Belgium Metals Report Q4 2009

Belgium Metals Report Q4 2009

The Belgian steel industry was one of the world’s worst performers in 2009 as it became a victim of the
Europe-wide recession, but there are signs of cautious optimism as ArcelorMittal restarts some of the
capacity closed earlier in the year, according to BMI’s latest Belgium Metals Report.
In H109, Belgian crude steel production fell 66% year-on-year (y-o-y) to 2.07mn tonnes. Although
monthly output in June – at 384,000 tonnes – was 63% above the February low-point of 235,000 tonnes,
it was still down 63% y-o-y. Moreover, output is at lows not seen for decades and was down 10% on the
levels seen in March and April, despite witnessing a brief surge. BMI attributes the modest 2009 upturn
to small purchases for restocking rather than a recovery in demand for steel products.
In late July, ArcelorMittal restarted a blast furnace it had idled at Ghent for four months. The restart at
one of two furnaces at the site came more than two weeks ahead of schedule. The move came amid signs
of a revival in the market as France and Germany declared themselves to be out of recession. However,
our outlook for the Belgium economy remains bearish and this will be reflected in domestic steel output
levels. Despite a further downward revision of our real GDP forecast to -3.7% in 2009, consumer
spending is holding up relatively well. We see the latter declining by just 1.4% in real terms this year,
although there is a danger that renewed job losses could send confidence tumbling once more.
Despite the resumption of operations at ArcelorMittal’s Ghent unit, BMI forecasts a 45% drop in crude
steel output due to a fall in hot-rolled production downstream, particularly flats which will be depressed
by the effects of the collapse in the automotive industry, with car scrappage schemes throughout Europe
having only a modest and temporary effect on demand for Belgian steel. While Belgium is unlikely to see
the kind of monthly output reported in Q1, any growth will largely be the result of inventory building.
Actual demand growth is not expected until Q210, with 2010 output set to rise by around 11% above
2009 levels, although this is still a low level.
We do not believe that annual steel production will exceed 9mn tonnes again until 2013. The decline in
output is related to the collapse in the export market, which is set to fall 38% to 13.6mn tonnes in 2009.
At the same time, the import market will fall by around 43% to just under 9.0mn tonnes. The value of net
exports will fall from US$10.2bn to US$5.4bn. Aluminium consumption, which is heavily influenced by
trends in the automotive industry, is set to fall even faster than demand for steel in Belgium, with the
market forecast to fall by 56% y-o-y to under 230,000 tonnes, although it should recover to around
380,000 tonnes by 2013.

SWOT Analysis........6
Belgium Metal Industry SWOT ... 6
Belgium Political SWOT............. 6
Belgium Economic SWOT........... 7
Global Metals Market Overview ................8
Table: World’s Top Ten Steel Producing Countries ... 10
Aluminium Outlook.. 11
Table: BMI Aluminium Forecast ............... 11
Table: Global Primary Smelter Aluminium Production, 2008-2010 (’000 tonnes)......... 13
Copper Outlook ....... 13
Table: BMI Copper Forecast.... 13
Metals Price Outlook................ 15
Table: Stock Levels At London Metal Exchange Warehouses (tonnes) .......... 17
Global Mining Outlook............. 17
Table: Biggest Chinese Acquisitions In Australia Since 2005...... 19
Table: Global Mining – Top Five Companies By Market Capitalisation (US$mn)......... 21
Table: Global Mining – Key Players’ Future Investment Plans (selected projects)........ 22
Regional Overview 24
Industry Forecast Scenario ....27
Table: Belgian Metals Industry Production And Trade, 2006-2013 .............. 29
Macroeconomic Outlook........... 30
Table: Belgium – Economic Activity, 2004-2013........ 32
Competitive Landscape.........33
Company Profiles..35
ArcelorMittal ........... 35
Steel Invest and Finance (Duferco)............ 36
Corus ...... 37
Alcoa....... 38
Global Assumptions ..............39
Table: Global Assumptions, 2007-2013..... 39
Table: Developed States GDP Growth, 2008-2010 .... 41
Table: Emerging Markets GDP Growth, 2008-2010 .. 42
Table: Commodity Prices, 2007-2010........ 43
BMI Methodology ..44
How We Generate Our Industry Forecasts 44
Cross Checks ........... 44