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Romania Metals Report Q4 2012
Business Monitor International, October 2012, Pages: 54
The Romania Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Romania's metals industry.
BMI's Romania Metals Report for Q4 2012 examines the latest developments in the country’s steel and aluminium industries and whether ongoing investment will be sufficient to boost production and improve the country’s competitive advantage in the years ahead. The report examines how producers are minimising investment risk and also explores the impact of the increasingly precarious external macroeconomic environment on Romanian consumption. The growth and risk management strategies being employed by the leading players in the steel and aluminium sectors are also analysed, as they seek to maximise the growth opportunities offered by the local automotive and construction sectors.
In the first seven months of 2012 Romanian crude steel output grew 5.6% year-on year (y-o-y) to 2.31mn tonnes (mnt) with monthly output sustained at the levels seen in H211. Steel exports are benefiting from a depreciation of the leu against the euro, sustaining its competitive edge against Western European producers. The automotive industry retains its importance for the Romanian steel industry, with flat products making up 62% of hot-rolled output and much of that production dedicated to serving the car industry. Automotive production will be boosted by an increase in capacity at Ford's Craiova plant,
which is set for significant expansion in 2013.
Going forward, production will be supported by a resumption of activities by Mechel, whose Romanian plants were affected by temporary shut-downs in early months of the year. Mechel's production has been gradually ramping up since a new 810,000 tonnes per annum (tpa) capacity EAF was commissioned at Otelu Rosu earlier in 2011. Output will also be held up ArcelorMittal's 2mntpa No.5 furnace remains operational following an EUR80mn investment. BMI believes that the No.5 furnace will operate at maximum capacity through 2012. Meanwhile, ArcelorMittal Galati completed construction of a new rolling mill in Hunedoara in July with 400,000tpa capacity producing long carbon steel products.
Additionally, the company is increasing liquid steel production to 700,000tpa to raise output of round semis at its Tubular Products Roman plant. These downstream projects will boost the value of Romanian steelmaking and enhance efficiency and competitiveness. Going forward, there are doubts over when Transdanube Industries’ planned steel mill, designed with capacities of 500,000tpa crude steel and 450,000tpa of concrete steel, will come onstream. The eurozone crisis has appeared to have had a delay in start-up, which was due in mid-2013, prompting BMI to revise down crude steel output forecasts.
With output likely to remain steady through 2012, BMI has upgraded its crude steel growth forecast from 1% to 3%, with crude output rising to 3.95mnt, an upward revision from 3.87mnt previously forecast.
? The domestic market is set for modest growth of 2.5% in 2012 amid a slowdown in growth in export-oriented steel consuming industries.
Romania Metals Report Q4 2012
© Business Monitor International Ltd Page 6
? BMI has revised its forecasts for Romanian crude steel production for 2013 down from 4.7mnt to 4.2mnt in light of both a slower recovery in the EU economy and the likelihood that Transdanube’s plans will be put back a year.
? In 2011, Romanian aluminium producer Alro produced around 261,000 tonnes of primary aluminium, up 8.3% y-o-y. However, output is set to decline 4.4% to 249,000 tonnes in 2012 due to poor market performance and energy supply shortages.
Executive Summary 5
SWOT Analysis 7
Romania Business Environment SWOT 7
Europe Metals Overview 8
Industry Forecasts 13
Table: Romania – Steel Production & Consumption ('000 tonnes, unless stated otherwise) 15
Table: Romania’s Steel Production & Trade ('000 tonnes, unless stated otherwise) 15
Table: Romania's Primary Aluminium (mn tonnes) 17
Macroeconomic Outlook 18
Weak Growth Outlook At Serious Risk 18
Table: Romania – Economic Activity, 2011-2016 21
Commodities Forecast 22
Steel Price Forecast – Steel To Average US$360/tonne In 2013 22
Table: Steel Forecast 22
Table: Steel Forecasts 28
Commodity Strategy – Monthly Metals Update 29
Aluminium: Support At US$1,800/tonne Likely To Hold 30
Copper: Relative Outperformer But Still Weak 32
Iron Ore: Don't Bet On A Sustainable Recovery 34
Lead: Potential For Short-Term Rally 36
Nickel: No Turnaround Coming 37
Steel: More Pain Ahead 38
Tin To Outperform 39
Zinc: Little Room For Optimism 41
Table: Select Commodities – Performance & BMI Forecasts 42
Competitive Landscape 43
Company Profiles 46
Table: ArcelorMittal – Key Financial Data 49
Alro SA 50
Tenaris Silcotub 52
BMI Methodology 53
How We Generate Our Industry Forecasts 53
Cross Checks 53