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Recently Released Market Study: Netherlands Metals Report Q4 2012

New Materials market report from Business Monitor International: "Netherlands Metals Report Q4 2012"


Boston, MA -- (SBWIRE) -- 12/27/2012 -- BMI's Netherlands Metals Report for Q4 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 seven months of 2012, Dutch crude steel output fell 4.0% y-o-y to 3.95mn 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 eurozone sovereign debt crisis is set to weigh on external demand, while the government's commitment to fiscal austerity will hurt weak domestic demand.

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Nevertheless, 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 and should prevent the kind of collapse seen in neighbouring Belgium. Tata Steel Europe is aiming to reduce costs by 20% in FY2012/13, while at the same time increasing investment. It is spending EUR800mn in increasing liquid steel-making capacity at Ijmuiden by 500,000 tonnes per anum (tpa) to 7.7 million tonnes per annum (mntpa) by 2015-16 while reducing jobs by 1,000. This should significantly improve the competitiveness of its Ijmuiden complex. As such, BMI retains an optimistic outlook for the long-term future of the Dutch steel industry with a swift return to pre-2008 levels by 2014.

The outlook for Dutch primary aluminium production looks less favourable. The 275,000tpa ZALCO aluminium smelter was closed in December 2011 due to poor profit margins. A Dutch-US consortium has taken over ZALCO's assets. While the smelter is being dismantled, the new owners are resuming production of finished and semi-finished products and anodes. 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%.

Over the last quarter BMI has revised the following forecasts/views:

- The higher than expected monthly output in mid-2012 has prompted us to raise our growth forecast for crude steel from -4.8% to -2.5% with production to come in at 6.76mn tonnes (mnt).
- With the economic outlook unchanged and GDP set to contract 0.6%, BMI maintains its crude steel consumption forecast of 4.3mnt in 2012, down 2.5% y-o-y with modest recovery in 2013 when domestic demand should rise 1.2%.

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