Forecast Report on Metals Industry in Italy

Research and Markets (http://www.researchandmarkets.com/research/83503c/italy_metals_repor) has announced the addition of the "Italy Metals Report Q3 2010" report to their offering.

The Italy Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Italy's metals industry.

Italian aluminium and steel industries showed a strong recovery in output in H110, but BMI warns that production is vulnerable to a double-dip recession and the impact of austerity measures in domestic and EU markets, while competitiveness outside the EU has weakened.

In Q110, crude steel output grew 30.8% year-on-year (y-o-y) and 15.5% quarter-on-quarter (q-o-q) to 6.42mn tonnes, with March output the highest level since October 2008 at 2.38mn tonnes, according to data from the World Steel Association (WSA). However, capacity utilisation is still barely above 80%, indicating that the Italian steel industry has some way to go before it returns to pre-recession levels. The Italian steel producers association Federacciai reported that Italy's steel product imports from countries outside the EU reached 1.86mn tonnes in Q110, up 7.1% y-o-y, while its steel product exports excluding EU destinations totalled 1.21mn tonnes, up 8.5% y-o-y. Italy's semi-finished steel product imports from non-EU member states reached 774,000 tonnes, up by 18.9% y-o-y, while semi-finished steel product exports to non-EU countries amounted to 97,000 tonnes, up 10.2% y-o-y. The situation was markedly different in the various market segments. In Q110, Italy's non-EU imports of long products decreased by 23.4% y-o-y to 141,000 tonnes, while its long product exports to these countries fell 25.5% y-o-y to 312,000 tonnes. At the same time, Italy's flat product imports from non-EU countries reached 847,000 tonnes, up by 11% y-o-y, while its flat product exports to non EU countries soared 87.2% y-o-y to 481,000 tonnes.

BMI expects that strong growth seen in H110 will diminish in H210, due in part to base effects. However, growth will slow in 2011 as the European economy struggles under the weight of austerity measures and the distinct probability of a slowdown or lapse into a second recession, although it will not be as deep or prolonged as the one witnessed in 2009. Another surge in output is likely in 2012 amid another recovery that will return the industry to pre-recession rates of crude production of around 28- 29mn tonnes per annum (tpa). Meanwhile, hot rolled output will reach around 31mn tonnes by 2014, close to pre-recession levels. The low long-term growth rate also makes it relatively easy for the Italian economy to outperform on a national basis.

Primary aluminium production has pulled back from the brink, although it is uncertain whether primary smelting still has a future in Italy. Alcoa, the country's only primary aluminium producer, had threatened to pull out of Italy due to high costs, disputes over subsidies and loss-making at its two smelting operations. The European Commission had demanded that Alcoa repay US$300mn in Italian government aid, prompting Alcoa to threaten a complete withdrawal from Italy. Alcoa indicated in May 2010 that it would curtail production at its 44,000tpa Fusina smelter near Venice, but would not close it down as it had previously threatened to do. The move came as the EU and the Italian government moved closer to resolving a dispute over electricity power supply and subsidies to the plant. Alcoa has also called for a three-year investment and restructuring plan costing EUR30mn for its Portovesme smelter on the island of Sardinia, which it had also threatened to close if the EU followed through on its demand Alcoa repay government subsidies it received since 2006.

Although BMI forecasts a 35% increase in primary aluminium output in 2010 to over 121,300 tonnes, Italy's total smelter operation rates will still be little more than 60% and it could take until 2012 before smelting operations become commercially viable to run at full capacity. There is a strong likelihood that the Fusina smelter will be closed as part of Alcoa's restructuring of operations in Italy, in which case the country will be left with just one smelter with capacity of 150,000tpa. However, with aluminium prices expected to be in the US$2,100-2,200 range in 2010-11, Alcoa should be able to secure an average premium of 5-10% over costs, making its Italian operations commercially viable provided markets remain sufficiently tight. However, such developments all depend on the effects of austerity measures on aluminium-consuming industries.

Key Topics Covered:

• SWOT Analysis
• Global Overview
• Quarterly Metals Views, July 2010
• Table: BMI's Core Views For The Metals Industry
• Table: World's Top 10 Steel Producing Countries (mn tonnes)
• Table: Recently Added And Planned Smelter Capacity
• Commodities Forecast Nickel To Average US$22,000/tonne In 2010
• Table: BMI Nickel Forecast
• Table: Nickel
• Market Strategy Aluminium Update: Downside Risks To Average Price of US$2,100/tonne In 2010
• Table: BMI Aluminium Forecast
• Table: Aluminium
• Commodities Forecast Gold To Average US$1,150/oz In 2010
• Table: BMI Gold Forecast
• Table: Gold
• Table: BMI Copper Forecast
• Table: Copper
• Regional Overview
• Forecast Scenario
• Table: Italy's Metals Industry, Historical Data and Forecast (000 tonnes unless stated)
• Macroeconomic Outlook
• Table: Italy Economic Activity
• Competitive Landscape
• Company Profiles
• Global Assumptions
• Table: Global & Regional Real Gdp Growth (%)
• Table: Real Gdp Growth (%) Consensus Forecasts
• Table: Global Assumptions
• Table: Developed States, Real Gdp Growth Forecasts
• Table: Emerging Markets Aggregate Growth

Companies Mentioned:

• Sapa Profili
• Gruppo Riva