Boston, MA -- (SBWIRE) -- 08/30/2012 -- BMI's Netherlands Metals Report for Q3 2012 examines the long-term potential of the country's highly integrated and competitive steel industry, but flags short-term concerns about the impact of external market problems, notably the eurozone crisis.
The report examines how the expected contraction in domestic consumption will affect the pattern of external trade and how Dutch metals processors are responding to the challenge. The report also analyses the growth and risk management strategies being employed by the leading players in the steel and aluminium sectors, as they seek to minimise the effects of the crisis on their operations In the first four months of 2012, Dutch crude steel output fell 3.5% year-on-year (y-o-y) to 2.29mn tonnes (mnt), in line with EU trends. The decline came after two years of growth that saw output up 4.0% and 28.5% in 2011 and 2010 respectively. The Dutch steel industry's high level of integration and competitiveness, particularly in high-value finished steel products, has enabled it to thrive in an increasingly difficult export environment. Over the longer run, the Netherlands' relatively competitive external sector should allow it to take advantage of rising demand in emerging markets, boosting longterm growth. Despite increasing investment, including EUR800mn in increasing liquid steel-making capacity at Ijmuiden by 500,000 tonnes per annum (tpa) to 7.7mn tonnes per annum (mntpa) by 2015-16, Tata Steel is implementing cost-cutting measures that will lead to around 1,000 job losses. This should, however, improve the competitiveness of the company's Dutch operations.
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The outlook for Dutch primary aluminium production looks less favourable with the permanent closure of the 275,000tpa ZALCO aluminium smelter due to poor profit margins. Smelting operations have stopped, but production of finished or semi-finished products and anodes will continue under new owners.
Over the last quarter BMI has revised the following forecasts/views:
- A strong rise in imports has accompanied the resurgence of trade in recent quarters, but this trend should decline in the coming months as private consumption abates, although this may not be to the benefit of domestic producers to expand in the Dutch market.
- With the external challenges facing the steel industry, we maintain our crude steel output forecast of 6.6mnt in 2012 (down 4.8%) and have revised down our growth rate for 2013 from 5% to 2% to reach 6.7mnt.
- As ZALCO is the largest smelter in the Netherlands, its closure could raise the ratio of net imports to consumption from 33% to as much as 90%.
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