Boston, MA -- (SBWIRE) -- 02/24/2014 -- BMI's Czech Metals Report for Q2 2014 assesses the growth prospects for the country's steel sector during 2014 and presents medium-term growth forecasts for steel production to 2018. In Q2 we believe the country's metals sectors will begin to witness a gradual recovery in production levels, following two years of contraction in steel output. The report analyses the reasons for the recovery as well as the ongoing challenges faced by Czech Republic steelmakers over the medium term.
The outlook for the sector is reflected in the actions of Czech steelmakers who, following a sustained period of caution, are starting to expand output levels. In December2013 ArcelorMittal Ostrava, a Czech Republic subsidiary of Luxembourg-based steelmaker ArcelorMittal, announced the completion of modernisation work to the continuous casting machine at its steelworks. The CZK1bn (US$53mn) project was expected to help it improve both the quality and diversity of the steel produced at the facility and to also help the company to boost its steel pipe exports to overseas oil and gas markets.
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However, we note that a number of other steelmakers continue to face financial difficulties. In December 2013, Russian steel producer Evraz announced plans to sell its Czech division Evraz Vitkovice Steel (EVS) to Russian bank Vnesheconombank following continued financial difficulties. Evraz suspended production at the facility in July 2013 due to weak demand, the second time the company halted production during the year having taken its Ostrava plant offline for the duration of April.
While we expect Czech steel production volumes to trend upwards over 2014-2018, we caution there is the potential for further downside risk for the Czech Republic's metals sector over the medium term, particularly given the Czech Republic's exposure to volatile external markets, although the industry's competitiveness should work in its favour. With rumours that further companies including ArcelorMittal are set to introduce cutbacks at their Czech facilities, BMI does not rule out a return to the lows seen in 2009 when output fell to 4.6mnt.
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