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Italy Metals Report Q2 2011

Italy Metals Report Q2 2011

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Price	$530.00
Meta Description	No
Publisher	Business Monitor International
Date of Report	Apr 15, 2011

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Quick Overview

The Italian steel industry has overcome the negative effects of sluggish growth in long products with export-led growth in value-added flat steel products, but the aluminium sector remains under a pall due to high electricity costs prompting the temporary closure of some smelter capacity.
In 2010, crude steel output grew 32.8% year-on-year (y-o-y) to 25.92mn tonnes. Flat steel production was up 38.7% y-o-y while long production was up 8.6%, reflecting both the poor growth in the construction sector and the influx of cheaper long steel from outside the EU. Italy's imports of long steel products increased by 33.2% y-o-y to 2.19mn tonnes, while its long steel product exports totalled 3.08mn tonnes, down by 2.8% y-o-y. Flat steel represented 51% of crude steel output, up from 45% from 2009, fuelled by export growth. Italy’s flat steel product imports reached 9.26mn tonnes, up by 29.4% y-o-y, while its flat steel product exports amounted to 6.48mn tonnes, up by 33.1% y-o-y. Overall output was still only 83% of pre-recession levels, indicating the Italian steel industry has some way to go before it fully recovers. Likewise, primary aluminium output was up 35% to just over 121,300 tonnes in 2010, recovering some of the decline seen in 2009. The level would have been higher had it not been for the planned temporary idling of Alcoa’s Fusina smelter under a cost-saving arrangement. BMI estimates finished steel consumption reached 33.94mn tonnes in 2010 (up 29.3%), while aluminium consumption reached 1.91mn tonnes (up 22.1%).
Italy’s steel imports grew 30.5% y-o-y to 16.67mn tonnes in 2010, while its steel exports rose 21.1% to 16.60mn tonnes. While Italy usually reports a trade deficit in steel in normal economic times, the strong growth in imports of cheaper steel from countries such as Turkey are hindering the pace of recovery. On the upside, value-added semi-finished steel exports grew 59.3% y-o-y to 908,000 tonnes, out-pacing imported semis growth of 36.7%.
The Italian economy remains anchored on the road to recovery, but a return to previous trend growth rates seems unlikely for now. We continue to highlight the enormous government debt load, which will remain a lingering risk to economic stability should the government fail to introduce major fiscal reforms over the medium term. At the same time, austerity measures will diminish the opportunity for fiscal stimulus that would be necessary to boost consumer demand and raise domestic consumption of steel products. Even so, this may not translate into strong output growth. As 2010 figures demonstrate, Italian steel output growth lagged behind import growth, although Italian producers were able to maintain a competitive advantage in higher value products. With the economy growing at just 1.6% in 2011, a full recovery to pre-recession levels of consumption is unlikely in the short term.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 6
Italy Political SWOT ............................................................................................................................................................................................. 6
Italy Economic SWOT ........................................................................................................................................................................................... 6
Global Market Overview.................................................................................................................................. 7
Steel To Average US$580/Tonne In 2011 ............................................................................................................................................................. 7
Table: BMI’s Steel Forecasts ................................................................................................................................................................................ 7
Table: Steel Prices (US$m/t) ................................................................................................................................................................................. 8
Commodities Forecast .................................................................................................................................. 13
Metals Update .......................................................................................................................................................................................................... 13
Aluminium........................................................................................................................................................................................................... 13
Copper ................................................................................................................................................................................................................ 14
Lead .................................................................................................................................................................................................................... 15
Nickel .................................................................................................................................................................................................................. 16
Tin....................................................................................................................................................................................................................... 17
Zinc ..................................................................................................................................................................................................................... 18
Gold .................................................................................................................................................................................................................... 19
Regional Overview ........................................................................................................................................ 20
Forecast Scenario ......................................................................................................................................... 24
Table: Italy’s Metals Industry, Historical Data and Forecast (‘000 tonnes unless stated) 2007-2015 ................................................................ 27
Macroeconomic Outlook ..................................................................................................................................................................................... 29
Table: Italy – Economic Activity, 2008-2015 ...................................................................................................................................................... 31
Competitive Landscape ................................................................................................................................ 32
Company Profiles .......................................................................................................................................... 34
Sapa Profili ......................................................................................................................................................................................................... 34
Alcoa ................................................................................................................................................................................................................... 35
Global Assumptions Q211............................................................................................................................ 36
Table: Global Assumptions, 2009-2015 .............................................................................................................................................................. 36
Table: Regional Real GDP Growth, 2010-2013 (% change y-o-y) ...................................................................................................................... 37
Table: Selected Exchange Rates, 2010-2013 (average) ...................................................................................................................................... 37
Developed States ................................................................................................................................................................................................. 38
Table: Developed States’ GDP Growth, 2010-2013 (% change y-o-y) ................................................................................................................ 38
Emerging Markets .............................................................................................................................................................................................. 39
Table: Emerging Market’s GDP Growth, 2010-2013 (% change y-o-y) .............................................................................................................. 40
Consensus Forecasts........................................................................................................................................................................................... 41
Table: Consensus Forecasts, 2011 And 2012 ..................................................................................................................................................... 41
BMI Methodology .......................................................................................................................................... 42
How We Generate Our Industry Forecasts ......................................................................................................................................................... 42
Petrochemicals Industry ..................................................................................................................................................................................... 42
Cross Checks ...................................................................................................................................................................................................... 43
Country Snapshot: Italy Demographic Data ................................................................................................ 44
Section 1: Population ............................................................................................................................................................................................... 44
Table: Demographic Indicators, 2005-2030 ....................................................................................................................................................... 44
Table: Rural/Urban Breakdown, 2005-2030 ...................................................................................................................................................... 45
Section 2: Education and Healthcare ...................................................................................................................................................................... 45
Table: Education, 2002-2005 ............................................................................................................................................................................. 45
Table: Vital Statistics, 2005-2030 ....................................................................................................................................................................... 45
Section 3: Labour Market and Spending Power ....................................................................................................................................................... 46
Table: Employment Indicators, 2001-2006 ......................................................................................................................................................... 46
Table: Consumer Expenditure, 2000-2012 (US$) ............................................................................................................................................... 46
Table: Average Annual Manufacturing Wages, 2000-2012 ................................................................................................................................ 47