Abstract
Romanian metallurgical industries are seeing little in the way of revival,
with BMI’s latest Romania
Metals Report expecting a steep decline in
output, led by a collapse in demand for flat products amid the
crisis in
the domestic and foreign carmaking industry, as well as a sharp slowdown in
the real estate
sector.
In the first four months of 2009, crude steel
output was down 65% to 685,000 tonnes, with output in April
down 3%
month-on-month (m-o-m) and 61% year-on-year (y-o-y). All producers were
operating at well
below capacity. BMI forecasts a 27% fall in crude steel
output in 2009 to 3.69mn tonnes, with hot rolled
production falling 30% to
3.38mn tonnes, due in large part to a collapse in flats. A major contributor
to
the decline in flats production is the car industry, with
Renault’s Romanian Dacia subsidiary calling the
situation a
‘state of emergency’ amid a sharp decline in both exports and
domestic sales. A slow recovery
is expected from 2010, but BMI does not
envisage crude steel output exceeding 2008 levels until 2013
when
production should total around 5.23mn tonnes. However, it could take until
2015 or 2016 for the
steel industry to recover to the pre-recession peak
in 2007, although this is contingent on sustained growth
in demand and the
retention of existing capacities.
In terms of products, heavy plate will
be the worst affected segment with output expected to fall 26.4% to
177,000 tonnes due to the slowdown in the global shipbuilding industry.
Romanian shipyards are
expected to record one of their worst years in
2009, having received no orders in H1. However, shipyards
are working at
near full capacity due to orders placed in previous years. Many shipyards are
also
changing their strategies with Damen Galati seeking orders for
military and luxury ships and Constanta
Shipyard and Daewoo Mangalia
focusing on ship repairs. BMI expects the cut in orders in 2009 to have
an
impact on heavy section production in 2010, with the decline in output set to
continue. An upturn is
expected from 2011 but we do not expect a return to
2008 production levels over the next five years.
According to BMI
forecasts, a collapse in real estate will lead to a 25% fall in rebar
production to just
under 588,000 tonnes in 2009. However, a quick rebound
should ensure that the segment performs
strongly in 2010 and by 2013
output should be approaching 900,000 tonnes, an increase of 15% over
2008
levels. The strength of growth in Romanian rebar production will be bolstered
by both its
competitiveness on European markets as well as domestic
demand.
Romania’s aluminium industry is also set to see a sharp
downturn in output. Romanian aluminium
producer Alro produced 56,196
tonnes of primary aluminium in Q109 (down 20% over Q408) and 6,076
tonnes
of flat rolled products (up 0.5%). Alro plans to produce 201,225 tonnes of
electrolytic aluminium
in 2009, down 24% over 2008 with an operating rate
at around 70%. This reduction is largely related to
the shutdown of one
pot line, implemented at the end of 2008. BMI believes that Alro may suffer a
bigger
fall in output, based on our pessimistic outlook for key export
markets and the poor performance of the
car industry, a major aluminium
consumer. BMI estimates that primary aluminium production growth
was flat
in 2008, totalling around 263,000 tonnes. A 30% fall is expected in 2009, with
output down to
just under 171,000 tonnes. A key contributor to the decline
will be the automotive sector, but car
assembly will also secure the
sector’s revival, with output set to reach 290,000 tonnes by 2013 as
Ford
boosts output at its recently acquired plant in Craiova.
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