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Italy Metals Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7369 Description The Italian metallurgical industry is facing a deep crisis that showed no signs of ending in H109, due to acollapse in the credit market and its impact on the key automotive and construction markets. BMI’s ItalyMetals Report forecasts steel output falling by more than a third in 2009.In the first five months of 2009, Italy’s crude steel output fell 43% year-on-year (y-o-y) to 8.09mn tonnes.Monthly output averaged around 1.62mn tonnes. There was very little sign of recovery in demand withany increases related to buyers restocking inventories. Further down the production chain, steel product manufacturers have been radically cutting output amidplummeting orders. Flat product orders had almost dried up in H109 and longs were also struggling as thesteel industry experienced a stronger than expected fall in demand. For example, Q2 output from tubemanufacturerCapello Tubi was as low as Q1, when shipments were cut by 30%. Its quarterly weldedtube production is expected to remain at around 35,000 tonnes until the end of 2009, operating at around70% capacity. There was also no sign of recovery in the plate market with prices falling below EUR400per tonne and purchases said to be small in quantity. Manufacturer surveys revealed that there was littleanticipation of a rebound in the plate market any time before end-2009. BMI forecasts crude steel output of 19.64mn tonnes in 2009, down 35% y-o-y. Output is expected toremain at an average of just over 1.6mn tonnes. Although a seasonal downturn is expected in August, themarket is already bouncing along the bottom of a trough and no significant further downturn is expectedin H209. The domestic metals market is being dragged down by a sharp recession. BMI forecasts Italy’seconomy will contract by 3.9% this year, which is greater than the expected 3.6% decline in eurozone realGDP volumes. The prolonged nature of the decline in business confidence is likely to mean that there willbe no early let-up for investment spending, and is likely in turn to result in a sustained reduction in metalspurchases, as well as a proliferation of smaller purchases for the sake of maintaining stocks and keepingcosts down. In February 2009, Prime Minister Silvio Berlusconi announced EUR2bn in incentives for the car andhome appliance industries in an effort to revive production. BMI does not believe this will have a majoreffect, even if it achieves its intended results. It will take until the end of 2009 for steel producers tocompletely destock their finished products and raw materials reserves, having built up a high level ofinventories at a time of sharply falling demand in Q408. Even if the automotive industry begins its revivalin H209, carmakers such as Fiat have closed their contracts for the year, which means steelmakers willneed to clear their inventories by seeking alternative markets. Table of Contents
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