Sweden Metals Report Q1 2012
Includes 3 FREE quarterly updates
The Swedish steel industry is set for a sharp decline in output in 2012 as export markets deteriorate and the domestic market contracts as a result of the effects of the eurozone debt crisis.
In the first 10 months of 2011, Swedish crude steel output grew 2.9% year-on-year (y-o-y) to 4.15mn tonnes (mnt). This growth consolidates the recovery that began in 2010, when output rose 72.7% to 4.84mnt. Monthly output returned to pre-recession norms in H111, but dropped off in H211 as export performance declined. Output reached a seasonal low point of 273,000 tonnes in July 2011, slightly below the level seen in July 2010. While production grew month-on-month in subsequent months, it was consistently down on the previous year, thereby depressing volume growth. BMI estimates that crude steel production reached 4.96mnt in 2011, up 2.3% y-o-y.
Domestic consumption also showed signs of softening. Consumption grew 7.9% to 2.92mnt in the first nine months of 2011. Meanwhile, import growth was 23.5%, 8.1% and 4.3% in Q1, Q2 and Q3 respectively; for the first nine months of the year, imports grew 11.6% to 2.9mn tonnes. This put Sweden on course for exports of 3.95mnt (up 8.5%) in 2011, far lower than the 4.32mnt we previously forecast. Declining import growth suggested that consumption growth steadily declined throughout the year. BMI estimates consumption rose 6% to 3.83mnt in 2011, a downward revision from the 4.36mnt we previously forecast.
The Swedish steel industry has made the most of its high value production and a product mix that is favourable to the trends within the European steel market, but it will inevitably be hit by the expected downturn in 2012 as shown by the deteriorating performance in H211. According to the Swedish Steel Producers’ Association (Jernkontoret), around 60% of total production comprised alloyed steel, including stainless. This compares with 10-15% in the rest of the EU. BMI believes that a contraction of 8% in exports to 3.64mnt in 2012 will lead to a 4.0% drop in crude steel production to 4.76mnt – a downward revision from the 5.07mnt forecast in the previous quarter – and a 5.0% fall in hot rolled output to 4.47mnt. This would mark a complete reversal of the growth witnessed in 2011.
Primary aluminium production has seen a brisk return to normal rates. After halving output in 2009 to 40,250 tonnes, BMI estimates that Sweden’s only primary aluminium smelter, Kubal, returned to 2008 rates of output in 2010, at close to 82,000 tonnes and reached full capacity of around 100,000 tonnes per annum in 2011. There is a distinct possibility that potlines at Kubal will be taken offline in 2012 as the automotive sector, one of its main consumers, is hit by a downturn in consumer spending. BMI believes that output in 2012 may be in the region of 70,000-80,000 tonnes.
The Swedish steel industry is set for a sharp decline in output in 2012 as export markets deteriorate and the domestic market contracts as a result of the effects of the eurozone debt crisis.
In the first 10 months of 2011, Swedish crude steel output grew 2.9% year-on-year (y-o-y) to 4.15mn tonnes (mnt). This growth consolidates the recovery that began in 2010, when output rose 72.7% to 4.84mnt. Monthly output returned to pre-recession norms in H111, but dropped off in H211 as export performance declined. Output reached a seasonal low point of 273,000 tonnes in July 2011, slightly below the level seen in July 2010. While production grew month-on-month in subsequent months, it was consistently down on the previous year, thereby depressing volume growth. BMI estimates that crude steel production reached 4.96mnt in 2011, up 2.3% y-o-y.
Domestic consumption also showed signs of softening. Consumption grew 7.9% to 2.92mnt in the first nine months of 2011. Meanwhile, import growth was 23.5%, 8.1% and 4.3% in Q1, Q2 and Q3 respectively; for the first nine months of the year, imports grew 11.6% to 2.9mn tonnes. This put Sweden on course for exports of 3.95mnt (up 8.5%) in 2011, far lower than the 4.32mnt we previously forecast. Declining import growth suggested that consumption growth steadily declined throughout the year. BMI estimates consumption rose 6% to 3.83mnt in 2011, a downward revision from the 4.36mnt we previously forecast.
The Swedish steel industry has made the most of its high value production and a product mix that is favourable to the trends within the European steel market, but it will inevitably be hit by the expected downturn in 2012 as shown by the deteriorating performance in H211. According to the Swedish Steel Producers’ Association (Jernkontoret), around 60% of total production comprised alloyed steel, including stainless. This compares with 10-15% in the rest of the EU. BMI believes that a contraction of 8% in exports to 3.64mnt in 2012 will lead to a 4.0% drop in crude steel production to 4.76mnt – a downward revision from the 5.07mnt forecast in the previous quarter – and a 5.0% fall in hot rolled output to 4.47mnt. This would mark a complete reversal of the growth witnessed in 2011.
Primary aluminium production has seen a brisk return to normal rates. After halving output in 2009 to 40,250 tonnes, BMI estimates that Sweden’s only primary aluminium smelter, Kubal, returned to 2008 rates of output in 2010, at close to 82,000 tonnes and reached full capacity of around 100,000 tonnes per annum in 2011. There is a distinct possibility that potlines at Kubal will be taken offline in 2012 as the automotive sector, one of its main consumers, is hit by a downturn in consumer spending. BMI believes that output in 2012 may be in the region of 70,000-80,000 tonnes.
Contents
Executive SummarySWOT Analysis
Sweden Political SWOT
Sweden Economic SWOT
Sweden Business Environment SWOT
Global Market Overview – Steel Forecast
Table: BMI’s Steel Forecast
Table: Steel Price Data
Commodities Outlook
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Regional Overview
Forecast Scenario
Table: Sweden’s Steel Industry, 2008-2016 (‘000 tonnes unless stated), 2008-2016
Macroeconomic Outlook
Table: Sweden – GDP By Segment Contribution To Growth, 2008-2015
Competitive Landscape
Table: Swedish Steel Capacity, 2007
Table: Main Steel Producers In Sweden
Company Profiles
Outokumpu
Ovako
RUSAL United Company
Sandvik Materials Technology (SMT)
SSAB
Global Assumptions
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y)
Table: Selected Developed Market Exchange Rates, 2010-2013 (average)
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average)
Developed States
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Emerging Markets
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Consensus
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y)
Country Snapshot: Sweden Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
Cross Checks Skip to top