Germany Metals Report Q1 2012

The German steel market is losing momentum and steel-makers are likely to review their operations in the country over coming months, with the likelihood of temporary blast furnace closures and reduced output, according to this latest Germany Metals Report from BMI.
In January-August 2011 Germany's crude steel production reached 30.5mn tonnes, an increase of 2.8% year-on-year (y-o-y), according to Wirtschaftsvereinigung Stahl (WV Stahl), the German steel federation.
In H111 WV Stahl says the German steel industry was operating at over 90% capacity, with utilisation rates reaching 94% in June. In the first five months of 2011, flat steel output was up 6.1% y-o-y to 11.3mn tonnes and long steel was up 3.8% to 5.5mn tonnes. Overall, hot rolled production was up 5.3% y-o-y to 16.78mn tonnes. As a result, BMI has revised down its forecast for crude steel output for 2011 from 46mn tonnes to 44.0mn tonnes, representing growth of 0.5%. For 2012 output is forecast at 46.1mn tonnes, up 4.5%, while domestic finished steel consumption is set to rise 5.5% to 40.7mn tonnes.
One of the fastest growing steel-consuming segments has been the manufacture of machinery goods and tools. In Q211 order bookings in the German machine tool industry rose 83% y-o-y, according to the VDW. Domestic demand in Germany increased 72%, while export orders rose 88% y-o-y. For H111 as a whole demand increased 103% y-o-y, with domestic orders up 96% and exports up 107%. The domestic automotive industry and the Chinese market were the key growth drivers over the first six months of the year. Flats production was supported by a 6% y-o-y rise in German passenger car output to 3.4mn units, assisted by 6% growth in car exports to 2.6mn units and a 10% rise in new registrations to 1.8mn units. In contrast, growth in construction steel remained lacklustre with the total price-adjusted value of orders in the construction industry increasing by 4.2% y-o-y in H111 with order growth tailing off by the end of the period. As such, rebar output will grow by just 2.3% to 2.5mn tonnes.
The cooling of export markets as well as a slowdown in the domestic economy will mark a decline in H211 steel production. ArcelorMittal announced in September that it was planning to temporarily shut down its blast furnace at Eisenhüttenstadt due to the slowdown in demand. The company says it is aiming to closely follow market trends following the completion of restocking activities and expects a seasonal downturn in Q411.
The German steel market, which represented 26% of EU finished steel consumption in 2010, is pivotal to overall European steel production. Capacity constraints in H111 helped drive import growth, but the downturn in demand is likely to reverse this trend. However, the strength of the euro, which we have forecast up from an average value of US$1.35/EUR to US$1.43/EUR, should help limit the decline in imports. As currencies in Central and Eastern Europe will either keep pace with the euro or experience modest appreciation, the main beneficiaries of anticipated German import growth will be producers in Asia. In terms of trade for 2011, BMI estimates 7.0% growth in imports to 24.3mn tonnes and 9.9% growth in exports to 27.9mn tonnes, but a sharp downturn in trade in 2012 as a result of the slowdown that began in H211.

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Executive Summary 5
SWOT Analysis 7
Germany Political SWOT 7
Germany Economic SWOT 7
Germany Business Environment SWOT 8
Global Market Overview – Steel Forecast 9
Table: BMI’s Steel Forecast 9
Table: Steel Price Data 10
Commodities Forecast 15
Copper 15
Aluminium 16
Lead 17
Nickel 18
Tin 19
Zinc 20
Europe Overview 21
Forecast Scenario 25
Steel 25
Table: Germany's Steel Industry, 2009-2016 ('000 tonnes unless stated otherwise) 26
Aluminium 27
Table: Aluminium Production, 2009-2016 28
Table: Aluminium Demand, 2009-2016 30
Copper 30
Table: Copper Production, 2009-2016 31
Table: Copper Demand, 2009-2016 32
Lead 32
Table: Lead Production, 2009-2016 33
Table: Lead Consumption, 2009-2016 34
Macroeconomic Outlook 34
Table: Germany’s GDP By Expenditure – Current Prices Breakdown, 2008-2016 (EURbn, unless otherwise stated) 37
Competitive Landscape 38
Aluminium 38
Table: Aluminium Industry – Key Facilities 38
Steel 38
Table: Steel Industry –Key facilities 40
Company Profiles 41
ArcelorMittal 41
Norsk Aluminium 42
ThyssenKrupp AG 43
Global Assumptions 44
Table: Global Assumptions, 2009-2015 44
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y) 45
Table: Selected Developed Market Exchange Rates, 2010-2013 (average) 45
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average) 46
Developed States 46
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y) 47
Emerging Markets 47
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y) 48
Consensus 49
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y) 49
Country Snapshot: Germany Demographic Data 50
Section 1: Population 50
Table: Demographic Indicators, 2005-2030 50
Table: Rural/Urban Breakdown, 2005-2030 51
Section 2: Education And Healthcare 51
Table: Education, 2002-2005 51
Table: Vital Statistics, 2005-2030 51
Section 3: Labour Market And Spending Power 52
Table: Employment Indicators, 2001-2006 52
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