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Canada Metals Report Q1 2014 - New Study Released

New Materials market report from Business Monitor International: "Canada Metals Report Q1 2014"


Boston, MA -- (SBWIRE) -- 01/28/2014 -- BMI View: Domestic consumption and exports of Canadian metal products will be supported by both Canada's positive fundamentals and the country's exposure to a recovering US and Mexico. With much of Canada's metal production exported, a weaker Canadian dollar against the US dollar will encourage refined exports. Therefore, we forecast modest production and consumption growth across the Canadian metals complex through 2017.

Our forecast for strong economic fundamentals in Canada, the US, and Mexico, combined with a weaker Canadian dollar (CAD) in the coming years, leads us to forecast the Canadian metals sector will see expansion through 2017. We forecast the CAD/US$ exchange rate to average 1.05 through the end of 2013, weakening to yearly averages of 1.17 in 2015 and 1.20 in 2016, before coming back down to 1.17 in 2017. Since Canada is a significant exporter of aluminium, nickel, and steel to the US, and to a lesser extent Mexico, this exchange rate dynamic could boost Canadian exports to end users in the US and Mexico. We expect increasing metals demand from Canada to both the US and Mexico as both see broad recovery in their real GDP growth and increasing manufacturing and investment activities. We maintain forecasts for real GDP growth of 2.8% and 3.3% in the US and Mexico, respectively, in 2014. Looking through 2017, we see real GDP growth averaging 2.6% in the US and 3.6% in Mexico.

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On the domestic front, we see positive prospects for the auto manufacturing and infrastructure sectors, boding well for steel and aluminium, in particular. Steel and aluminium are the two main components of Canada's metals sector. We forecast Canada's infrastructure industry will grow 4.4% on average per annum from 2014 through 2017, with investment into oil and gas pipeline infrastructure growing 5.2%. Furthermore, after production declines in 2013, we forecast a resumption of automotive manufacturing growth, averaging 2.9% over the aforementioned period. Looking at the wider economy, Canada should see average real economic growth of 2.4% a year through 2017, comparable to the US.

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