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Romania Iron and Steel Report - H2, 2014

Romania Iron and Steel Report - H2, 2014

This report covers the developments in Romania’s iron and steel industry in the second half of 2014 – plus early 2015. Industrial output is available for full 2014, foreign trade until November and detailed quarterly foreign trade for Q3, 2014 included. Based on available data, we have compiled detailed industry balances for the 12-month period ending September 2014.

The output of crude steel slightly recovered in 2014 by 6% y/y to 3.16mn tonnes – after it hit in 2013 the lowest post-crisis levels, except for 2009. For the 12-month period ending September 2014, crude steel output was only 2% up y/y to 3.10mn tonnes, while the growth accelerated to 7% y/y in Q4.

Apparent intake of raw steel goods increased by 6% y/y to 4.1mn tonnes for the 12-month period ending September 2014 (1mn tonnes from import, notably) and the apparent intake of finished steel increased by 3% to 3.8mn tonnes. The rise in finished steel use is notable amid the subdued investments, but it still lags 22% below the level of 2006 – before country’s EU accession and 33% below the peak level reached in 2007-2008. Assuming rising investments in 2015 (not yet confirmed by microeconomic evidences), the domestic demand should further strengthen.

Key Points:

Output of crude steel, hot rolled goods virtually unchanged y/y in 12M to Sep-14 
Cruse steel output at 3.1mn tonnes, half of 6.2-6.3mn tonnes in 2005-2007; it stabilises, might rise moderately amid favourable energy regulations – but the future is still uncertain
Use of raw steel products up 6% y/y to 4.1mn tonnes -- of which only 37% from local production and 1mn tonnes net imports. There is room for further expansion of raw steel production depending on the local energy prices
Intake of finished steel products up 3% y/y in 12M to Sep-14 despite subdued public and private investments. Of this, 83% is from local production. Export of finished goods is larger than import in volume terms – but not in value terms. Gross imports were 0.637mn tonnes -- one sixth of consumption, but it is unsure whether local producers can deliver the specific high value added items.
Export of un-welded pipes 12% up y/y to 360,629 tonnes in Jan-Sep, average price up 2% y/y to €1,174 per ton
Export of other pipes, tubes, profiles, up 36% y/y to 101,551 tonnes in Jan-Sep, average price down 7% y/y to €614 per ton
Export of scrap iron down 23% y/y to 1.20mn tonnes in Jan-Sep, average price 6% down y/y to €254 per ton
Import of thick, flat, cold rolled goods – covered, up 16% y/y to 335,249 tonnes in Jan-Sep, average price 5% down y/y to €752 per ton
Import of profiles up 30% y/y to €159,044 tonnes in Jan-Sep, average price 7% down y/y to €642 per ton
Import of semi-finished goods down 43% y/y to 85,373 tonnes in Jan-Sep, average price up 5% y/y to €505 per to

In value terms, exports of raw steel products contracted by 8% y/y in 12M to Nov-14, imports increased by 7% y/y – an effect of high local energy prices, and the trade gap consequently more than doubled to €523mn. In volume terms – in 12M to Sep-14, the trade gap widened by only 20% y/y – with the differential explained by the deterioration in the terms of trade[price of exports relative to price of imports]

Also in value terms, exports of finished steel increased by 8% y/y and imports by only 4% y/y – with the gap narrowing by 19% y/y to €244mn. In volume terms, for 12M to Sep-14, the surplus surged by 75% y/y as exports increased by 15% y/y. Terms of trade also deteriorated.<


Executive Summary 4
QuERI Forecast 6
State of Industry 11
2013 WorldSteel Statistics 12
Romania’s 2013 apparent steel use down 0.5% y/y to 165kg per capita; 40% down from 2007, 54% of EU27 average – WorldSteel. 12
EU steel consumption seen as strengthening in 2015-16, yet business conditions in the steel sector will remain challenging 13
EC agrees to waive green energy surcharge for large Romanian industrial consumers. 13
STYLISED STRUCTURE OF METAL INDUSTRY 14
IntelliNews model of Romanian steel market – recent developments. 14
Industry Indicators 15
A. GROSS INDUSTRIAL OUTPUT [2010=100] 15
Main drivers over past six quarters: Mechel selling Romanian units and high energy cost. 16
Main driver for next six quarters: external demand and expected recovery of constructions sector. 16
B. SALES INDEX [2010=100] 17
C. MARKET BALANCES 18
IntelliNews model of Romanian steel market – utilisation balance. 18
Foreign Trade Balances 23
Output 32
Corporate Update 32
EC agrees to waive green energy surcharge for large Romanian industrial consumers 32
ARCELORMITTAL 33
ArcelorMittal Hunedoara considers closing down steel processor in Romania 33
Romanian steel maker ArcelorMittal Galati to boost output by 25% in 2015 33
Romanian unit of steel maker ArcelorMittal scarps power delivery contract with Nuclearelectrica 33
TMK 34
Output of TMK Artrom pipe maker up 2% y/y in Jan-Sep 34
MECHEL [formerly] 34
Former Mechel wire maker in Romania breaks even in H1 2014 34
Appendix 35
Appendix 1: Romania’s Crude Steel production – monthly, 2004-2014 35
Appendix 2: Romania’s Industrial Activity Indices – annual 2006-2013, quarterly 2012- 2014 36
Appendix 3: Romania Steel Industry – detailed exports&imports – annual 2002-2012 [USD/EUR, tonnes] 37
Appendix 3: Romania Steel Industry – detailed exports&imports – H1, 2014 [EUR, tonnes] 40


Figure 1: Demand, Output and Foreign Trade for Romania’s iron and steel production sector – 1995 USD mn 7
Figure 2: Demand, Output and Foreign Trade for Romania’s steel product manufacturing sector – 1995 USD mn 7
Figure 3: Demand, Output and Foreign Trade for Romania’s integrated iron and steel sector – 1995 USD mn 8
Figure 4: Romania’s exports of total iron and steel sector 9
Figure 5: Steel benchmark prices [global] starting 2003 11
Figure 6: Romania’s total steel balance [tonnes] – 2007-2014 11
Figure 7: Average steel export & import prices 2007-2014 [EUR/ton] 11
Figure 8: Apparent use of steel per capita, by region vs. Romania 12
Figure 9: Stylised IntelliNews model of Romania’s metal industry 14
Figure 10: Romania’s industrial production index, metal and metal processing industries 200 15
Figure 11: Industrial production index, metal PRODUCTION industry – seasonal pattern 15
Figure 12: Industrial production index, metal PROCESSING industry – seasonal pattern 15
Figure 13: Sales volume index, metal PROCESSING industry [EUR, 2010=100] 17
Figure 14: Sales volume index, metal PRODUCTION industry [EUR, 2010=100] 17
Figure 15: EUR sales per industrial production unit in metal production and metal processing sectors [2006-2013] 18
Figure 16: Raw Steel Goods -- trade, market balances – annual [incl. 2014E] -- Ktonnes 21
Figure 17: Finished Steel Goods -- trade, market balances – annual [incl. 2014E] -- Ktonnes 21
Figure 18: Raw Steel Goods -- trade, market balances – quarterly -- Ktonnes 22
Figure 19: Finished Steel Goods -- trade, market balances – quarterly -- Ktonnes 22
Figure 20: Trade balance, iron and products 23
Figure 21: Romania’s quarterly Exports&Imports of metal and metal products [EUR] 2001-2013 24
Figure 22: Romania’s quarterly Exports & Imports of metal. [EUR], 2001-13 24
Figure 23: Romania’s quarterly Exports&Imports of metal products [EUR], 2001-2013 24
Figure 24: Detailed structure of Romania’s exports in 2007 vs. 2013 EUR thous 27
Figure 25: Detailed structure of Romania’s exports in 2007 vs. 2013 tonnes 27
Figure 26: Detailed exports for main items [tonnes], 2007-2014 30
Figure 27: Detailed exports for main items [EUR thous], 2007-2014 30
Figure 28: Export prices for export items, quarterly, 2007-2014 [EUR/ton] 31


Table 1: QuERI Forecast – Romania iron and steel sector – 1995 USD mn 8
Table 2: QuERI Forecast – Romania iron and steel sector – y/y 9
Table 3: Price for main steel products [global] starting 2003 11
Table 4: Romania Sales / Industrial Activity Indices (2010=100) 16
Table 5: Romania Balance of Steel, 2002 to 2014 – annual -- Ktonnes 19
Table 6: Romania Balance of Steel, 2011 to 2014 – quarterly -- Ktonnes 20
Table 7: Export, import, balance, annual, iron and iron products separately; annual 23
Table 8: Export, import, balance, annual, iron and iron products separately; quarterly 23
Table 9: Romania’s metal industry – detailed exports – annual, 2007-2014 [tonnes] 25
Table 10: Romania’s metal industry – detailed exports – annual, 2007-2014 [thous EUR] 26

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