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Australia Metals Report Q2 2011


Australia Metals Report Q2 2011

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Additional Information
Price $530.00
Meta Description No
Publisher Business Monitor International
Date of Report Apr 8, 2011
Quick Overview
2010 marked a significant rebound in both the production and consumption of refined metals as base effects kicked in. BMI expects moderate growth in production and consumption of refined metals across most sectors in Australia over the forecast period to 2015. Steel output rebounded particularly strongly in 2010 as demand from Asia picked up significantly from 2009 levels. Indeed, Australian steel production came in 7.29mn tonnes in 2010, according to the World Steel Association, growing by approximately 70% from 2009 levels, when the sector was hit by the global financial crisis. A large part of the growth was driven by a rebound in production by BlueScope Steel Ltd and OneSteel Ltd. We forecast Australian steel output to grow by 8.0% to reach 7.89mn tonnes by 2015.
We estimate that Australian production of refined zinc declined by 5.7% in 2010 to 495,000 tonnes. However, we forecast annual average growth of 2.5% over the forecast period to 2015, at which point output could reach 565,000 tonnes. This growth is due to planned production increases at Nyrstar and Sun Metals' refineries. We have significantly revised down our estimate for Australian consumption of refined zinc in 2010. We had previously estimated consumption at 199,000 tonnes, but now anticipate zinc consumption to come in at 189,000 tonnes. Despite the downward revision, this is still a healthy growth rate of 11.8% from 2009 levels. This is in line with our forecasts for the Australian economy as a whole.
Despite an estimated decline in Australian refined aluminium production in 2010, output is set to grow in 2011 and over the forecast period to 2015, as higher prices provide incentives to increase output. We expect increases in supply to be driven by Rio Tinto and Alcoa, as ongoing strong demand from Asia provides production incentives. Australian aluminium demand remained weak in 2010, but will pick up slightly over the forecast period.
Australian output of refined nickel fell by 12.0% in 2010 on the back of disruptions at BHP Billiton's Kwinana refinery. That said, annual average growth should come in at 2.3% over the forecast period to 2015, reaching 144,000 tonnes. Consumption of refined nickel is likely to increase by 2.1% in 2010 to 2,450 tonnes as the economy recovers, with an average growth rate of 1.5% per annum pencilled in until 2015.
Lead is the one metal for which we forecast very weak output and consumption over the forecast period. In terms of production, neither of Australia's two refineries have expansion plans, and the largest, Port Pirie, has experienced falling output for five years. As yet there have been no plans announced by other companies to set up a refinery in Australia and the country therefore looks set to continue its weak production. Latest data suggest that Australian production of refined lead fell by approximately 20% in 2010, to 188,000 tonnes. That said, we forecast output to expand, albeit slowly over the forecast period with annual average growth of 4.8% to 2015, most of which is front-loaded to reach 238,000 tonnes. Despite these growth rates, however, production will remain at pre-crisis levels.
The majority of Australia's refined metal output is for export, with Asia, and particularly China, accounting for the largest share. We therefore assign downside risks to our forecasts on the back of an expected slowdown in Asia's economic growth in 2011. Domestic demand for Australia's refined metal production is dependent on the country's economic growth rate, and we forecast modest growth until 2015 as the economy gradually recovers from recession. However, any reduction in the growth rate would have a detrimental effect on consumption levels for metals.
Table of Contents
Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 7
Australia Political SWOT ..................................................................................................................................................................................... 7
Australia Economic SWOT ................................................................................................................................................................................... 7
Australia Business Environment SWOT ................................................................................................................................................................ 8
Global Market Overview.................................................................................................................................. 9
Steel Forecast ....................................................................................................................................................................................................... 9
Table: BMI’s Steel Forecasts ................................................................................................................................................................................ 9
Table: Steel Prices (US$m/t) ............................................................................................................................................................................... 10
Commodities Forecast .................................................................................................................................. 15
Metals Update .......................................................................................................................................................................................................... 15
Aluminium........................................................................................................................................................................................................... 15
Copper ................................................................................................................................................................................................................ 16
Lead .................................................................................................................................................................................................................... 17
Nickel .................................................................................................................................................................................................................. 18
Tin....................................................................................................................................................................................................................... 19
Zinc ..................................................................................................................................................................................................................... 20
Gold .................................................................................................................................................................................................................... 21
Regional Overview ........................................................................................................................................ 22
Table: Top 10 Asian Steel Producers, 2009 ........................................................................................................................................................ 22
Industry Forecast .......................................................................................................................................... 26
Steel: Output Rebounding Strongly, But Growth To Slow Ahead ......................................................................................................................... 26
Steel Production & Consumption ('000 tonnes unless stated) .............................................................................................................................. 29
Aluminium: Supply & Demand Growth To 2015 ..................................................................................................................................................... 30
Refined Aluminium Production ('000 tonnes) ..................................................................................................................................................... 31
Primary Aluminium ('000 tonnes) ....................................................................................................................................................................... 32
Nickel: Production To Expand To 2015, Consumption To Remain Static ................................................................................................................. 33
Output by Refinery ('000 Tonnes) ....................................................................................................................................................................... 34
Nickel Output ('000 Tonnes) ............................................................................................................................................................................... 34
Zinc: Rebound In Supply & Demand Growth .......................................................................................................................................................... 35
Refined Zinc Production (KT) ............................................................................................................................................................................. 36
Zinc Output (KT)................................................................................................................................................................................................. 37
Lead: Long-Term Weakness In Supply & Demand .................................................................................................................................................. 38
Output by Refinery (KT)...................................................................................................................................................................................... 39
Lead Output (KT) ................................................................................................................................................................................................ 40
Regulatory Development ............................................................................................................................... 41
Economic Activity ......................................................................................................................................... 44
Table: Australia – Economic Activity, 2008-2015 .............................................................................................................................................. 46
Competitive Landscape ................................................................................................................................ 47
Aluminium........................................................................................................................................................................................................... 47
Steel .................................................................................................................................................................................................................... 48
Company Profiles .......................................................................................................................................... 49
Rio Tinto Alcan ................................................................................................................................................................................................... 49
Alcoa ................................................................................................................................................................................................................... 51
BlueScope Steel ................................................................................................................................................................................................... 53
OneSteel .............................................................................................................................................................................................................. 55
Global Assumptions ..................................................................................................................................... 57
Table: Global Assumptions, 2009-2015 .............................................................................................................................................................. 57
Table: Regional Real GDP Growth, 2010-2013 (% change y-o-y) ...................................................................................................................... 58
Table: Selected Exchange Rates, 2010-2013 (average) ...................................................................................................................................... 59
Developed States ................................................................................................................................................................................................. 59
Table: Developed States’ GDP Growth, 2010-2013 (% change y-o-y) ................................................................................................................ 60
Emerging Markets .............................................................................................................................................................................................. 61
Table: Emerging Market’s GDP Growth, 2010-2013 (% change y-o-y) .............................................................................................................. 61
Consensus Forecasts........................................................................................................................................................................................... 62
Table: Consensus Forecasts, 2011 And 2012 ..................................................................................................................................................... 62
Country Snapshot: Australia Demographic Data ....................................................................................... 63
Section 1: Population .......................................................................................................................................................................................... 63
Table: Demographic Indicators, 2005-2030 ....................................................................................................................................................... 63
Table: Rural/Urban Breakdown, 2005-2012 ...................................................................................................................................................... 64
Section 2: Education and Healthcare ................................................................................................................................................................. 64
Table: Education, 2002-2005 ............................................................................................................................................................................. 64
Table: Vital Statistics, 2005-2030 ....................................................................................................................................................................... 64
Section 3: Labour Market and Spending Power.................................................................................................................................................. 65
Table: Employment Indicators, 2001-2006 ......................................................................................................................................................... 65
Table: Consumer Expenditure, 2000-2012 (US$) ............................................................................................................................................... 65
Table: Average Annual Wages, 2000-2012 ......................................................................................................................................................... 66
BMI Methodology .......................................................................................................................................... 67
How We Generate Our Industry Forecasts ......................................................................................................................................................... 67
Cross Checks ...................................................................................................................................................................................................... 67




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