United Kingdom Metals Report Q2 2012
Business Monitor International, May 2012, Pages: 52
Business Monitor International's United Kingdom Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United Kingdom's metals industry.
High energy costs and an increasingly hostile operating environment prompted the permanent closure of the Lynemouth primary aluminium smelter in March leaving the country with just one small smelter, while steelmaking is set to fall for a fifth consecutive year, according to BMI’s latest UK Metals Report. In 2011 UK crude steel output fell 2.3% y-o-y to 9.5mn tonnes (mnt) with the eurozone crisis and domestic uncertainty hitting production in H2. This came on top of a 3.5% decline to 9.71mnt in 2010.
With manufacturing in a weak position, this was not enough to improve output and the decline in steelmaking continued into 2012. Monthly output fell 26% y-o-y to 562,000 tonnes in February, a record low and lower than the level seen in the aftermath of the 2008 financial crisis and subsequent recession. The abrupt decline coincided with a downturn in the construction sector, with output falling 10.6% in the three months to end-January 2012 compared to the previous three months.
Production did not accurately reflect the demand situation and on the domestic market there is likely to be some restocking activity over coming months. As such, BMI expects a recovery from the lows seen in Q112, although it will not be enough to stage a recovery. Crude steel output is set to decline 4.5% y-o-y to 9.05mnt in 2012 while hot-rolled output is forecast to fall 3.5% to 7.94mnt in the same year.
The UK's steel output has been in long-term decline as rising costs and a lack of competitiveness with emerging players such as China and India has forced companies to look elsewhere for more profitable areas of production. BMI does not forecast a full return to pre-recession rates of output over the mediumterm and there are question marks over its future direction. Energy costs and the economic downturn are simply exacerbating the structural change in the global production base with output shifted to Asia, particularly China.
Steel output remains down a third from pre-recession norms and BMI does not anticipate resurgence amid the gloomy economic climate. The beginning of a sustained recovery in the sector is expected to be delayed until late 2012 at the earliest, when we expect domestic finished steel consumption to rise 5% to 9.8mnt and exports to rise 8.7% to just under 6.8mnt. However, it will take until 2015 at the earliest for domestic and external demand to return to normal.
Primary aluminium production has already been scaled down following the cut in national production capacity due to a lack of long-term availability of cheap electricity. The UK has one aluminium smelter, RioTinto Alcan’s 43,000 tonnes per annum (tpa) plant in Lochaber, following the closure of the Anglesey and Lynemouth smelters in 2009 and 2012 respectively. The Lochaber smelter is likely to operate at close to capacity from 2012, but will be insufficient to cover domestic demand.
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Executive Summary
SWOT Analysis
United Kingdom Political SWOT
United Kingdom Economic SWOT
United Kingdom Business Environment SWOT
Global Market Overview
Steel Forecast
Table: BMI's Steel Forecasts
Table: Steel Products And Inputs – Price Data
Commodities Forecast
Gold
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Europe Metals Overview
Industry Forecast
Table: United Kingdom’s Steel Industry, 2009-2016 ('000 tonnes, unless otherwise stated)
Macroeconomic Outlook
Table: United Kingdom – Economic Activity, 2011-2016
Competitive Landscape
Aluminium
Steel
Company Profiles
Tata Steel Europe
Rio Tinto
Table: Rio Tinto's Key Financial Data, 2008-2011
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: UK 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, 2000-2005
Table: Consumer Expenditure, 2000-2011 (US$)
Table: Average Annual Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
Cross Checks
- Tata Steel Europe
- Rio Tinto
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