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Sweden Metals Report Q3 2009Published by: Business Monitor International Published: Jul. 20, 2009 - 44 Pages Table of Contents
AbstractThe Swedish steel and aluminium industries will see output slashed by 40-50% as Sweden and its 10largest export markets endure a deep economic recession, according to BMI’s latest Sweden MetalsReport.In the first five months of 2009, Swedish crude steel output dropped 54% year-on-year (y-o-y) to 1.14mntonnes. This was on top of a drop of 8.4% to 5.2mn tonnes in 2008, with the decline largely attributed tothe sharp economic slowdown from September. Output had averaged around 488,000 tonnes per month inH108, but by December output had dipped to just under 275,000 tonnes and in the January-May period of2009 it was running at an average of 227,400 tonnes per month. There has been no perceptible recoveryin output, with demand for Swedish steel products remaining depressed. Declining orders came as a resultof a sharp fall in sales to the automotive, consumer goods and engineering industries. In response, steeland aluminium producers halved output in H109. Steel producers SSAB and Outokumpu and Sweden’sonly primary aluminium smelter Kubal reduced production by 50%. SMT has said its order intake ratedeclined in April and May to a level 40-50% down y-o-y. The company has closed 10 productionfacilities. In Q109, Svenskt Stahl AB (SSAB) recorded an operating loss of SEK134mn (US$17mn), incontrast to operating earnings of nearly SEK2.75bn in Q108, as a result of the downturn in the steelmarket. Sales fell by 38% y-o-y to SEK8.35bn. The company continues to cut costs and said it willcontinue with its plans to stop production at its plants in Sweden in order to avoid a build up ofinventories. The Swedish steel industry will follow overall economic trends. The country is heading for its largesteconomic contraction in at least 30 years, with our revised real GDP growth forecast set at -4.3%. Notonly will there be deep recessions in all 10 of Sweden’s largest trading partners, but constricting creditconditions from a weakened domestic banking system will weigh heavily on domestic consumption andtherefore demand for housing, household goods and vehicles, which are the lifeblood of the steel industry. BMI forecasts a 43% fall in crude steel output to 2.96mn tonnes in 2009, with a recovery beginning inH210 when full-year output will rise by nearly 9% to 3.23mn tonnes. In terms of primary aluminiumproduction, we forecast a 50% y-o-y drop in aluminium production to 50,000 tonnes. We caution that themost likely alternate scenario to our core forecast is for a ‘double-dip’ recession, with a mild recovery inH209 preceding a return to negative growth in 2010. In this event, while there would be a bluntercontraction in 2009, the recovery process would be prolonged, resulting in years of below-trend growth. Amid a collapse in key markets, the situation facing the Swedish steel and aluminium industries is dismal,affecting all products. Export markets are equally gloomy. Bearing in mind the trends projected in theautomotive and construction industries and the response so far taken by domestic manufacturers. Recovery will be slow and by 2013, steel output should be around 4.75mn tonnes, which is still lowerthan the level seen in recent years. A major medium-term challenge will be the lack of domestic demandcoupled with increased competition as foreign producers step up output, particularly in special niche areaswhich had driven growth in Swedish metallurgy. Aluminium production is, however, expected to returnto full capacity of 100,000 tonnes per annum (tpa), although domestic production will continue torepresent a diminishing proportion of the Swedish market. Get Full Details About This Report >> |
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