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Poland Metals Report Q4 2009Published by: Business Monitor International Published: Oct. 1, 2009 - 45 Pages Table of Contents
AbstractPolish steel and aluminium demand is set for a rapid recovery in 2010 as the automotive industry returnsto growth and construction activity resumes, but the domestic industry is being hampered by highelectricity prices despite competitive labour costs, according to BMI’s latest Poland Metals Report.In H109, Polish steel output fell 43.9% year-on-year (y-o-y) to 3.05mn tonnes, placing the industry atlows not seen for decades. While June’s monthly output - 550,000 tonnes - was 16% above March’s lowpoint,it was still down 40% y-o-y. Much of the modest increase in output in Q209 was related torestocking rather than a strong recovery in demand for end-use products, although there has been a pickupin demand from the automotive industry. In Q209, Poland’s Profil SA Rolling Mill, which sourcesfeedstock from domestic steelmakers, kept production unchanged due to low consumer activity. Its longsproduction in the quarter was scheduled to total 24,300 tonnes, down 35.2% y-o-y. It expects only amodest increase in production in Q309. The decline in H109 followed a dismal performance in 2008when crude steel production fell by 8.5% to 9.73mn tonnes, with the decline concentrated in the last fourmonths of the year. In the longer term, the situation facing the Polish metals industry is broadly positive. ArcelorMittal isreportedly considering moving capacity from its plant in Ostrava in the Czech Republic to Sosnowiec insouthern Poland due to lower labour costs. However, there are still some hurdles, notably the high cost ofelectricity that led to the closure of the country’s only smelter earlier this year, which had been inbusiness for 43 years. The closure came amid a hike in electricity prices which is also underminingcompetitiveness in the steel sector. Polish steel mills, specifically those that use electric arc furnaces suchas Zlomrex subsidiary Huta Stali Jakosciowych, complain that the hike in energy prices is unjustifiableand that their competitiveness is being eroded as energy prices in other EU countries are declining. As aresult, cheaper steel is being imported, depressing the sales of Polish producers. On the basis of trends BMI observes in the automotive and construction sectors when taking into accountthe loss of competitiveness caused by high electricity prices, we forecast a 32.5% drop in crude steeloutput in 2009 to 6.54mn tonnes. A strong recovery is expected in 2010 with growth of 10.9%, withgrowth concentrated in the second half as the construction and automotive industries make a fullrecovery. This trend will be strengthened by infrastructural projects, with 15.3% growth in 2011, butgrowth should moderate in 2012 and 2013, ending the forecast period at 9.71mn tonnes, marginally above2008 levels. Nevertheless, this is still below pre-crisis levels. Although we expect growth in themanufacturing of finished steel products, Polish steel mills will find it hard to compete with cheaperforeign producers which will represent an increasing share of the Polish market. The Polish finished steelmarket will total 15.45mn tonnes by 2013, a 3.6% increase over 2008 levels. In the aluminium sector, despite the closure of domestic primary production, Polish aluminium netimports are set to nearly halve to 226,800 tonnes in 2009, on the back of a 45% fall in domesticconsumption to 430,000 tonnes. Recycled aluminium will represent a higher proportion of the marketthan before, falling just 5.6% to just under 212,700 tonnes. The recovery will be brisk from 2010, whenaluminium consumption will rise 22% in line with a revival in the automotive industry. By 2013, demandwill total around 765,400 tonnes, up 4.6% over 2008 levels and representing a new high. Get Full Details About This Report >> |
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