BMI View: France's metals sector continues to be buffeted by global headwinds, including falling steelprices and increasing competition from low-cost overseas producers. We are expecting French steel outputto decline this year, following a series of contractions in recent years. While we forecast production tobegin growing again next years, overall output will remain significantly below levels seen 10 years ago.
Though still among the largest producers in Europe, France's steelmaking capabilities have recededconsiderably over the past. Standing at more than 20mn tonnes (20mnt) a year in the mid 2000s,in thedecade since, the country's total crude steel output has contracted by about 25% and is forecast to dip under16mnt this year following a year-on-year (y-o-y) decline of about 1.3%. Rising labour and production costsand falling competitiveness have combined with the effects of the global economic downturn and a sluggishFrench economy to sap investment as the country's larger producers have scaled back capacity. Inparticular, the future of France's steel sector remains clouded by uncertainty surrounding the future ofArcelorMittal's Florange steel mill, which, having been mothballed by the company in 2012, has morphedinto an high-stake political dispute. By 2013, a deal by the government to save the plant from closure with afive-year investment programme appeared to have failed due to technical difficulties, but it seemed unlikelythe government would carry through with its threat to nationalise the facility.
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