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Czech Republic Metals Report Q1 2013
Business Monitor International, January 2013, Pages: 46
BMI's Czech Republic Metals Report for Q1 2013 assesses the impact of the eurozone crisis on steel output in the months ahead, as well as how it will influence corporate growth and risk management strategy over the medium term. The report also examines steelmakers' responses to domestic industrial trends, particularly in the context of falling exports and the impact of a sluggish construction industry on long steel output.
In the first 10 months of 2012, Czech crude steel output declined by 7.1% year-on-year (y-o-y) to 4.33mnt. Monthly output was volatile throughout the period, in line with market uncertainty. It peaked at 487,000 tonnes in May but fell to 360,000 tonnes by October. Due to its external vulnerabilities, the Czech steel industry has been unfavourably affected by the economic downturn across Europe, which has hit heavy industry and construction. The temporary shutdown of Evraz's steel production line in the Czech Republic, Evraz Vitkovice Steel, in October had an impact on BMI's estimated crude steel output for 2012, which was revised down from 5.25mnt to 5.08mnt. Poor performance in 2012 wipes out the gains made in 2011. Evraz's decision was made due to low demand and the company's efforts to run down its raw materials inventory. The Vitkovice steel mill is a key customer of the Czech unit of ArcelorMittal which supplies it with raw materials, and its closure will affect the supply line.
Over the last quarter BMI have revised the following forecasts/views:
- In terms of the domestic market, the downturn in the construction industry continues to erode long steel consumption levels; long steel represents two-thirds of Czech steel output. In 2012,
the construction sector contracted 2.3%, following a decline of 7.2% in the previous year. We believe the Czech Republic's construction industry value will tentatively enter positive territory in 2013 as the European environment picks up.
- Exports are likely to be the main stimulant in the Czech steel industry over the foreseeable future. It will take until 2016 before domestic consumption levels reach and exceed pre-2008 levels.
- While crude output is forecast to stabilise at around 5mnt in 2013, BMI does not rule out a return to the lows seen in 2009 when output fell to 4.6mnt. Eyes will be on ArcelorMittal's plans,
with potential for further production cut-backs at its Czech facilities - in line with trends seen elsewhere in Europe.
- Due to sluggish and over-supplied markets, BMI has revised down output forecasts over the medium term with output reaching 6.4mnt by 2017, which is still lower than the pre-crisis norm.
This will be sustained by less than 6% growth in the Czech automotives industry and an average of just 2.4% growth in construction.
Executive Summary 5
SWOT Analysis 7
Table: Czech Republic Business Environment SWOT 7
Europe Metals Overview 8
Industry Forecasts 14
Table: Czech Republic's Steel Industry Forecasts ('000 tonnes, unless otherwise stated) 15
Table: Czech Republic's Steel Industry Historical Data ('000 tonnes, unless otherwise stated) 16
Macroeconomic Outlook 17
Return To Economic Growth In 2013 17
Table: Czech Republic - Economic Activity 19
Commodities Forecast 20
Monthly Metals Update 20
Iron Ore: Temporary Resilience 22
Steel: No Sustained Recovery 24
Aluminium: Resistance To Be Tested 26
Copper: Chinese Stockpiles Present Downside Risk 27
Lead: Range-Trade Ahead 28
Nickel: No Return To 2012 Highs 29
Tin: Continued Outperformance 30
Zinc: Little Room For Optimism 31
Table: Select Commodities: Performance & BMI Forecasts 32
Steel To Average US$360/tonne In 2013: Short-Term View 33
Table: Steel Forecast 33
Table: Steel Forecasts, 2007-2014 39
Competitive Landscape 40
Company Profiles 41
Table: ArcelorMittal - Key Financial Data 43
Železiarne Podbrezová 44
BMI Methodology 45
How We Generate Our Industry Forecasts 45
Cross Checks 45