Romania Metals Report Q3 2012

The Romania Metals Report examines the long-term trends in steelmaking, but argues that while shortterm growth will outpace the European Union, average output remains at historical lows.

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 four months of 2012 Romanian crude steel output grew 2.2% y-o-y to 1.31mn tonnes (mnt) with monthly output sustained at the levels seen in H211.

Production will be supported through 2012 by a resumption of activities by Mechel, whose Romanian plants were affected by temporary shut-downs in early months of the year, as well as ArcelorMittal’s 2mn tonnes per annum (mntpa) No.5 furnace, which remains operational following an EUR80mn investment.

BMI believes that the No.5 furnace will operate at maximum capacity through 2012.

Meanwhile, ArcelorMittal Galati is proceeding with construction of a new steel mill in Hunedoara with a EUR43mn rolling mill, due to come online by 2012.

Additionally, the company is increasing liquid steel production to 700,000tpa to raise output of round semis at its Tubular Products Roman plant.

Although Romania is bucking the trend of falling steel production in the EU, output is still well below the levels seen before the 2008 financial crisis due to cuts in production at ArcelorMittal’s Romanian operations.

With capacity still idled, the industry has not recovered from the 45.4% drop in output reported in 2009.

It will take until 2015 until the industry has totally recovered from the collapse seen in recent years.

With output likely to remain steady through 2012, BMI is retaining its forecast of 1% growth in both crude steel output and consumption to 3.87mn tonnes and 3.77mn tonnes respectively.

The automotive industry retains its central 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.

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.