Romania’s steel production in fluctuating trend following decision to stop raw steel production

Romania’s crude steel output increased gradually from 5.5mn tonnes in 2002 to nearly 6.3mn tonnes in 2006-2007. It further plunged to below 2.8mn tonnes in 2009 amid deep recession and inventory effects, but returned meanwhile and has stabilised to around 3.7-3.8mn tonnes in 2011-2012.

The output of raw steel goods followed a similar pattern and stabilised around 3.2-3.5mn tonnes [2012 data is still not final – the 8.3% y/y decline calculated by us for the year might have been lower].

What has essentially happened is that local steel mills stopped producing raw steel goods for export – since this business model is now no more cost-effective.

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

 

Romania’s major steel export : hot rolled flats

Romania’s largest export item is visibly scrap [2.35mn tonnes in 2011, yet 22% down y/y to 1mn tonnes in 1H 2012], when it comes to either volume or value. But excluding  scrap, is not really an output item of local steel industry, other major export items are flat, hot rolled goods [hot rolled flats] and the  un-welded pipes, tubes, tubular products. The hot rolled flats accounted for nearly half of the exports in 2007 [see chart below], but werereduced by more than two times, accounting for roughly one fifth in 2011; in H1 of 2012, hot rolled flats accounted for some one quarter of  total exports. Among the items with positive dynamics  are pipes and particularly  bars [rods] – with the latter rising from virtually zero to 7.4% of exports in 1H 2012.

This is just a quick glimpse into the Intellinews Report: Romania Iron and Steel Report. Learn more and purchase now>>

 

2011-12_ a difficult period for Malaysian steel industry

 

The global steel industry continued to face a challenging period in 2011-12, arising from higher input costs and an increasingly adverse external environment. Global steel demand softened while raw material prices remained volatile. In line with tough market conditions, Malaysia’s steel consumption decreased slightly to 8.2mn tonnes in 2011. Meanwhile, crude steel production grew at a lower rate of 4.3% to 5.9mn tonnes in 2011.

In Malaysia, the steel industry was further affected by the influx of imported steel products which tend to reduce market prices. Under these unfavourable competitive conditions, performances of steel companies generally declined. Nevertheless, most companies managed to increase sales volume but with much reduced profits.

According to the Malaysian Iron and Steel Industry Federation (MISIF), the domestic steel industry, in consumption terms, will grow at a rate of 2–4% in 2012-13. More demand for domestic steel products is expected with the stepping up of the implementation of various mega-projects under the government’s Economic Transformation Programme (ETP).

Salient points 

• In line with the unfavourable global economic situation, Malaysia’s total steel demand was 8.2mn tonnes while crude steel output reached 5.9mn tonnes in 2011. 
• The performance of the local steel industry in 2012-13 will depend mainly on the rate of construction projects implemented under the government’s ETP. The MISIF expects domestic steel demand to reach 8.4mn tonnes this year. 
• Due to the scale of China’s production and Malaysia’s progressive liberalisation policy, local steel players fear that an influx of imported steel products into Malaysia would continue to exert pressure on prices and margins.

Source: South East Asia Iron and Steel Institute (SEAISI)

Much more in the Intellinews report: Malaysia Steel Industry Report

 

Flood disaster in Thailand landed steel industry in troubled waters

The global steel industry was faced with many challenges in 2011 and H1/2012, arising from an adverse external environment, soft international steel demand and volatile raw material prices. Thailand was hit hard from both global economic uncertainty and local massive flooding, causing the GDP y/y growth in 2011 to drop a mere 0.1% compared to the plan of 4.5%. Overall, the country’s steel production and exports declined significantly as the floods disrupted supply chains and operations in Q4/2011.

Domestic steel consumption increased by 3.3% y/y to 14.5mn tonnes in 2011, much lower than the 31% increase in 2010. The Iron and Steel Institute of Thailand (ISIT) estimated that steel consumption in 2012 would grow by at least 5%, driven by post-flood reconstruction spending from both the public and private sectors. The growth in the demand for steel would also be supported by a significant expansion in the automotive and electronic industries.

Many domestic steel companies were badly affected by the severe floods and global economic slowdown, which eroded their operating margins. Going forward, more resilience in operating results is expected as plants resume production to normal levels and sale volume increases.

Prominent Points

• Thailand’s steel consumption registered a slower growth of 3.3% to 14.5mn tonnes in 2011, accounting for the largest share (28%) among the ASEAN countries.
• Domestic production of finished steel products fell by 6.7% to 9.3mn tonnes in 2011 as a result of the devastating floods.
• Thailand should see a 4.5–5.5% GDP growth in 2012 attributed to the government’s income generating policies and recovery in the industrial production sector after the floods.

Source: SEAISI

These are only a few of the insights in the new EMD Report : Thailand Steel Industry. Learn more and purchase now>>

 

Vietnam’s steel industry badly hit by depressing global economy

2011 saw unpredictable happenings of the European sovereign debt crisis depressing the global economy. In Vietnam, unstable macroeconomic conditions and negative impacts of the global economy caused domestic companies to fall into bad situations and brought many of them into the verge of bankruptcy.

Vietnam’s steel industry was affected by the negative effects of the following factors: increase in the cost of raw materials and the exchange rate caused the production cost to go up; tight monetary policy and reduction of public investment caused the demand to drop and selling prices to remain stagnant; and high interest rate and declining stock market led to higher interest expenses.

Vietnam is the third-largest steel consuming country in ASEAN with a demand of 9.70mn tonnes in 2011, down 8.3% y/y.

Key Findings 

• Vietnam’s steel consumption declined 8.3% y/y to 9.70mn tonnes in 2011. As steel demand shrinks and stock increases, the VSA predicts that the steel industry might fail to raise production by 3–4% in 2012. 
• Lower consumption, higher inventories and rigid competition from low-priced Chinese imports forced several steel companies to cut their prices and operate below full capacity.
• Steel exports made good progress in 2011 with a significant increase of 52.2% y/y to 2.07mn tonnes, mainly attributed to export promotion schemes and attractive prices.

                                       Source: SEAISI

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

 

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

 

Global steel predicament casts shadow over Romania’s iron and steel industry

The outlook for Romania’s steel industry is mixed: while some companies invest in new production facilities, or in upgrading existing ones, one large global steel group [Mechel] mulls over pulling out from the country; so far it only decided to cut its local workforce. Both strategies, investing and dis-investing, are however responses to the same challenges: weak profitability. Low utilisation rates, seen globally as well as locally, add to weak demand and result in falling EBITDA margins. The new investments in Romania, quite notable particularly compared to the feeble investment activity in other sectors, are aimed at replacing outdated facilities rather than expanding the production capacity. Nonetheless, even opening again production lines closed in 2008, as it was the case with ArcelorMittal Galati, is encouraging.

Romania Monthly Crude Steel Output

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