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Boston, MA -- (SBWIRE) -- 03/07/2013 -- BMI's Italy Metals Report for Q1 2013 examines the causes of the sudden slowdown in the Italian steel industry in H212 and examines whether the country will regain the volumes it reported before the 2008 financial crisis. The report examines how metals producers are responding to the challenges posed by an increasingly precarious external macroeconomic environment and also assesses the ability of producers and exporters to realise returns in the short term.
The Italian primary aluminium smelting sector is in decline due to capacity closures caused by high operating costs, notably electricity, while the steel industry suffers from fragmentation in the downstream sector which has made production uncompetitive and in need of restructuring. In the first 10 months of 2012, Italian crude steel output fell 3.6% year-on-year (y-o-y) to 23.3mn tonnes (mnt), a lower rate of decline than throughout the rest of the EU. Italy retained its position as the EU's second largest steelmaking country with a 16% share of production.
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Going into 2013, the industry will face increased competitiveness in core markets as it feels growing pressure from non-EU rivals and this could prompt industry consolidation and a move towards greater specialisation rather than a focus on volumes.
Over the last quarter BMI has revised the following forecasts/views:
- While BMI has forecast output of 28.4mnt for 2017 on the basis of a slow recovery and reduced capacity utilisation at the Ilva Steel plant in Taranto, this could easily be undermined by a complete and permanent closure of the plant. Such a prospect will preclude any return to the 30mntpa that was typical of the Italian steel industry before the 2008 financial crisis.
- BMI no longer expects the economy to return to growth in 2013 and the recovery will be slower than previously expected. Italy's deepening economic woes have prompted us to downgrade the consumption growth forecast from -8% to -10% in 2012 with the total at just under 26mnt.
- Alcoa's 150,000tpa Portovesme aluminium smelter has been closed and its remaining 44,000tpa smelter at Fusina, near Venice, could also be in jeopardy. As a result, Italian primary aluminium smelting could be approaching its end, mirroring a trend seen across where high operating costs have made it impossible to sustain output at current and projected global prices.
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