Romania Metals Report Q1 2013
Business Monitor International, January 2013, Pages: 53
BMI's Romania Metals Report for Q1 2013 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 10 months of 2012 Romanian crude steel output grew 2.8% year-on-year (y-o-y) to 3.26mn tonnes (mnt) with monthly output sustained at the levels seen in H211. Its performance in 2012 reversed the loss seen in 2011, although production is still more than a third less than pre-2008 levels. Steel has benefitted from the depreciation of the leu against the euro, sustaining its competitive edge against Western European producers, but has been undermined by the idling of a 1mntpa blast furnace at ArcelorMittal's Galati complex 'in order to adapt production to market demand'.
Growth has been supported by ArcelorMittal Galati's new steel mill in Hunedoara with a EUR43mn rolling mill, which came into operation in Q312. Additionally, the company increased liquid steel production to 700,000tpa to raise output of round semis at its Tubular Products Roman plant. The steelmaker is investing over EUR25.0mn in upgrading and improving production quality at its plate mill No. 2. Following the mill's modernisation, the company will be able to produce new types of plate, which will allow it to enter new markets. These downstream projects will boost the value of Romanian steelmaking.
- BMI has revised down its estimate for 2012 output growth from 3.0% to 2.5% due to the downward revision in the GDP growth estimate from 1.0% to 0.5% and the continuing impact of the eurozone crisis on exports.
- The domestic market grew by around 2.5% in 2012 amid a slowdown in growth in exportoriented steel consuming industries.
- Output will be limited in 2013 by Mechel's decision to temporarily suspend production at the group's Romanian steelmaking facilities due to unfavourable conditions on markets of raw materials - notably ferrous scrap - and finished steel products.
- The steel sector recovery should then pick up pace from 2014, with output set to reach 6mnt by 2016, in line with a recovery in longs.
- With power supplies back to normal in December 2012, aluminium smelter Alro should be able to boost output in 2013 following a 4.4% decline in output in 2012. However, production is still in jeopardy due to the financial problems of troubled electricity generator Hidroelectrica.
Executive Summary 5
SWOT Analysis 7
Romania Business Environment SWOT 7
Europe Metals Overview 8
Steel 9
Aluminium 12
Industry Forecasts 14
Steel 14
Table: Romania - Steel Production & Consumption ('000 tonnes, unless stated otherwise), 2009-2017 16
Table: Romania's Steel Production & Trade ('000 tonnes, unless stated otherwise), 2003-2010 16
Aluminium 17
Table: Romania's Primary Aluminium (mn tonnes), 2009-2017 18
Macroeconomic Outlook 19
Table: Romania - GDP By Expenditure, Real Growth %, 2008-2016 21
Commodities Forecast 22
Monthly Metals Update 22
Iron Ore: Temporary Resilience 24
Steel: No Sustained Recovery 26
Aluminium: Resistance To Be Tested 28
Copper: Chinese Stockpiles Present Downside Risk 29
Lead: Range-Trade Ahead 30
Nickel: No Return To 2012 Highs 31
Tin: Continued Outperformance 32
Zinc: Little Room For Optimism 33
Table: Select Commodities: Performance & BMI Forecasts 34
Steel Forecast 35
Steel To Average US$360/tonne In 2013: Short-Term View 35
Table: Steel Forecast 35
Table: Steel Forecasts, 2007-2014 41
Competitive Landscape 42
Aluminium 42
Steel 43
Company Profiles 45
ArcelorMittal 45
Table: ArcelorMittal - Key Financial Data, 2005-2011 48
Alro SA 49
Mechel 50
Tenaris Silcotub 51
BMI Methodology 52
How We Generate Our Industry Forecasts 52
Cross Checks 52
Company Profile
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