Market Report, "Canada Metals Report Q3 2011", published

Fast Market Research recommends "Canada Metals Report Q3 2011" from Business Monitor International, now available
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July 25, 2011 - PRLog -- Canadian metals production is failing to keep up with rising consumption due to capacity constraints caused by ongoing plant shut-downs, according to this latest Canada Metals Report from BMI.

In the first five months of 2011, Canadian crude steel output was down 0.5% year-on-year (y-o-y) to 5.36mn tonnes and over 15% down on pre-recession levels. Output has been dragged down by lockout at US Steel's Hamilton plant, which began in November 2010 over an industrial dispute relating to changes to employment contracts and pensions. The impact of US Steel's controversial and ongoing shut-downs has been 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 the North American market to have returned to normal. However, lay-offs announced in late 2010 due to bad market conditions indicate that the second furnace will not be restarted any time soon.

Full Report Details at

According to the Metals Service Centre Institute (MSCI), steel service centre shipments in Canada soared 14.1% y-o-y to 528,300 tonnes in May. Shipments over the first five months of 2011 were 2.7mn tonnes, up 14.4% y-o-y. Inventories were 1.54mn tonnes, up 10.4% y-o-y and the equivalent of 2.9 months supply at current shipping rates. In May, Canadian aluminium shipments totalled 12,500 tonnes, up 10.9% y-o-y. Shipments over January-May of 61,100 tonnes were up 9.1% y-o-y. Inventories at the end of May of 30,600 tonnes of aluminium were 6.9% down y-o-y and at current shipping rates equal to 2.5 months supply.

With average monthly production relatively unchanged for over a year, the Canadian steel industry seems to have reached a plateau and is unlikely to show significant growth in 2011 unless disputes surrounding US Steel's facilities in Canada are resolved. On this basis, BMI forecasts crude steel output growth of just 1.5% to 13.20mn tonnes and 4.1% growth in hot-rolled output to 13.13mn tonnes for 2011 as demand for value-added steel products grows. As such, crude and hot-rolled output will not return to pre-recession levels until around 2014-15.

The prospects for growth in metals consumption look positive. Canadian industries were operating at 79% production capacity in Q111, up 2.2 percentage points (pp) from Q110. Capacity use in manufacturing saw the largest y-o-y growth rate, rising 2.8pp to 79.7%. Capacity use rose in 18 of the 21 major manufacturing industries in the quarter, led by transportation equipment, machinery and fabricated metal products. Capacity use in the transportation equipment sector rose 3.7pp to 83.8%, led by demand for motor vehicles. In the fabricated metals industry, capacity use was 77.8% in Q111, up 2.8pp over Q410 and a 10pp rise over Q110.

The aluminium sector appears to be better placed for sustained growth over the medium term, due in part to tighter North American market conditions in the short term as well as investment in the long term. Rio Tinto's US$1bn expansion plan will upgrade its aluminium smelter operations in Canada. Rio will spend US$758mn on the first phase of a new aluminium plant in Quebec and has committed US$300mn to prepare for a larger US$2.5bn upgrade at the firm's Kitimat smelter in British Columbia. The first phase of the new plant in Saguenay-Lac-Saint-Jean, Quebec, will have 38 pots and a production capacity of 60,000tpa of aluminium by 2013, with possible future phases bringing capacity to 460,000tpa. According to Rio, metal output per pot at the plant will be 40% higher than at existing smelters. At Kitimat, Rio is preparing for a modernisation project that will increase the smelter's current production capacity by more than 48% to around 420,000tpa and will be powered by hydroelectricity, making it one of the lowest cost smelters in the world.

Report Table of Contents:

SWOT Analysis
- Canada Political SWOT
- Canada Economic SWOT
Global Market Overview
- Steel Forecast
- Steel to Average US$580/tonne In 2011
- BMI Steel Forecast
- Steel Prices
- Cost Push on The Supply Side
- Few Supply Constraints In Sight, For Now
Commodities Forecast
- Commodity Strategy - Metals Update
- Aluminium
- Copper
- Gold
- Lead
- Nickel
- Tin
- Zinc
Forecast Scenario
- Table: Canada's Metals Industry ('000 tonnes unless stated), 2008-2015
Economic Activity
- Canada - GDP Contribution to Growth
Competitive Landscape
- Steel
- Aluminium
- Table: Canadian Aluminium Smelters
- Trade Relations with the US
Company Profiles
- Rio Tinto Alcan
- ArcelorMittal Dofasco
- US Steel Canada
Global Assumptions, Q311
- Table: Global Assumptions, 2009-2015
- Table: Global And Regional Real GDP Growth, 2010-2013 (% change y-o-y)
- Table: Selected Exchange Rates, 2010-2013 (average)
- Developed States
- Table: Developed States' GDP Growth, 2010-2013 (% change y-o-y)
- Emerging Markets
- Table: Emerging Markets' GDP Growth, 2010-2013 (% change y-o-y)
- Consensus Forecasts
- Table: Bloomberg Consensus GDP Growth Forecasts, 2011-2012 (% change y-o-y)
Country Snapshot: Canada Demographic Data
- Section 1: Population
- Table: Demographic Indicators, 2005-2030
- Table: Rural/Urban Breakdown, 2005-2030
- Section 2: Education And Healthcare
- Table: Education, 2000-2003
- Table: Vital Statistics, 2005-2030
- Section 3: Labour Market And Spending Power
- Table: Employment Indicators, 2001-2006
- Table: Consumer Expenditure, 2000-2012 (US$)
- Table: Average Annual Manufactuing Wages, 2000-2012
BMI Methodology
- How We Generate Our Industry Forecasts
- Cross Checks

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Tags:Steel, Canadian, Aluminium, Supply, Inventories, Crude, Shipping, Shut-downs, Hot-rolled, Shipments
Industry:Industrial, Manufacturing, Energy
Location:Massachusetts - United States
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