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Netherlands Metals Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: July 2009 Product Code: R302-7370 Description Dutch steel and aluminium producers are experiencing a sharp downturn in demand amid theNetherlands’ economic crisis and are unlikely to return to pre-recession levels over the foreseeable future,according to BMI’s latest Netherlands Metals Report.In the first five months of 2009, Dutch crude steel output plummeted by 51% y-o-y to 1.59mn tonnes.This came on top of a 6.6% decline in output to 6.88mn tonnes in 2008. In Q209, the Netherlands slippeddeeper into recession but we see little prospect of a recovery until the beginning of 2010, at the earliest. Industrial production, exports and investment spending are feeling the brunt of the downturn at themoment, but with unemployment set to keep rising it is weak household spending that will drag therecession out into next year. Like elsewhere in Western Europe, the collapse in consumer confidence andspending power had the biggest impact on sales of large, durable goods, with sales of vehicles, homefurnishing and consumer electronics down sharply. The European market situation for flat products remained unchanged throughout H109, characterised byweak demand and destocking with buyers only purchasing for immediate needs. However, by mid-2009there were signs of price stability, indicating that the market had reached its bottom. Demand for longproducts has stabilised at a low level with stainless steel longs growing although prices are still underpressure in this segment. Demand for flats remains weak, with no significant improvement expected in2009 due in large part to the collapse in the automotive industry. BMI’s automotive team warns thatFrench auto production could continue to be eroded eastwards by companies moving operations tocheaper Eastern European bases, although the government’s five year loan to car makers and theconsequent car makers’ commitments will ensure that the fall in output is not too drastic. Nevertheless,production is likely to be mostly concentrated on small cars and to be limited to 1.90mn units by the endof 2013. This will in turn limit domestic demand for steel and aluminium flat products. As for theEuropean markets, the Western European automotive market contracted by at least 8% due to thefinancial crisis. Most other Western European markets have stagnated or fallen considerably as a result. Consequently, there is little sign of a revival in metals demand from this industry. All these factors are exerting a negative pull on the Dutch steel and aluminium industries and thereappears to be no sign of an upturn in output on the horizon. The metallurgical industry is strongly procyclical,with troughs and peaks running ahead of the economic trend. Bearing this in mind and based onthe trends observed in H109, crude steel output is forecast to fall 47% to 3.67mn tonnes, its worstperformance for decades, while hot rolled production is set to decline 43% to 3.49mn tonnes. Activitylevels in the housing market and levels of spending on consumer durables are likely to remain lowthrough 2009 due to anticipation of further falls in prices and tightening credit conditions, prompting asharp slowdown in domestic consumption of steel and aluminium. The long-term prospects for the Dutch steel industry are also poor, with output unlikely to return to prerecessionlevels over the next five years. BMI believes there is a distinct chance that some steel andaluminium capacity may be closed permanently. Meanwhile plans to raise annual capacity at theVlissingen aluminium smelter by 30,000 tonnes per annum (tpa) to 290,000tpa by the end of 2009 arelikely to be put on hold until the European market recovers to 2007 levels of demand. Table of Contents
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