Australia Metals Report Q2 2012
Business Monitor International, April 2012, Pages: 64
Latest data suggest that the rebound seen in H111 weakened significantly in the second half of the year. Indeed, slower real GDP growth in several key economies, combined with higher levels of market volatility have seen both production and consumption weaken in Australia. Moreover, our macroeconomic outlook for the Australian and Chinese economies has been tempered somewhat following both deteriorating trading conditions as well as slower growth following monetary tightening cycles over the past few quarters. For some metals we believe output will have contracted in 2011 and forecast only a weak recovery in 2012.
Latest data confirms our view that Australian steel production will decline for the full year. According to Worldsteel, steel output fell by an average of 9.1% in the three months to October 2011, which dragged steel production in the first ten months of the year down 3.8% year-on-year (y-o-y). This is broadly in line with our full-year forecast for a 5% decline in steel production to 6.67mn tonnes in 2011. On a monthly basis monthly production has fallen to an average of 585kt ('000 tonnes), down from the monthly average of 608kt in 2010. In 2012 we only see a small rebound in output of 3.0%, as we expect macroeconomic headwinds as well as micro-level dynamics to weigh on the sector. Morever, we see some downside risks to our forecasts, particularly as base effects from the first few months of the year affect y-o-y growth rates in Q112. The poor performance of the steel sector will continue to have two main implications. First, there are serious risks to the recovery of the domestic steel market and this will lead to continued overcapacity. This could continue to affect profitability at the major steel producers. Second, it will take longer for output to surpass pre-crisis levels over the forecast period, which we only see happening after 2016.
Despite a rebound in Q111 zinc output, the pace of production has slowed with data for the first nine months of 2011 showing only meagre output growth. The World Bureau of Metals Statistics (WBMS) reported a negligible increase of 0.3% y-o-y in slab zinc output over the period. Nyrstar reported that its smelters were operating at capacity, but this will have been insufficient to make up for the loss in output at the beginning of the year. Meanwhile, no data has been released for Sun Metals' Townsville smelter (owned by Korea Zinc).
We have revised down our forecasts for Australian refined aluminium production in 2011, but have left the 2012 forecast unchanged. We now see growth of 0.7% in 2011, down from 3.0% previously. For 2012 we maintain our forecast of 1.5% growth. Australian aluminium consumption remains weak and we have revised down our consumption forecast for 2011 to 1.0% from 2.0% previously. We expect refined nickel production to have increased by 5.5% in 2011, up from our previous forecast of 3.0%. We continue to highlight that annual average growth should come in around 3.8% over the forecast period to 2016, reaching 137kt. Consumption of refined nickel has shown a 2.0% y-o-y increase in 2011. We forecast an average growth rate of 2.8% a year until 2016.
Latest data from the WBMS suggest that Australia's refined lead production expanded by 24.3% y-o-y in the first nine months of 2011. This is in sharp contrast to the data provided for the first six months as well as the data from Nyrstar, which owns the largest Lead smelter. Indeed, Nyrstar's Port Pirie reported a decline of 11.0% y-o-y in Q311, and this followed a poor performance in previous quarters. The weak result was largely on the back slower throughput associated with the consumption of more complex concentrates.
The majority of Australia's refined metal output is for export, with Asia and particularly China accounting for the largest share. We therefore assign downside risks to our forecasts on the back of an expected slowdown in Asia's economic growth in 2011 and 2012. Moreover, domestic demand for Australia's refined metal production is dependent on the country's economic growth rate, and we forecast modest growth until 2016, as the economy gradually recovers from recession. However, any reduction in the growth rate would have a detrimental effect on the consumption of metals.
Business Monitor International's Australia Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Australia's metals industry.
Executive Summary
SWOT Analysis
Australia Political SWOT
Australia Economic SWOT
Australia Business Environment SWOT
Global Overview
Steel Market
Table: BMI’s Steel Forecasts
Table: Steel Products And Inputs – Price Data
Commodities Forecast
Gold
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Asia Overview
Steel
Table: Top 10 Asian Steel Producers
Aluminium
Forecast Scenario
Steel: Output To Recover Slowly From 2012
Table: Australia's Steel Industry, 2009-2016 ('000 tonnes, unless stated otherwise)
Aluminium: Slow Growth To 2016
Table: Australia's Aluminium Production And Consumption, 2009-2016
Nickel: Consumption To Remain Weak
Table: Australia's Refined Nickel Production And Consumption, 2009-2016
Zinc: Rebound In Supply And Demand Growth
Table: Australia's Refined Zinc Production And Consumption, 2009-2016
Lead: Short-Term Rebound In Supply And Demand
Table: Australia's Refined Lead Production And Consumption, 2009-2016
Macroeconomic Outlook
Table: Australia – Economic Activity, 2011-2016
Regulatory Development
Competitive Landscape
Aluminium
Steel
Company Profiles
Rio Tinto
Table: Rio Tinto's Key Financial Data, 2008-2011
Alcoa
Table: Alcoa’s Key Financial Data, 2008-2011
BlueScope Steel
OneSteel
Global Assumptions, Q212
Table: Global Assumptions, 2010-2016
Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y)
Table: Developed Market Exchange Rates, 2011-2013
Table: Emerging Market Exchange Rates, 2010-2013
Developed States
Table: Developed States – Real GDP Growth, 2010-2013
Emerging Markets
Table: Emerging Markets – Real GDP Growth 2010-2013
Consensus
Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%)
Country Snapshot: Australia Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2012
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
BMI Methodology
How We Generate Our Industry Forecasts
Cross Checks
- Rio Tinto
- Alcoa
- BlueScope Steel
- OneSteel
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