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Sweden Metals Report Q4 2009Published by: Business Monitor International Published: Oct. 1, 2009 - 47 Pages Table of Contents
AbstractSwedish crude steel and primary aluminium production is set for double-digit growth in 2010 and 2011 asthe metals industry recovers from a disastrous 2009 performance, but BMI’s latest Sweden Metals Reportpredicts that it will take until at least 2013 before output in all segments approaches pre-crisis levels,though there is a distinct risk of a double-dip recession even then.In H109, Swedish crude steel output fell 53.7% year-on-year (y-o-y) to 1.36mn tonnes. This was inaddition to a drop of 8.4% to 5.2mn tonnes in 2008, with the decline largely attributed to the sharpeconomic slowdown from September. Output had averaged around 488,000 tonnes per month in H108,but by December output had dipped to just under 275,000 tonnes and in the January-June period of 2009it was running at an average of 226,170 tonnes per month. There has been no perceptible recovery inoutput, with demand for Swedish steel products remaining depressed. Declining orders came as a result ofa sharp fall in sales to the automotive, consumer goods and engineering industries. In response, steel andaluminium producers halved output in H109. Steel producers SSAB and Outokumpu and Sweden’s onlyprimary aluminium smelter Kubal reduced production by 50%. SSAB mothballed all its Swedish blastfurnaces in Q209 and the company’s output remains at only half of capacity. 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 believes that the Swedish metals industry will slowly return to market from Q409 with metallurgicaland trade companies already announcing a rally in European demand for some segments in late July. Inflat steel sector, hot-rolled coil and coated steel showed signs of revival in late July, but cold-rolled steeland plate had yet to increase. However, by the end of August, the liquidation of excess stockpiles ofEuropean companies had not been completed and flats demand in general remained poor and an end tostimulus programmes for the automotive industry in September will dampen prospects for growth. Longsshould be stimulated by increased construction activity largely associated with state infrastructureprogrammes. Nevertheless, Swedish producers should start feeling the effects of the economic recovery inGermany and France in Q409, but it could take up to a year for the recovery to pick up momentum. BMI forecasts a 47% fall in crude steel output to 2.77mn tonnes in 2009, with a recovery beginning inH210 when full-year output will rise by nearly 17% to 3.24mn tonnes. In terms of primary aluminiumproduction, we forecast a 51% y-o-y drop to around 47,450 tonnes, but the industry should see high levelsof growth from this low base with output up 27% in 2010 and 33% in 2011; by 2013, BMI forecastsoutput at just under 93,250 tonnes, which is still 3.6% down on 2008 levels. We caution that the mostlikely alternate scenario to our core forecast is for a ‘double-dip’ recession, with a mild recovery in H209preceding a return to negative growth in 2010. In this event, while there would be a less sharp contractionin 2009, the recovery process would be prolonged, resulting in years of below-trend growth. Get Full Details About This Report >> |
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