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Poland Metals Report Q1 2012
Business Monitor International, Jan 2012, Pages: 47
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 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 maintains that it sees 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 expects the zloty to average PLN3.96/EUR in 2011 and PLN3.83/EUR in 2012, versus its 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 continues to consider Poland's macroeconomic trajectory among the most solid in Europe. At the present juncture, it is holding to a real GDP growth forecast of 4.0% for 2011, underpinned by solid domestic demand dynamics. However, BMI acknowledges that downside risks to its growth expectations are on the rise. In the mean time, it retain it's forecast of 18.7% growth in finished steel consumption to 11.46mn tonnes, although economic headwinds in 2012 have led to a reduction in BMI's forecast from 13.53mn tonnes to 12.15mn tonnes.
- Benchmark BMI's Independent 5-year Metals Industry Forecasts for Poland to test other views - a key input for successful budgeting and strategic business planning in the Poland Metals market.
- Target Business Opportunities & Risks in Poland through BMI's reviews - and major deals, projects and investments.
- Exploit Latest Competitive Intelligence & Company SWOTS on your competitors and peers through company rankings by sales, market share and ownership structure – includes multi-national and national companies.
Business Monitor International's Poland Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Poland's metals industry.
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