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Belgium Metals Report Q3 2009Published by: Business Monitor International Published: Jul. 20, 2009 - 43 Pages Table of Contents
AbstractThe Belgian steel industry has entered a prolonged and deep decline and BMI’s latest Belgium MetalsReport does not envisage a return to pre-recession levels over the next five years.In the first five months of 2009, Belgian crude steel production fell 65% y-o-y to 1.77mn tonnes.Although monthly output in May - at 440,000 tonnes - was nearly 90% above the February low-point of235,000 tonnes, it was still down 60% year-on-year (y-o-y). Output is at lows not seen for decades. BMIattributes the modest upturn in 2009 to small purchases for restocking rather than a recovery in demandfor steel products. Industrial sectors that are suffering the most include the automotive and construction industries, both ofwhich are major users of Belgium’s steel output. The lack of confidence in the housing market -unsurprising given the Europe-wide property slump and the lack of available credit - is illustrated byfigures for gross fixed capital formation (GFCF). Investment in housing was flat y-o-y in late 2008. Weexpect housing market woes to add to negative consumer sentiment in 2009. Indicators from the centralbank add additional weight to our bearish view on private consumption. Additionally the slump inEuropean car sales has had a negative impact on the automotive industry’s supply chain and thereforedemand for steel. Belgium hosts five car assembly plants, six truck manufacturers and more than 300suppliers, with more than 96% of output dedicated to export markets. ArcelorMittal’s Gent and Liège plants are highly reliant on the automotive industry and are set to sufferthe most from the collapse in European car sales. With total production capacity of 10mn tonnes perannum (tpa) of continuous casting slab and 8.5mn tpa of hot rolling mill capacity, cuts in ArcelorMittal’soutput will have a severe negative impact on steel production in 2009. Signs of a deep decline in outputhave already been witnessed. In November 2008, ArcelorMittal Liège idled one of its two blast furnacesat its Seraing site with a view to restarting them after a two month period. In January 2009, it announcedthat the 1.5mn furnace would not be brought back online in H109. A furnace at the Ougrée site wasbrought back into operation in mid-January, after a month’s stoppage. The three plants under the controlof the Russian-Belgian joint venture Steel Invest and Finance will also face major difficulties, althoughthey are less dependent on the automotive industry. Yet they have also experienced drastic cuts in output,with Belgian joint venture partner Duferco Belgium cutting production by about 30% in Q408, with cutstotalling 50% at La Louvière in Q109. Belgium’s recession showed no sign of abating in Q209 with BMI forecasting a contraction of 2.4% in2009, the first full-year recession for more than a decade. Amid this gloom, BMI forecasts a 45% drop incrude steel output due to a fall in hot-rolled production downstream, particularly flats which will bedepressed by the effects of the collapse in the automotive industry. While Belgium is unlikely to see thekind of monthly output reported in Q1, any growth will largely be the result of inventory building. Actualdemand growth is not expected until Q210, with 2010 output set to rise by around 11% above 2009levels, although this is still a low level. We do not believe that annual steel production will exceed 9mn tonnes again until 2013. The decline inoutput is related to the collapse in the export market, which is set to fall 38% to 13.6mn tonnes in 2009. At the same time, the import market will fall by around 43% to just under 9.0mn tonnes. The value of netexports will fall from US$10.2bn to US$5.4bn. Get Full Details About This Report >> |
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