Canada Metals Report Q4 2010: New research report available at Fast Market Research

Nov. 5, 2010 - PRLog -- The Canadian steel industry will emerge from the current crisis increasingly focused on the emerging economies for growth prospects, according to this latest Canada Metals Report from BMI.

Rising automotive sales within the North American market, coupled with increasingly stringent import and export laws over the last quarter, will certainly aid in easing the pressure for Canadian manufacturers operating in the aluminium sector; however, much has yet to be done in order to allow the market to reach the levels witnessed only two years ago. Indeed, BMI does not believe there will be a return to prerecession levels of steel output in the short-term, with some capacity likely to come offline permanently. However, in the steel industry, the impact of US Steel's controversial ongoing shut-downs should be offset in whole or in part by Essar Steel's investment in its Algoma facility. Here, one blast furnace has already been brought up to operational capacity of 2mn tonnes per annum (tpa), and a second furnace is due to come online when the steelmaker judges that the North American market has returned to normal. As such, crude and hot-rolled output will not return to pre-recession levels until around 2014.

Over the January-July period, Canadian crude steel output was up 56.2% y-o-y to 7.44mn tonnes, with monthly output consistently above 1mn tonnes until July, when it fell to 975,000 tonnes, the lowest level since November 2009. However, capacity utilisation remains at around 75-80% and BMI believes the situation will not change significantly over H210, with the automotive and construction industries unlikely to rally any further. Nevertheless, this should be enough to bring total crude output to 12.94mn tonnes, up 15.6% y-o-y and an upwards revision from the 10.3mn tonnes we forecast in the previous quarter.

A demand recovery is coming sooner than we had anticipated, as we expect apparent finished steel consumption to reach 12.50mn tonnes in 2010. Canadian steel product shipments grew 17.8% y-o-y in August to 489,600 tonnes, bringing for total for the first eight months to 3.8mn tonnes, up 15.5% y-o-y. Month-end steel product inventories totalled 1.3mn tonnes, up by 33.8% y-o-y and equal to 2.6 months supply.

Aluminium is likely to follow a similar trend. In August, Canadian metals service centre shipments rose 11.3%y-o-y to 11,300 tonnes of aluminium products, according to the Metal Service Center Institute's Metals Activity Report. This brought shipments for the first eight months of the year to 89,800 tonnes, up 5.6% y-o-y. Inventories at the end of July were up 7.5% y-o-y to 31,700 tonnes, equal to 2.8 month supply at current shipping rates. However, 2011 should mark a slowdown in growth before a further surge in 2012, as the anticipated slowdown in the US economy has knock-on effects on the Canadian industry.

We have revised up our forecasts for Canadian private consumption, as the consumer has proven extraordinarily resilient, despite external headwinds emanating from the US. Our real private consumption forecast has been revised up substantially for 2010, to 3.3% from 2.7%. Again, this would put the Canadian economy at the top among major developed states. As such, we have upgraded our finished steel consumption growth forecast from 31.6% to 36.5%, offsetting most of the 40.6% contraction in 2009. However, with a slowdown in 2011, it will take until 2012 at least until consumption levels return to near the levels seen before the recession.

A chief concern for the steel and aluminium industries is that growth in Canadian consumption levels will translate into a concurrent rise in demand from domestic manufacturing sectors. This could be offset by the surge in imports from the US witnessed in 2010. At the same time, exports are expected to cool in H210 and into 2011, suggesting that Canadian metal service centres may not experience the strong growth seen in the domestic market. Nevertheless, prospects look generally good as Canada outpaces the US market over the short-to-medium term. The main downside risk is the potential for a second global slowdown, which could trigger a retrenchment among Canadian household spending and credit demand.

For more information or to purchase this report, go to:
-  http://www.fastmr.com/prod/90378_canada_metals_report_q4_...

Report Table of Contents:

Executive Summary
SWOT Analysis
- Canada Political SWOT
- Canada Economic SWOT
Global Market Overview
- Table: World's Top 10 Steel Producing Countries
- Table: Recent And New Smelter Capacity
Commodities Forecast
- Nickel
- Table: BMI's Nickel Forecasts
- Table: Nickel, 2005-2011
- Aluminium
- Table: BMI's Aluminium Forecasts
- Table: Aluminium, 2005-2011
- Copper
- Table: BMI's Copper Forecasts
- Table: Copper, 2005-2011
Forecast Scenario
- Table: Canada's Metals Industry ('000 tonnes unless stated)
Economic Activity
- Consumer Strong, But US Presents Headwinds
- Table: Canada - Economic Activity
- Table: Canada - GDP Contribution To Growth
Competitive Landscape
- Steel
- Aluminium
- Table: Canadian Aluminium Smelters
- Trade Relations with the US
Company Profiles
- Rio Tinto Alcan
- ArcelorMittal Dofasco
- US Steel Canada
Global Assumptions - Q4 2010 Update
- Table: Global Assumptions
- Table: Global & Regional Real GDP Growth
- Table: Consensus Forecasts
- Table: Developed States, Real Gdp Growth Forecast
- Table: Emerging Markets Aggregate Growth
Country Snapshot: Canada Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2000-2003
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Manufactuing Wages, 2000-2012
BMI Methodology
- How We Generate Our Industry Forecasts
- Cross Checks

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