Spain Metals Report Q2 2012

Published : June 2012
No. of Pages : 47

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The Spanish steel industry is facing a second year of contraction in 2012 with both the domestic and export markets under pressure, according to BMI’s latest Spain Metals Report. In 2011 Spanish crude steel production fell 4.7% year-on-year (y-o-y) to 15.6mn tonnes, making Spain one of the worst-performing countries in terms of steelmaking. The contraction is reversing some of the recovery seen in 2010, when output grew 13.8% to 16.35mn tonnes. Output was lower than the 16.0mn tonnes BMI had forecast, principally due to a sharp drop off in Q411 when output declined 9.2% y-o-y.
The drop in production can, in the main, be attributed to the crisis in the Spanish construction industry, as well as the unfavourable value of the euro to the US dollar which hampered exports to non-EU countries. The automotive industry also experienced a modest downturn, although there were signs that it was entering 2012 on a downtrend that will impact negatively on flat steel production. Although the first two months saw some recovery from Q411, output was down 13.6% y-o-y with the sector far from recovery. In January 2012, ArcelorMittal announced it would close indefinitely its long carbon steel production plant in Madrid due to continued weakness in demand. The plant was closed in October 2011 due to the weakness in the construction market.
Aggressive fiscal austerity, rising interest rates, stubbornly high unemployment and ongoing deleveraging in the private sector will keep domestic demand growth well below potential over the medium term. As such, domestic finished steel consumption is estimated at 12.45mn tonnes in 2011, down 5% y-o-y, with forecast 2.1% contraction in GDP set to plunge the market lower in 2012 with a further 5% fall to a new low of 11.82mn tonnes, helping to reverse all the gains seen in 2010.
The crisis in the eurozone, coupled with Spain’s own debt problems and austerity measures will lead to a further decline in crude steel output, to 14.81mn tonnes in 2012, a fall of 5.0% y-o-y. Widespread scaling back of government departments and investment projects, concomitant with hikes in taxes on income and consumption, will see to it that fiscal austerity weighs on the recovery in household consumption and gross fixed capital formation (GFCF) over the next few quarters, holding back the domestic market. Over the longer term, we believe economic growth in Spain will prove moribund and the local steel market will fail to return to pre-recession levels of consumption.
With the domestic market in the doldrums, the steel industry is reliant on exports for growth. Germany, which has seen a better-than-expected increase in demand, has been the chief target for Spanish output. The decline in the performance of the German manufacturing sector from mid-2011 is therefore having a deleterious effect on export performance with a resulting contraction in the Spanish steel industry. We estimate a 4.7% fall in exports to 9.35mn tonnes in 2011, followed by a further 5% decline in 2012. It will take until 2015 before Spain’s steel exports rise above the 10mn tonne level that was typical of prerecession norms.

Executive Summary . 5
SWOT Analysis 7
Spain Political SWOT 7
Spain Economic SWOT .. 7
Spain Business Environment SWOT ... 8
Global Market Overview .. 9
Steel Market 9
Table: BMI’s Steel Forecasts . 9
Table: Steel Products And Inputs – Price Data 12
Commodities Forecast .. 12
Gold . 12
Copper . 13
Aluminium 14
Lead . 15
Nickel ... 16
Tin 16
Zinc .. 17
Europe Overview ... 19
Forecast Scenario .. 24
Table: Spain’s Steel Industry, 2009-2016 (‘000 tonnes, unless otherwise stated) 26
Table: Spain’s Primary Aluminium Industry, 2009-2016 (‘000 tonnes) ... 27
Table: Spain’s Refined Copper Industry, 2009-2016 (‘000 tonnes) . 27
Table: Spain’s Refined Lead Industry, 2008-2016 (‘000 tonnes) . 27
Table: Spain’s Refined Zinc Industry, 2009-2016 (‘000 tonnes) .. 28
Table: Spain’s Refined Nickel And Tin Industry, 2009-2016 (‘000 tonnes) . 28
Macroeconomic Outlook .. 28
Table: Spain – Economic Activity, 2011-2016 . 31
Competitive Landscape 32
Aluminium 32
Steel . 33
Company Profiles .. 34
Acerinox ... 34
Alcoa 34
ArcelorMittal ... 35
Compañía Española de Laminación SA (CELSA) 35
Sidenor . 35
Global Assumptions, Q212 ... 36
Table: Global Assumptions, 2010-2016 ... 36
Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y) ... 37
Table: Developed Market Exchange Rates, 2011-2013 ... 37
Table: Emerging Market Exchange Rates, 2010-2013 . 38
Developed States .. 38
Table: Developed States – Real GDP Growth, 2010-2013 .. 38
Emerging Markets 39
Table: Emerging Markets – Real GDP Growth. 2010-2013 40
Consensus 41
Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%) 41
Country Snapshot: Spain Demographic Data. 42
Section 1: Population ... 42
Table: Demographic Indicators, 2005-2030 42
Table: Rural/Urban Breakdown, 2005-2030 43
Section 2: Education And Healthcare .. 43
Table: Education, 2002-2005 ... 43
Table: Vital Statistics, 2005-2030 43
Section 3: Labour Market And Spending Power .. 44
Table: Employment Indicators, 2001-2006 .. 44
Table: Consumer Expenditure, 2000-2012 (US$) 44
Table: Average Annual Manufacturing Wages, 2000-2012 . 45
BMI Methodology ... 46
How We Generate Our Industry Forecasts .. 46
Cross Checks ... 46Table: BMI's Steel Forecasts . 9

Table: Steel Products And Inputs – Price Data . 12

Table: Spain's Steel Industry, 2009-2016 (‘000 tonnes, unless otherwise stated) . 26

Table: Spain's Primary Aluminium Industry, 2009-2016 (‘000 tonnes) . 27

Table: Spain's Refined Copper Industry, 2009-2016 (‘000 tonnes) . 27

Table: Spain's Refined Lead Industry, 2008-2016 (‘000 tonnes) . 27

Table: Spain's Refined Zinc Industry, 2009-2016 (‘000 tonnes) . 28

Table: Spain's Refined Nickel And Tin Industry, 2009-2016 (‘000 tonnes) . 28

Table: Spain – Economic Activity, 2011-2016 . 31

Table: Global Assumptions, 2010-2016 . 36

Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y) . 37

Table: Developed Market Exchange Rates, 2011-2013 . 37

Table: Emerging Market Exchange Rates, 2010-2013 . 38

Table: Developed States – Real GDP Growth, 2010-2013 . 38

Table: Emerging Markets – Real GDP Growth. 2010-2013 . 40

Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%) . 41

Table: Demographic Indicators, 2005-2030 . 42

Table: Rural/Urban Breakdown, 2005-2030 . 43

Table: Education, 2002-2005 . 43

Table: Vital Statistics, 2005-2030 . 43

Table: Employment Indicators, 2001-2006 . 44

Table: Consumer Expenditure, 2000-2012 (US$) . 44

Table: Average Annual Manufacturing Wages, 2000-2012 . 45

Spain Metals Report Q2 2012

Published By: Business Monitor International

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