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Sweden Metals Report Q2 2012 Published : June 2012

No. of Pages : 45

Price:US$1175

The outlook for the Swedish steel industry looks favourable compared to the rest of Europe in 2012, but challenges facing the European automotive industry pose a major downside risk, according to BMI’s latest Sweden Metals Report. In 2011 Swedish crude steel output grew 0.5% y-o-y to 4.89mn tonnes. This follows 72.7% growth in 2010. Monthly output returned to pre-recession norms in H111, but dropped off in H211 as export performance declined and capacity utilisation was reduced. In H211, output was down 8.7% y-o-y and down 25.4% compared to H111. Domestic consumption also showed signs of softening. Consumption grew 5% to 3.8mn tonnes in 2011. Meanwhile, import growth was 1.6 to 3.9mn tonnes. Sweden’s exports were estimated at 3.93mnt (up 8%) in 2011. In February 2012, SSAB decided to postpone the restart of one of its three blast furnaces in Sweden due to weak market conditions. One of two blast furnaces in Oxelsoeund was shut down in mid-2011 for relining, which was completed by October. SSAB said it was monitoring the market on a weekly basis and would only bring the furnace back online when prices had improved. It had built up inventories of steel slab before the furnace was shut down, but as these stocks were depleted it increased production at its Lulea blast furnace. SSAB’s Swedish operations were working at about 75% in Q112, up from 70% in H211. This helped raise monthly output to the 400,000-420,000 tonnes range, up from an average of 370,000 tonnes in Q411. Increased production at SSAB, even without the resumption of activities at the blast furnace at Oxelsoeund, should help Sweden raise production by 2% to 4.42mn tonnes. However, there are considerable downside risks. With 60% of total production comprised of alloyed steel, including stainless, the sector is likely to be heavily influenced by the trends in the automotive industry. The eurozone debt crisis is set to knock demand for vehicles in the EU and Swedish steel will have to find new routes to market. At present, we are forecasting 2.2% growth in domestic finished steel consumption to 3.88mn tonnes and 4.4% growth in exports of semi-finished and finished steel to 4.11mn tonnes. If achieved, this would mean that Sweden would be one of the few major steelmaking countries to buck the EU trend, but risks are heavily to the downside. A wind-down of inventory restocking, tightening government spending and base effects following the post-recession capital investment boom will all contribute to a deceleration in the Swedish metals industry. We stress though, that Sweden will remain one of the fastest growing economies in Western Europe through the long term, with a sustainable growth model and limited macroeconomic risks. Sweden Metal Industry Q2 2012 Table of Contents Executive Summary . 5 SWOT Analysis 6 Sweden Political SWOT . 6 Sweden Economic SWOT ... 6 Sweden Business Environment SWOT 7 Global Market Overview .. 8 Steel Market 8 Table: BMI’s Steel Forecasts . 8 Table: Steel Products And Inputs – Price Data 11


Commodities Forecast .. 11 Gold . 11 Copper . 12 Aluminium 13 Lead . 14 Nickel ... 15 Tin 15 Zinc .. 16 Europe Overview ... 18 Forecast Scenario .. 23 Table: Sweden’s Steel Industry, 2009-2016 (‘000 tonnes unless stated) .. 24 Macroeconomic Outlook .. 25 Table: Sweden –Contribution To GDP Growth By Expenditure, 2009-2016 ... 28 Competitive Landscape 29 Table: Swedish Steel Capacity, 2007 ... 29 Table: Main Steel Producers In Sweden .. 30 Company Profiles .. 31 Outokumpu ... 31 Ovako ... 31 RUSAL . 32 Sandvik Materials Technology (SMT) .. 32 SSAB 33 Global Assumptions, Q212 ... 34 Table: Global Assumptions, 2010-2016 ... 34 Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y) ... 35 Table: Developed Market Exchange Rates, 2011-2013 ... 35 Table: Emerging Market Exchange Rates, 2010-2013 . 36 Developed States .. 36 Table: Developed States – Real GDP Growth, 2010-2013 .. 36 Emerging Markets 37 Table: Emerging Markets – Real GDP Growth. 2010-2013 38 Consensus 39 Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%) 39 Country Snapshot: Sweden Demographic Data . 40 Section 1: Population ... 40 Table: Demographic Indicators, 2005-2030 40 Table: Rural/Urban Breakdown, 2005-2030 41 Section 2: Education And Healthcare .. 41 Table: Education, 2002-2005 ... 41 Table: Vital Statistics, 2005-2030 41 Section 3: Labour Market And Spending Power .. 42 Table: Employment Indicators, 2001-2006 .. 42 Table: Consumer Expenditure, 2000-2012 (US$) 42 Table: Average Annual Wages, 2000-2012 .. 43 BMI Methodology ... 44 How We Generate Our Industry Forecasts .. 44 Cross Checks ... 44 Table: BMI's Steel Forecasts . 8 Table: Steel Products And Inputs – Price Data . 11 Table: Sweden's Steel Industry, 2009-2016 (‘000 tonnes unless stated) . 24 Table: Sweden –Contribution To GDP Growth By Expenditure, 2009-2016 . 28 Table: Swedish Steel Capacity, 2007 . 29 Table: Main Steel Producers In Sweden . 30 Table: Global Assumptions, 2010-2016 . 34 Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y) . 35 Table: Developed Market Exchange Rates, 2011-2013 . 35


Table: Emerging Market Exchange Rates, 2010-2013 . 36 Table: Developed States – Real GDP Growth, 2010-2013 . 36 Table: Emerging Markets – Real GDP Growth. 2010-2013 . 38 Table: BMI And Bloomberg Consensus Real GDP Growth Forecasts, 2011 And 2012 (%) . 39 Table: Demographic Indicators, 2005-2030 . 40 Table: Rural/Urban Breakdown, 2005-2030 . 41 Table: Education, 2002-2005 . 41 Table: Vital Statistics, 2005-2030 . 41 Table: Employment Indicators, 2001-2006 . 42 Table: Consumer Expenditure, 2000-2012 (US$) . 42 Table: Average Annual Wages, 2000-2012 . 43


Sweden Metals Report Q2 2012