BMI''s Italy Metals Report for Q4 2012 examines the causes of the sudden slowdown in the Italian steel
industry in H212 and examines whether the country will regain the volumes it reported before the 2008
financial crisis. The report examines how metals producers are responding to the challenges posed by an
increasingly precarious external macroeconomic environment. These challenges have affected exports
and had an impact on the Italian consumer. The report considers these issues and also assesses the ability
of producers and exporters to realise returns in the short term.
In the first seven months of 2012, Italian crude steel output fell 0.7% y-o-y to 17.3mn tonnes (mnt), a rate
of decline far lower than the EU rate of -4.6%. Italy retained its position as the EU''s second largest
steelmaking country with a 16.7% share of production. According to the Italian steel producers''
association Federacciai, in H112 Italy''s steel imports totalled 7.42mnt, down 27.4% y-o-y, while its steel
exports totalled 9.92mnt, up 10.3% y-o-y.
The main problems Italy will face over our forecast period are similar to those seen over the past 20
years: low business productivity; insufficient investment in high technology industries; disadvantageous
demographics; and of course the labour market. A significant downside risk is the rising cost of
electricity. With two-thirds of Italian crude steel output produced by electric arc furnaces, compared to
25-40% in other major steel producing nations in Western Europe, margins are under greater threat.
The cost of energy has also impacted negatively on the aluminium industry with Alcoa planning to take
offline its loss-making 150,000tpa Portovesme aluminium smelter by end-October if no buyers are found.
Glencore, Klesch and wind energy company KiteGen showed interest in acquiring the Portovesme
smelter in September 2012.
Over the last quarter BMI has revised the following forecasts/views:
The contraction in economic activity, particularly in the industrial sector, confirms BMI''s
domestic crude steel consumption forecast of -8% growth to 30.3mnt in 2012.
The unexpected closure of the Ilva steel plant at Taranto was closed in August 2012 under a
court order due to emissions has taken offline 30% of Italian capacity. As such, the closure has a
major impact on BMI''s forecast for 2012 output with the growth output revised down from -3%
to -11%. Assuming that it will only be in partial operation over the medium term, BMI has made
a downward revision to its 2016 forecast from 30.7mnt to 25.7mnt.
Italy Metals Report Q4 2012
© Business Monitor International Ltd Page 6
In the event of no sale, the closure of the Portovesme smelter would undermine the
competitiveness of downstream aluminium alloy and metal works industries, which will be
reliant on foreign producers for supplies due to the lack of primary metal.
Italy Metals Industry
Table of Contents
Executive Summary 5
SWOT Analysis ... 7
Italy Business Environment SWOT 7
Europe Metals Overview 8
Steel ... 8
Aluminium 11
Industry Forecast.. 13
Steel . 13
Table: Italy – Steel Production & Consumption (''000 tonnes, unless stated otherwise)... 15
Table: Italy – Steel Industry Historical Data (''000 tonnes, unless stated otherwise) ... 15
Aluminium 16
Table: Italy – Aluminium Production & Consumption (''000 tonnes, unless stated otherwise). 17
Macroeconomic Outlook.. 18
Fiscal Retrenchment To Drive Recession 18
Table: Italy – GDP By Expenditure (Real Growth %) 20
Commodities Forecast . 21
Steel Price Forecast – Steel To Average US$360/tonne In 2013.. 21
Table: Steel Forecast .. 21
Table: Global Steel Forecasts. 27
Commodity Strategy – Monthly Metals Update 27
Aluminium: Support At US$1,800/tonne Likely To Hold. 29
Copper: Relative Outperformer But Still Weak... 31
Iron Ore: Don''t Bet On A Sustainable Recovery. 33
Lead: Potential For Short-Term Rally 35
Nickel: No Turnaround Coming.. 36
Steel: More Pain Ahead .. 37
Tin To Outperform.. 38
Zinc: Little Room For Optimism. 40
Table: Select Commodities – Performance & BMI Forecasts. 41
Competitive Landscape ... 42
Company Profiles . 43
Alcoa... 43
Financial Data 46
Table: Alcoa – Financial Data 46
BMI Methodology.. 47
How We Generate Our Industry Forecasts . 47
Cross Checks .. 47Table: Italy – Steel Production & Consumption ('' tonnes, unless stated otherwise)
Table: Italy – Steel Industry Historical Data ('' tonnes, unless stated otherwise)
Table: Italy – Aluminium Production & Consumption ('' tonnes, unless stated otherwise)
Table: Italy – GDP By Expenditure (Real Growth %)
Table: Steel Forecast
Table: Global Steel Forecasts
Table: Select Commodities – Performance & BMI Forecasts
Table: Alcoa – Financial Data
industry in H212 and examines whether the country will regain the volumes it reported before the 2008
financial crisis. The report examines how metals producers are responding to the challenges posed by an
increasingly precarious external macroeconomic environment. These challenges have affected exports
and had an impact on the Italian consumer. The report considers these issues and also assesses the ability
of producers and exporters to realise returns in the short term.
In the first seven months of 2012, Italian crude steel output fell 0.7% y-o-y to 17.3mn tonnes (mnt), a rate
of decline far lower than the EU rate of -4.6%. Italy retained its position as the EU''s second largest
steelmaking country with a 16.7% share of production. According to the Italian steel producers''
association Federacciai, in H112 Italy''s steel imports totalled 7.42mnt, down 27.4% y-o-y, while its steel
exports totalled 9.92mnt, up 10.3% y-o-y.
The main problems Italy will face over our forecast period are similar to those seen over the past 20
years: low business productivity; insufficient investment in high technology industries; disadvantageous
demographics; and of course the labour market. A significant downside risk is the rising cost of
electricity. With two-thirds of Italian crude steel output produced by electric arc furnaces, compared to
25-40% in other major steel producing nations in Western Europe, margins are under greater threat.
The cost of energy has also impacted negatively on the aluminium industry with Alcoa planning to take
offline its loss-making 150,000tpa Portovesme aluminium smelter by end-October if no buyers are found.
Glencore, Klesch and wind energy company KiteGen showed interest in acquiring the Portovesme
smelter in September 2012.
Over the last quarter BMI has revised the following forecasts/views:
The contraction in economic activity, particularly in the industrial sector, confirms BMI''s
domestic crude steel consumption forecast of -8% growth to 30.3mnt in 2012.
The unexpected closure of the Ilva steel plant at Taranto was closed in August 2012 under a
court order due to emissions has taken offline 30% of Italian capacity. As such, the closure has a
major impact on BMI''s forecast for 2012 output with the growth output revised down from -3%
to -11%. Assuming that it will only be in partial operation over the medium term, BMI has made
a downward revision to its 2016 forecast from 30.7mnt to 25.7mnt.
Italy Metals Report Q4 2012
© Business Monitor International Ltd Page 6
In the event of no sale, the closure of the Portovesme smelter would undermine the
competitiveness of downstream aluminium alloy and metal works industries, which will be
reliant on foreign producers for supplies due to the lack of primary metal.
Italy Metals Industry
Published: October
2012 No. of Pages: 48 Price: US $ 1175
Table of Contents
Executive Summary 5
SWOT Analysis ... 7
Italy Business Environment SWOT 7
Europe Metals Overview 8
Steel ... 8
Aluminium 11
Industry Forecast.. 13
Steel . 13
Table: Italy – Steel Production & Consumption (''000 tonnes, unless stated otherwise)... 15
Table: Italy – Steel Industry Historical Data (''000 tonnes, unless stated otherwise) ... 15
Aluminium 16
Table: Italy – Aluminium Production & Consumption (''000 tonnes, unless stated otherwise). 17
Macroeconomic Outlook.. 18
Fiscal Retrenchment To Drive Recession 18
Table: Italy – GDP By Expenditure (Real Growth %) 20
Commodities Forecast . 21
Steel Price Forecast – Steel To Average US$360/tonne In 2013.. 21
Table: Steel Forecast .. 21
Table: Global Steel Forecasts. 27
Commodity Strategy – Monthly Metals Update 27
Aluminium: Support At US$1,800/tonne Likely To Hold. 29
Copper: Relative Outperformer But Still Weak... 31
Iron Ore: Don''t Bet On A Sustainable Recovery. 33
Lead: Potential For Short-Term Rally 35
Nickel: No Turnaround Coming.. 36
Steel: More Pain Ahead .. 37
Tin To Outperform.. 38
Zinc: Little Room For Optimism. 40
Table: Select Commodities – Performance & BMI Forecasts. 41
Competitive Landscape ... 42
Company Profiles . 43
Alcoa... 43
Financial Data 46
Table: Alcoa – Financial Data 46
BMI Methodology.. 47
How We Generate Our Industry Forecasts . 47
Cross Checks .. 47Table: Italy – Steel Production & Consumption ('' tonnes, unless stated otherwise)
Table: Italy – Steel Industry Historical Data ('' tonnes, unless stated otherwise)
Table: Italy – Aluminium Production & Consumption ('' tonnes, unless stated otherwise)
Table: Italy – GDP By Expenditure (Real Growth %)
Table: Steel Forecast
Table: Global Steel Forecasts
Table: Select Commodities – Performance & BMI Forecasts
Table: Alcoa – Financial Data
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