Belgium Metals Report Q3 2012

BMI’s Belgium Metals Report for Q312 examines the long-term effects of the economic crisis on the country’s steelmaking capacities and warns that the sector will never recover.

The report examines how a collapse in domestic production will impact on the country’s structure of steel trade and explores the ability of exporters to take advantage of the crisis facing the Belgian steel industry. In the first four months of 2012, Belgian crude steel output dropped 16.7% y-o-y to 2.56mn tonnes (mnt), one of the worst performances in the EU. A decline in demand growth in export markets has dealt a blow for the Belgian steel industry with permanent blast furnace closures by ArcelorMittal and Duferco.

Arcelor Mittal remains the dominant producer with capacities of 104mn tonnes per annum (mntpa) continuous casting slab, 8.4mntpa hot rolling, 5.62mntpa cold rolling, 3.81mntpa galvanising and 715,000tpa colour coating. Insufficient demand prompted ArcelorMittal to temporarily close its 1.65mntpa blast furnace B at its plant in Liège as well as idling its 1.25mntpa No.2 blast furnace at Florange, France; one of which has remained offline since 2008 and the other was shuttered in August 2011. Both blast furnaces at Liège are now scheduled for permanent closure. In March 2012, Duferco announced it would permanently close its Carsid site after talks with potential takeover candidates failed. This will permanently remove 2.1mntpa of slab capacity that had been taken offline in 2008. It also ended Duferco’s crude steelmaking activities in Belgium. This will ensure that the country will never return to volumes of production seen before the 2008 financial crisis, even when the market picks up.

Economic stagnation and the idling of blast furnaces confirms our forecast of a 10% contraction in crude steel output to 7.3mnt.

In 2012, crude steel consumption is forecast to decline 10%, a downward revision from 5% previously forecast due to the impact of the economic slowdown on Belgian manufacturing.

A sharp slowdown in 2012 will mean it will take a four- or five-year period for domestic consumption to return to pre-recession levels, with 2016 consumption reaching around 5.26mnt, a level more typical of the years prior to the collapse in demand.