Recently published research from Business Monitor International, "Sweden Metals Report Q4 2012", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 12/27/2012 -- BMI's Sweden Metals Report for Q412 examines the competitive advantages of the country's steel and aluminium sectors, but warns that dependence on the automotive industry as a major consumer could prove to be a weakness amid the eurozone crisis. The report examines how producers are responding to volatile market conditions and examines trends going forward. 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 maximise the growth opportunities in niche markets, such as energy plants.
The Swedish steel industry's strong recovery from the 2008-09 crash is threatened by the eurozone crisis and there are growing concerns of a significant collapse in output. In the first seven months of 2012, Swedish crude steel output declined 13.5% y-o-y to 2.65mnt. While this was not the worst performance in the EU, the contraction was far greater than the EU average of -4.6% over the period. However, the situation appeared to be easing by mid-year with new orders for basic and fabricated metals indicating a rising trend, although this had yet to result in an upturn in crude steelmaking. The easing of the rate of industrial decline has not been matched by a similar stabilisation in crude steel output, which plummeted 10.3% y-o-y in June and 41% y-o-y in July. Falling output followed a downward trend in exports of semifinished and finished steel with the Swedish steel industry.
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However, we believe the sector, which has a competitive advantage in high value, niche production, particularly stainless steel, will benefit from an anticipated upswing in EU demand from mid-2013. This will depend on SSAB restarting of one of its three blast furnaces in Sweden, which had been closed due to weak market conditions.
Over the last quarter BMI has revised the following forecasts/views:
- BMI retains its output forecast of 6mnt in 2016. This will be supported by continued investment, such as Sandvik's recently opened mill for the advanced manufacture of stainless steel and high nickel alloy tubes for use in nuclear power plant steam generators. Specialisation in the energy sector will help cushion the impact of short-term market volatility.
- With 60% of total production comprised of alloyed steel, including stainless, the sector is likely to be influenced by the trends in the automotives industry. The industry will have to ensure competitive pricing and diversification of markets to maintain growth, which BMI is confident Sweden will meet.
- BMI believes the steel industry will struggle over the remainder of 2012 with annual output falling 7% y-o-y to 4.54mnt, a downward revision from the 2.5% decline we forecast previously.
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