Indonesia’s steel industry growing strong

Indonesia’s steel consumption grew robustly by 22.4% y/y to 10.95mn metric tonnes in 2011 in line with the growth in domestic steel demand. As the country with the largest economy and highest population in ASEAN, its share of steel consumption reached 20.9% making it the top second steel consuming country in the region.

With about 300 domestic players, the steel industry of Indonesia employs more than 500,000 people and is capable of producing 5.5mn tonnes of total steel products annually including hot-rolled steel products (bars, wire rods and plates) and crude steel products (billet and slab). And more production is expected in the coming years.

Salient points 

• The significant increase in Indonesia’s steel consumption in 2011 was supported more by import, which was 32% higher than the 2007 level, and not from domestic production. 
• The country’s domestic steel production increased 4.5% y/y to 5.45mn tonnes in 2011. Bars and wire rods are the primary steel products and account for the largest annual production output of the industry. 
• The gross domestic product (GDP) of the Indonesian iron and basic steel industry increased 3.4% y/y to IDR 8.0tn in Q2/2012.

Much more in the Emerging Markets Direct report: Indonesia Steel Industry 1H12

 

China’s steel production on the rise or perhaps over producing

China steel industry saw the value of its total assets increased nearly three times between 2005 (RMB 15.29tn) and 2011 (RMB 44.41tn). Cumulative revenue for the industry during the first six months of 2012 was RMB 6.14tr, or 26.21% of 2011’s annual revenue. The industry was reported to have made no profit in the first six months of 2012 due to overcapacity.

China has become a net exporter of steel products since 2006, reducing its imports of steel products over the years. Only 7mn tons of steel products were imported in the first six months of this year, amid overcapacity and slowdown in demand.

China increased its crude steel production by 7.45% y-o-y to 684.9mn tons in 2011. Monthly crude steel production surged to a record 61.6mn tons in March this year and production level maintained above 60mn in the following months. Annual inventory level of steel products by large and medium steel mills topped 117.1mn tons, a record-high level, in 2011. Domestic iron ore production rose for six consecutive months since January 2012 despite weak demand and rising inventory level.

Key Findings:

• China’s domestic steel composite price index shows that average prices of all steel products have fallen since September 2011. 
• Inventory level of iron ore at ports across the      country has been rising as the result of weak steel demand. 
• Large-      and medium-sized steel mills in China saw their inventory levels increase      by 31.98% y-o-y in the first half of 2012.

This is only a small extract of the insights in the China Steel Industry report; read more and purchase>>

 

Construction industry losing ground in Romania

Construction works volume index grew by 9.1% y/y in Q2 and by 6.8% y/y in H1/2012, according to official statistics. The works for engineering projects surged by 17.1% y/y in Q2 and 18.1% y/y in H1, remaining the sector’s growth driver. Nonetheless, the construction works volume dropped by 4.6% y/y in July, losing ground immediately after the June 10 local elections had driven up the index in Q2. The construction sector’s dynamics and its contribution to the GDP growth are likely to witness abrupt weakening in H2, as the government cut down significantly public funding for infrastructure under the autumn budget adjustment and construction works on large projects, such as motorways and Bucharest underground sections had to be slowed down.

Figure 1 Construction works index in 2007-2012 (2005=100)

 

 

 

 

 

These are only a few of the insights in the new IntelliNews : Romania Construction and Real Estate Report. Learn more and purchase now>>

 

 

Indian consumers more fascinated by imported electronic equipment

India recorded its worst GDP in the last nine years with a 5.3% growth during the fourth quarter. Mirroring this, the Indian electronics industry also suffered a minor slowdown but managed to record a y/y growth of 10%. The production turnover of the industry grew at a CAGR of more than 15% in the last six years and is expected to cross INR 1.5 tn by the end of fiscal year 2013.

The country ranks very low regarding electronic equipment manufacturing, at 1.5% of the total world production. According to Department of Electronics and Information Technology (DeitY), more than 50% demand for electronics in the country was met through imports and the figure is expected to rise to 75% by 2020.  Government of India is undertaking several initiatives to promote domestic manufacturing of electronic equipment. Under the Draft National Policy on Electronics (NPE), the Government has targeted for creation an eco-system for a globally competitive electronic system design and manufacturing sector in the country, in order to achieve a production turnover of about USD 400 Bn by 2020. The policy also targets investment of about USD 100 Bn and employment to around 28 mn people at various levels of the industry.

All six major sub-sectors of Indian electronics industry saw growth in production turnover during the fiscal year 2012. Highest growth was recorded by the electronic components and communication equipment sub-sector, while consumer electronics was slightly subdued compared to past few years. However, rising costs of raw materials and persistent inflation was negatively affecting the profitability of the sector. Major domestic players in the industry recorded a significant decline in their profit margins during the year.

The outlook for Indian electronics is positive owing to the huge domestic demand and supply gap and double digit production growth rate in almost all of its sub-sectors. The increasing population and growing per capita income will increase the size of this industry in the years to come.

Salient Points

• In fiscal      year 2012, Indian electronic industry recorded a production turnover of      around USD 30 bn. The total electronic hardware production turnover of the      country grew at a CAGR of 16.8% during the last six years
• The largest      contribution in FY12 came from communication and broadcast equipment,      which accounted for 28.3% of the total production turnover, followed by      consumer electronics with 23.9%. Together these accounted for more than      half of the entire production turnover of the industry
• Electronic      hardware exports grew at a CAGR of 28.9% during the period 2007-12 and      crossed USD 9 bn by the end of fiscal year 2012.
• During the      period January 2000 to June 2012, electronics sector received foreign      direct investment (FDI) of USD 1.17 bn, equal to 0.7% of the total FDI inflows      in the country during that period. This was low compared with the inflows to      other industrial sectors of the country. However, it grew by 19% y/y over      the June 2011 figure, suggesting rising growth in inflows in this sector.

Chart: Cumulative FDI in Electronics Sector (Since January 2000 in USD Mn)

Source: Department of Industrial Policy and Promotion (DIPP)

This is only a small extract of the insights in the India Electronics Industry report; read more and purchase>>

 

Indian healthcare industries show resilience in the face of slowdown by recording double digit growth

Indian economy saw a period of slowdown in fiscal year 2012. The country recorded a GDP growth of 5.3% in the fourth quarter which was its worst performance in last nine years. However, Indian healthcare industry continued to show resilience in the face of slowdown with leading healthcare players recording a double digit growth, both in revenues and net profits. The industry is growing at a CAGR of 15% and is expected to cross USD 75 bn by the end of calendar year 2012.

The country’s government spending on infrastructure is low, approximately  1.2% of GDP in 2010. Fiscal year 2012 saw a 13% increase in government budget allocation to the flagship programme named National Rural Health Mission (NRHM). The programme has been quite successful in raising the standards of people’s health, healthcare infrastructure and healthcare delivery across the country within a short span of seven years. However, the country is likely to miss the healthcare targets for 2015 under Millennium Development Goals.

Huge demand supply gap exists in the healthcare sector of India. The country was lagging behind in terms of average number of hospitals, hospital beds, doctors, nurses and other paramedical staff. The huge population accompanied with large prevalence of communicable and non-communicable diseases demands large scale development and growth in this sector. Private sector is playing a big role in this regard accounting for more than 70% of country’s health expenditure.

The outlook for Indian healthcare is positive owing to double digit growth rate in almost all of its  segments, whether its primary healthcare, secondary and tertiary healthcare, medical equipments, disgonotics, health insurance or medical tourism.  The ever growing population, increasing government expenditure on health and growing per capita income will increase the size of this industry in the years to come.

Key Findings

• The Ministry      of Health and Family Welfare increased the planned allocation on public      health from USD 4.97 bn in FY11 to USD 5.96 bn in FY12, an increase of 20%      y/y. The major stressor on the Indian government over the last few years      has been raising the standards of rural health. Almost 75% of the      government spend was on its flagship programme National Rural Health      Mission (NRHM).
• The annual      budget outlay for NRHM increased from INR 109 bn in FY08 to INR 178.4 bn      in FY12. The budget outlay has grown at a CAGR of 13% during the fiscal      period 2008-12.
• The size of      India’s healthcare sector was around USD 66 bn as of year 2010. The sector      size is expected to cross USD 75 bn by the end of calendar year 2012.
• The      existing supply/demand gap is attracting investors to the healthcare      sector of the country. In the first half of calendar year 2012, the sector      registered 25 deals with a value of USD 749 mn. In the same period in year      2011, it recorded equity investment of USD 208 mn only. Health care received      the highest investment, surpassing the long preferred information      technology sector, in terms of total private equity investments during      this period.

Chart: Private Equity Investments in First Half of Calendar Year 2012 (In USD Mn)

Source: The Economic Times

Much more in the Emerging Markets Direct report: India Healthcare Industry 1H12

 

Romania’s GDP mirage: fact or fiction?

Romania’s seasonally-adjusted GDP edged up by 0.5% q/q in Q2, after it has stagnated for three years around the same level. Against the past quarter, the domestic demand strengthened robustly driven by both consumption (1.6% up q/q) and gross fix capital formation (gfcf, 4.4% up q/q). On the opposite, the external demand weakened visibly by 1.4% q/q. The imports edged up by 1.2% q/q contributing, besides the export’s weakening, to the deterioration of the external balance.

GDP and main elements by utilisation, quarterly, seasonally adjusted [2000=100]

These are only a few of the insights in the new IntelliNews : Romania Country Report. Learn more and purchase now>>

 

Euro 2012 soccer championship paved way for a better transport infrastructure in Poland

The Polish transportation sector registered positive performance in 2011 in terms of freight volume and service revenues. Freight transportation increased by 6.5% y/y to 1.9bn tonnes in 2011, supported by the good performance of air, road and railway segments, while pipeline, maritime and inland waterway transport posted annual decline in 2011. Transport services revenues advanced by 4.8% y/y to PLN 133.7bn (EUR 32.5bn) last year.

The preparations for Euro 2012 soccer championship, co-hosted with Ukraine in June 2012, helped Poland significantly improve in the past two years the previously neglected transport infrastructure. The investments in 2009-2011 drove the transport sector upwards during the period and there is still enough room for growth, considering that some of the projects are still to be finalised. Passenger traffic particularly is likely to thrive from the organization of the Euro 2012. In 2011, however, transport of passengers shrank by 3.7% y/y to 807mn, according to official statistics.

Figure 1 Freight transport in 2000-2011 (y/y, in %)

This is only a small extract of the insights in the Polish Transportation Sector report; read more and purchase>>

 

Unofficial data leaked from central bank paints bleak picture of Romanian banking system

Romanian banks incurred aggregated losses of RON 325mn (EUR 73mn at eop XR) in Q2, 2012, according to our calculations based on central bank data. Out of 41 banks, 23 reported profits and 18 losses, according to unofficial data leaked from the central bank. The banking system thus dipped back into the red after it posted aggregated RON 125mn (EUR 29mn, @ eop XR) profit in Q1.

Big picture: dividends vs. interest incomes derived by BIS-reporting banks in Romania [and elsewhere in region].

Nonetheless, this picture has to be put in the context of foreign financial groups. The foreign banks derive two types of benefits from their Romanian subsidiaries: firstly via dividends [probably the smallest portion of the benefits these days, most of the time re-invested when they were higher in the past] and secondly via the interest for the money lent at an interest rate that is driven by the country’s sovereign rating – meaning at high interest rates. The ROA for the foreign financial groups have thus nothing to do with the ROA reported by their local subsidiaries [assuming they finance their own subsidiaries, which is mostly the case].

Much more in the Emerging Markets Direct report: Romania Financial Sector

 

Pharmaceutical market in Romania will be largely impacted by the controversial claw-back tax

Romania’s pharmaceutical sales in the 12 months ending June 2012 increased by 13.6% y/y (16.9% y/y in local currency) to EUR 2.6bn (RON 11.5bn), backed by the good performance in the period Jul 2011 – Mar 2012. In Q2/2012, medicine sales dropped by 2.5% y/y to EUR 626mn (RON 2.77bn), compared to the 18% y/y expansion in Q1. In local currency, sales still managed to post positive 4.4% y/y growth in Q2, but the advance eased significantly from the 21.6% y/y surge in the previous quarter. The slowdown in growth pace (in RON) and the moderate decline of the market in volume terms (down by 0.5% y/y in Q2) reveal companies’ tendency to shift focus from market share expansion to profitability, after the government’s attempt to enforce the claw-back tax.

Figure 1 Pharma annual sales in 2004 – 2012 (EUR mn, PPP)

 

 

 

 

 

 

 

Projections for the performance of the pharma market this year remain largely on the optimistic side, ranging from 5.7% y/y to 8.9% y/y growth in local currency.  Nonetheless, the evolution of the market will be largely impacted by regulatory measures such as the controversial clawback tax amended this August and also by the budget allotted for subsidized drugs.

These are only a few of the insights in the new IntelliNews Report: Romania Pharmaceutical sector. Learn more and purchase now>>       

 

Poland’s steel industry growth dented

Poland’s metallurgical sector is dominated by the steel industry which accounts for more than 90% of the country’s total metallurgical output, while copper production contributes about 7%. Poland is the sixth biggest steel producer in the EU, accounting for about 5% of EU’s total crude steel output, and the biggest in the CEE region.

Its major copper producer, KGHM, is the world’s biggest silver producer and the eighth-largest mined copper producer.

The outlook for Poland’s metallurgy is not rosy with steel production seen growing by about only 2% this year following a 10% increase in 2011, hurt by declining demand in the wake of subdued manufacturing growth amidst the eurozone financial turbulence, and copper production not expected to exceed a 2011 record high level in the near term.

These are only a few of the insights in the new IntelliNews Report: Polish Metallurgy sector. Learn more and purchase now>>