recovery from the recession in the mid-1990s.
Clearly this time around the Italian economy is struggling to regain momentum. As such, we believe the economy will grow at a tepid 1.1% in 2011. Consequently, we see Italian consumption of steel moderating in H211, although a downturn is unlikely.
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