23:43 | 24.11.2010
Research and Markets: Canada Metals Report Q4 2010 – Finished Steel Consumption to Reach 12.50mn Tonnes In 2010
Research and Markets (http://www.researchandmarkets.com/research/812139/canada_metals_repo)
has announced the addition of the “Canada
Metals Report Q4 2010” report to their offering.
The Canada Metals Report provides industry professionals and
strategists, corporate analysts, metals associations, government
departments and regulatory bodies with independent forecasts and
competitive intelligence on Canada’s metals industry.
The Canadian steel industry will emerge from the current crisis
increasingly focused on the emerging economies for growth prospects,
according to this latest Canada Metals Report from BMI.
Rising automotive sales within the North American market, coupled with
increasingly stringent import and export laws over the last quarter,
will certainly aid in easing the pressure for Canadian manufacturers
operating in the aluminium sector; however, much has yet to be done in
order to allow the market to reach the levels witnessed only two years
ago. Indeed, BMI does not believe there will be a return to
pre-recession levels of steel output in the short-term, with some
capacity likely to come offline permanently. However, in the steel
industry, the impact of US Steel’s controversial ongoing shut-downs
should be offset in whole or in part by Essar Steel’s investment in its
Algoma facility. Here, one blast furnace has already been brought up to
operational capacity of 2mn tonnes per annum (tpa), and a second furnace
is due to come online when the steelmaker judges that the North American
market has returned to normal. As such, crude and hot-rolled output will
not return to pre-recession levels until around 2014.
Over the January-July period, Canadian crude steel output was up 56.2%
y-o-y to 7.44mn tonnes, with monthly output consistently above 1mn
tonnes until July, when it fell to 975,000 tonnes, the lowest level
since November 2009. However, capacity utilisation remains at around
75-80% and BMI believes the situation will not change significantly over
H210, with the automotive and construction industries unlikely to rally
any further. Nevertheless, this should be enough to bring total crude
output to 12.94mn tonnes, up 15.6% y-o-y and an upwards revision from
the 10.3mn tonnes we forecast in the previous quarter.
A demand recovery is coming sooner than we had anticipated, as we expect
apparent finished steel consumption to reach 12.50mn tonnes in 2010.
Canadian steel product shipments grew 17.8% y-o-y in August to 489,600
tonnes, bringing the total for the first eight months to 3.8mn tonnes,
up 15.5% y-o-y. Month-end steel product inventories totalled 1.3mn
tonnes, up by 33.8% y-o-y and equal to 2.6 months supply.
Aluminium is likely to follow a similar trend. In August, Canadian
metals service centre shipments rose 11.3% y-o-y to 11,300 tonnes of
aluminium products, according to the Metal Service Center Institutes
Metals Activity Report. This brought shipments for the first eight
months of the year to 89,800 tonnes, up 5.6% y-o-y. Inventories at the
end of July were up 7.5% y-o-y to 31,700 tonnes, equal to 2.8 month
supply at current shipping rates. However, 2011 should mark a slowdown
in growth before a further surge in 2012, as the anticipated slowdown in
the US economy has knock-on effects on the Canadian industry.
We have revised up our forecasts for Canadian private consumption, as
the consumer has proven extraordinarily resilient, despite external
headwinds emanating from the US. Our real private consumption forecast
has been revised up substantially for 2010, to 3.3% from 2.7%. Again,
this would put the Canadian economy at the top among major developed
states. As such, we have upgraded our finished steel consumption growth
forecast from 31.6% to 36.5%, offsetting most of the 40.6% contraction
in 2009. However, with a slowdown in 2011, it will take until 2012 at
least until consumption levels return to near the levels seen before the
A chief concern for the steel and aluminium industries is that growth in
Canadian consumption levels will translate into a concurrent rise in
demand from domestic manufacturing sectors. This could be offset by the
surge in imports from the US witnessed in 2010. At the same time,
exports are expected to cool in H210 and into 2011, suggesting that
Canadian metal service centres may not experience the strong growth seen
in the domestic market. Nevertheless, prospects look generally good as
Canada outpaces the US market over the short-to-medium term. The main
downside risk is the potential for a second global slowdown, which could
trigger a retrenchment among Canadian household spending and credit
Rio Tinto Alcan
US Steel Canada
For more information, visit http://www.researchandmarkets.com/research/812139/canada_metals_repo.