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France Metals Report Q4 2009Published by: Business Monitor International Published: Oct. 22, 2009 - 44 Pages Table of Contents
AbstractBMI’s latest France Metals Report opines that a modest rise in French steel production in Q209 as aresult of inventory rebuilding and a temporary surge in car sales will not halt the inevitable decline in theindustry, which is losing out to more competitive producers in the east.In the first seven months of 2009, France’s crude steel output fell 40.8% year-on-year (y-o-y) to 6.96mntonnes. The steel industry recovered from its December 2008 low in H109 but crude steel production hasnot risen substantially above 1mn tonnes per month. In July, output was down 37.1% y-o-y to 1.1mntonnes, though this was up by around 28% from January. A similar trend was observed in the aluminiumindustry, where Rio Tinto Alcan reduced alumina output at its Gardanne refinery by 15% and slashedoutput at its Saint-Jean-de-Maurienne and Dunkerque smelters by early 2009. BMI estimates thataluminium output declined 6.3% y-o-y in 2008 to 495,000 tonnes. Rising output has been dedicated to restocking, although an increase in production is always expectedtowards mid-year with the seasonal increase in demand for construction steel, before demand drops offagain in August. The European market situation for flat products remained unchanged throughout H109,characterised by weak demand and destocking with buyers only purchasing for immediate needs. However, by mid-2009 there were signs of price stability, indicating that the market had reached its nadir.Demand for long products has stabilised at a low level with stainless steel longs growing, although pricesare still under pressure in this segment. Demand for flats remains weak, with no significant improvementexpected in 2009 due in no small part to the collapse in the automotive industry. The economic downturn hit demand in crucial end-user industries such as the automotive andconstruction industries. ArcelorMittal ran its mills at half capacity for much of H109. However, thecompany said in a statement that it would restart a furnace at its plant in Florange in August, havingclosed it in May in the face of low demand from key auto and construction sector customers. The decisionwas made amid a technical recovery in demand that led to customers rebuilding their stocks. However,the company warned that demand still remained very low. The recovery will be slow as the construction industry will continue to struggle - BMI’s infrastructureteam forecasts real industry value growth of -5.5% in 2009 and -4% in 2010, before a recovery is stagedin 2011. The automotive industry received a shot in the arm due to the scrappage schemes launchedacross Europe, and the decline in the domestic light vehicle market for January-July was only 3.7% y-o-yas local producers were able to keep up their market share. The termination of some scrappage schemes in European markets means that the boost will have only atemporary effect on the steel flats and aluminium industries. BMI forecasts crude output falling 30% to12.46mn tonnes and hot rolled production falling by just over 30% to 11.71mn tonnes in 2009. In 2010,the steel industry should report crude growth of around 7.5% to 13.25mn tonnes, with hot-rolled outputrising 6.4% to 12.46mn tonnes. In historical terms, these are still poor results and BMI does not envisagea return to pre-recession levels over the next five years, with some plant closures almost certain. By 2013,crude steel output should be 16.15mn tonnes, which is still nearly 10% below 2008 levels. Aluminiumshould fare better, helped in part by its use in lighter and more fuel-efficient vehicles. By 2013,aluminium production should have recovered to 2008 levels, provided there is no closure of capacity. Get Full Details About This Report >> |
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