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Austria Metals Report Q3 2009Published by: Business Monitor International Published: Jul. 20, 2009 - 42 Pages Table of Contents
AbstractThe Austrian steel industry is suffering as a result of the slump in domestic and external demand,particularly in terms of steel flat products, exacerbated by a strong euro. Forecasts in BMI’s latest AustriaMetals Report suggest that output will not recover to pre-recession levels over the foreseeable future.In 2008, steel output grew by just 0.2% year-on-year (y-o-y) to 7.59mn tonnes. The industry had beenexperiencing solid growth throughout the first eight months of the year, but output plunged in the wake ofthe global financial crisis with monthly crude steel output at 407,000 tonnes in December, a 40% fallfrom the peak in July. After a brief and modest increase in January, output hit a new low of 349,000tonnes in February. However, by May 2009, production output had staged a modest recovery withmonthly output at 438,000 tonnes. This was still woeful by historical standards. For the first five monthsof 2009, crude output was down 41% y-o-y to 1.94mn tonnes. End-user demand for flat products remains weak and the summer season will see a further deterioration indemand. However, buyers are coming back to the market, albeit only for relatively small quantities toreplenish their stocks, having run them down in H109. Although producers across Europe have lifted theirprice offers, buyers are reluctant to accept the increases. With the US dollar weakening against the euroand sterling, imported material is becoming more competitive while exports are less attractive outside theeurozone. With the eurozone economy heading deeper into recession in 2009, Austria’s metallurgical industries willincreasingly suffer declining demand. Between 60 and 80% of Austrian aluminium and steel production isexported, with the hard-hit automotive industry comprising around 25% of sales. Consequently, producersare highly exposed to the economic downturn. BMI forecasts the economy to contract by 2.4% this year(the country’s first recession since 1975). As a result, BMI forecasts a slow and unsteady recovery inmonthly crude steel output volume in H209, while total output for the year will be down by a thirdcompared with 2008 to 5.05mn tonnes, the lowest annual total since 1996. The beginnings of aneconomic recovery of the eurozone in 2010 offer some respite to the export sector and international creditconditions, helping the economy to grow 0.9% in 2010. This will result in a sluggish recovery in thedomestic steel industry with production set to rally from Q210, with output reaching 5.68mn tonnes. BMIdoes not envisage a return to pre-recession levels over the foreseeable future due to increased competitionfrom the CIS and Turkey. By 2013, output should have recovered to 6.72mn tonnes, still down 11.5% on2008 levels. Our forecast is supported by Austrian steelmaker VoestAlpine’s recent statement that areturn to 2007 production levels ‘is likely only over a period of several years.’ Get Full Details About This Report >> |
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