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Intellinews Romania Iron and Steel Report -May 2013

  • May 2013
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 32 pages

The IntelliNews Romania Steel and Iron Report offers an extensive summary of the Romanian steel and iron markets. It includes a complete coverage of the latest developments and corporate news, accompanied by thorough statistics and comments. This sector report is ideal to keep you abreast on recent company and industry news. Written by local professionals, it is a unique market and business intelligence analysis, tailored to save time by providing in-depth information, while helping you to make confident and informed business decisions.

Romania will produce raw steel/raw steel goods [code 72] only for local processing or consumption [and not for exports]; the industry has a potential for growth that depends on the construction sector mainly – but also on the exploitation of high value-added segments now delivered only by exports [for which investments are needed]. Provided the EU/local government turn more supportive to energy-intensive industries, such investments would make sense economically. Under current circumstances however imports of raw steel goods might increase from neighbouring, non-EU countries such as Ukraine. The business model adopted by local steel industry will critically depend on the energy policies. Electricity and natural gas prices in Romania are lowest in the EU. While the electricity prices have increased significantly as a result of the renewable energy support, the natural gas price is likely to increase in the coming couple of years as the gas market is liberalised. Shale gas abundance is far from imminent in Europe and the carbon cut policies are making energy-intensive industries even less profitable.

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. From a net export of 2mn tonnes of raw steel goods in 2003, Romania turned to a net importer with nearly 0.5mn tonnes. Net balance of processed goods returned in the surplus area after strong demand in the pre-crisis years pushed it into the deficit area. The domestic intake of steel goods [either raw or processed – but used domestically] has surged from 2.65mn tonnes in 2002 to 5.75mn tonnes in 2007 to shrink at 3.14 mn tonnes in 2009. Please note that the 2009 steel intake was still well above the 2.65mn tonnes intake in 2002. Steel intake further strengthened to above 3.5mn tonnes in 2011-2012. We expect it to increase more or less moderate – depending on the expansion of construction sector essentially and of ArcelorMittal Galati commitment of taking advantage of the abundant demand generated by the automobile sector. The wind power sector remains a potential customer for local steel makers – shipyards, but not as much as it was in the past years.

Table Of Contents

Intellinews Romania Iron and Steel Report -May 2013
Executive Summary

Strategy Comment - Change in the Business Model

Industry Overview
2011 WorldSteel Statistics
Romania's apparent steel use down 4% y/y to 181kg per capita; 34% down from 2007, 53% of EU27 average - WorldSteel.
European steel makers lose share on shrinking market.
Russias Mechel sells out Romanian steel assets to cut loss.
Government says it cannot intervene in Mechel's abandoned steel plants.
Steel plant of ArcelorMittal says cannot stand current energy prices…
Lakshmi Mittal in energy price talks for ArcelorMittal's units in Romania
STYLISED STRUCTURE OF METAL INDUSTRY
IntelliNews model of Romanian steel market - recent developments.

Industry Indicators
A. INDUSTRIAL OUTPUT INDEX [2010=100]
B. SALES INDEX [2010=100]
C. UTILISATION BALANCE
IntelliNews model of Romanian steel market - utilisation balance.

Foreign Trade Balances

Foreign Trade - Detailed

Corporate Update
ARCELORMITTAL
ArcelorMittal cuts capacity of main Romanian steel mill to 3mn tonnes per year.
TMK
TMK reports weaker profit for 2012, slips in the losses in Q1/2013.
MECHEL
Romanian wire maker formerly owned by Mechel files for insolvency.

INDEPENDENT
Indian investor considers small EUR 100-200mn steel plant in Romania.


Appendix
Appendix 1: Romania's Crude Steel production - monthly, 2004-2012
Appendix 2: Romania's Industrial Activity Indices - annual 2006-2011, quarterly 2008- 2012
Appendix 3: Romania Steel Industry - detailed exportsandimports - annual 2002-2012 [USD/EUR, tonnes]



List of Figures

Figure 1: Steel benchmark prices [global] starting 2003
Figure 2: Romania's total steel balance [tonnes] - 2007-2012
Figure 3: Average steel export and import prices 2007-2012 [EUR/ton]
Figure 4: Apparent use of steel per capita, by region vs. Romania
Figure 5: Stylised IntelliNews model of Romania's metal industry
Figure 6: Romania's industrial production index, metal and metal processing industries 2000-2012
Figure 7: Industrial production index, metal PRODUCTION industry - seasonal pattern
Figure 8: Industrial production index, metal PROCESSING industry - seasonal pattern
Figure 9: Sales volume index, metal PROCESSING industry [EUR, 2005=100]
Figure 10: Sales volume index, metal PRODUCTION industry [EUR, 2005=100]
Figure 11: EUR sales per industrial production unit in metal production and metal processing sectors [2006-2012]
Figure 12: Romania Balance of Steel (thousand tonnes) - annually 2005-2012
Figure 13: Romania Balance of Steel (thousand tonnes) -quarterly 2010-2012
Figure 14: Trade balance, iron and products
Figure 15: Romania's quarterly ExportsandImports of metal and metal products [EUR] 2001-2012
Figure 16: Romania's quarterly Exports and Imports of metal. [EUR], 2001-12
Figure 17: Romania's quarterly ExportsandImports of metal products [EUR], 2001-2012
Figure 18: Detailed structure of Romania's exports in 2007 vs. 2012 EUR thous
Figure 19: Detailed structure of Romania's exports in 2007 vs. 2012 tonnes
Figure 20: Detailed exports for main items [tonnes], quarterly 2007-2012
Figure 21: Detailed exports for main items [EUR thous], 2007-2012
Figure 22: Export prices for export items, quarterly, 2007-2012 [EUR/ton]



List of Tables

Table 1: Price for main steel products [global] starting Dec 2003
Table 2: Romania Sales / Industrial Activity Indices (2010=100)
Table 3: Romania Balance of Steel 2005 to 2012 (thousand tonnes)
Table 4: Export, import, balance, annual, iron and iron products separately; annual
Table 5: Export, import, balance, annual, iron and iron products separately; quarterly
Table 6: Romania's metal industry - detailed exports - annual, 2007-2012 [EUR thous, tonnes]

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