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Sweden Metals Report Q1 2013
Business Monitor International, January 2013, Pages: 46
BMI's Sweden Metals Report for Q113 examines the competitive advantages of the country's steel and aluminium sectors, but warns that dependence on the automotive industry as a major consumer could prove to be a weakness amid the eurozone crisis. The report examines how producers are responding to volatile market conditions and examines trends going forward. The report also analyses the growth and risk management strategies being employed by the leading players in the steel and aluminium sectors, as they seek to maximise the growth opportunities in niche markets, such as energy plants.
The Swedish steel industry's strong recovery from the 2008-09 crash is threatened by the eurozone crisis and there are growing concerns of a significant collapse in output. The export-oriented steel industry,
which depends heavily on the market for special grades used in machine tools and the automotive sector,
continued to witness a decline in 2012. This was largely the result of a corresponding worsening situation in the European automotive market where consumer sentiment was generally subdued due to fiscal retrenchment and other macroeconomic factors. A wind-down of inventory restocking, tightening government spending and base effects following the post-recession capital investment boom all put pressure on the Swedish metals industry. These issues will not go away in 2013 and will continue to put considerable downside risk on Swedish steelmaking. We stress though, that Sweden will remain one of the fastest growing economies in Western Europe through the long term, with a sustainable growth model and limited macroeconomic risks.
Over the last quarter BMI has revised the following forecasts/views:
- In 2012, Swedish crude steel output declined 11.0% to 4.35mnt according to BMI estimates, one of the worst performances in the EU and well below our forecast of 4.54mnt in the previous quarter. We retain our output forecast of around 6mnt by 2017.
- With 60% of total production comprised of alloyed steel, including stainless, the sector will continue to be influenced by the trends in the automotive industry. Further growth will depend on SSAB restarting of one of its three blast furnaces in Sweden, which had been closed due to weak market conditions. One of two blast furnaces in Oxelsoeund was shut down in mid-2011 for relining, which was completed by October.
- Primary aluminium production has seen a brisk return to normal rates. However, there is a distinct possibility that potlines at Kubal will be taken offline if the automotive sector, one of its main consumers, continues to be affected by the downturn in consumer spending. BMI believes in 2012 output was in the region of 70,000-80,000 tonnes from the smelter.
Executive Summary 5
SWOT Analysis 6
Sweden Business Environment SWOT 6
Europe Metals Overview 7
Industry Forecast 13
Table: Sweden - Steel Production & Consumption ('000 tonnes, unless stated otherwise), 2009-2017 14
Table: Sweden - Steel Industry Historical Data ('000 tonnes unless stated otherwise), 2003-2010 14
Macroeconomic Outlook 15
Table: Sweden - GDP Contribution To Growth, 2008-2016 18
Commodities Forecast 19
Monthly Metals Update 19
Table: Select Commodities: Performance & BMI Forecasts 31
Steel Forecast 32
Steel To Average US$360/tonne In 2013: Short-Term View 32
Table: Steel Forecast 32
Table: Steel Forecasts 38
Competitive Landscape 39
Table: Sweden - Steel Capacity 39
Table: Main Steel Producers In Sweden 40
Company Profiles 41
Financial Data 44
Table: UC RUSAL - Financial Data, 2006-2011 44
BMI Methodology 45
How We Generate Our Industry Forecasts 45
Cross Checks 45