Market and product
France Metals Report Q3 2010
Nevertheless, if output remains at these levels, crude should reach 15.08mn tonnes for the year, as we have forecast. Given that crude is the industry bellwether, we have also not made any significant changes to hot-rolled output, which we continue to forecast at 14.5mn tonnes in 2010, up 15.6% y-o-y. Doubledigit growth will only partly offset the massive decline seen in 2009, when French crude steel output fell 28.2% y-o-y to 12.84mn tonnes, although this was less than expected. In historical terms, these are still poor results and we do not envisage a return to pre-recession levels until 2013 or 2014, although there is a possibility of some plant and furnace closures that could lead to lower output levels. By 2014, crude steel output should be around 18.1mn tonnes, which is around 1.1% above 2008 levels. Aluminium should fare better, helped in part by its use in lighter and more fuelefficient vehicles. By 2014, aluminium production should have recovered to 2008 levels, provided there is no closure of capacity. The economic downturn hit demand in crucial end-user industries such as the automotive and construction industries.
The recovery will be slow as the construction industry will continue to struggle - the infrastructure team forecasts real industry value growth of -9.7% in 2009 and -0.9% in 2010, before a recovery is staged in 2011. Meanwhile, we warn that French autos production could continue to be eroded eastwards by companies moving operations to cheaper Eastern European bases, although the government's five-year loan to carmakers and the carmakers' consequent commitments will ensure that the fall in output is not too drastic. Production focused on small cars will in turn limit domestic demand for steel and aluminium flat products, although the latter will be mitigated by the rising use of aluminium as a lightweight substitute for steel. However, there is little sign of a revival in metals demand from this industry until 2011 at the earliest.
(Source: http://www.companiesandmarkets.com)
