BASIC IRON AND STEEL IN ITALY – ANALYSIS
Headline
- Basic Fe and steel market in Italy grew by 1.1 % due to decelerate public presentation of automotive and building industries in Italy
- Number of constructing licenses issued for the building of new homes decreased by 35 % . Despite authorities inducements, farther diminished the market of basic Fe and steel merchandises in 2014
- A 3.4 % diminution in electricity monetary values for industrial users in Italy in 2013 additions fight of basic Fe and steel industry in the European Union market
- Ilva production works ( the chief Italian and European steel manufacturer ) closed due to suspected graft and consistent pollution transcending allowed and reported degrees
- Production of basic Fe and steel is expected to turn by CAGR of 4.
4 % during 2013-2019 driven by recovery automotive industry in Italy as building industry will be dawdling behind.
Market Tendency
- Basic Fe and steel market in Italy grew by 1.1 % to the entire value of EUR32.3 billion during 2013 and continued to turn by 1.7 % compared to 2013. The industry recorded fringy growing due to weak public presentation of automotive and building industries which are the chief purchasers of steel merchandises in Italy.
- Construction industry remained weak during the period of 2013 – 2014. Employee turnover in building sector continued to decreased by 8.8 % and 7.3 % consequently. Though the authorities abolished the IMU revenue enhancement ( Imposta Municipale Unica ) on first places from the start of 2014, the figure of constructing licenses issued for the building of new homes decreased to 53,463 in 2013 entering a 34.8 % diminution. Tight recognition conditions for houses and families, coupled with high uncertainness and new financial regulations aimed at cut downing revenue enhancement equivocation, acted as a retarding force on the building every bit good.
Contraction in building industry negatively affects the market size of basic Fe and steel in Italy.
- Automotive industry in Italy faced a lessening of 0.7 % to the value of EUR36.52 billion in 2013. The lessening was due to 3.3 % diminution in demand of vehicles in Italy in 2013 as exports increased by 5.2 % . Heavy revenue enhancement load and other operating costs led to increasing outsourcing of auto production to foreign states, such as Poland. As a consequence, vehicle production in measure in Italy declined by 2 % in 2013. Capacity use of vehicle production is already low, as FIAT utilizes 55 % of its capacity, Peugeot-Citroen – 66 % , Renault-Nissan – 77 % . Meanwhile, German vehicle manufacturers enjoyed over 80 % capacity use in 2013. Weak production of vehicles negatively affects the demand of basic Fe and steel in Italy.
- Monetary values in steel sector were under negative force per unit area due to increasing competition from China, worsening natural stuff costs every bit good as low demand growing caused by hapless macro-economic conditions and decelerate growing in Asia. Global export monetary values of HRC steel decreased by 7.4 % in 2013 though recovered by 3.3 % in 2014 to an mean monetary value of US $ 558.2 per metric ton. Market size of basic Fe and steel in Italy is negatively affected by lower steel monetary values as glut signifiers.
- Imports value of basic Fe and steel in Italy decreased by 2.3 % to the value of EUR16,273 million in 2013. Italy chiefly imports basic Fe, steel and ferro-alloys – primary merchandises that are used in farther fabrication procedure in order to do other merchandises. Basic Fe, steel and ferro-alloys imports declined by 2.1 % due to increased competition worldwide as China increases its exports of basic Fe and steel merchandises.
- Presently active antidumping responsibilities on Chinese wire rod were to run out on August 2014 when Eurofer ( European Steel Association ) filed a question. Eurofer suggested a charge of over 20 % for Chinese wire rod in order to protect EU manufacturers from dumping. The new question will protract the responsibility by about 15 months until the reply is given.
- To turn to the issues of fighting EU market of Fe and steel industry, an EU-wide program named Commission Communication Action Plan for a competitory and sustainable steel industry in Europe was created on June, 2013. Presently, the program is offering to cut down or take electricity feed-in duties related to renewable electricity on energy-intensive industries to do them more competitory internationally.
PRODUCTION TRENDS
- Italy hosts some of the biggest European steel bring forthing workss ; as a consequence Italian companies are to a great extent reliant on export and overall European demand of bargain. Basic Fe and steel production decreased by 3 % in 2013 and continued to fell by 0.2 % in 2014. The lessening was driven by worsening exports in 2013 as demand growing in domestic market slowed down to 1.1 % . During 2013, exports of steel production decreased by 9.8 % accounting for 52 % of turnover.
- Italian manufacturers of basic Fe and steel are confronting serious issues. Most production installations lack investings in new equipment that is more energy efficient and produces less pollution in the procedure and Italian steel production sites are oversized for current market construction. Due to fighting domestic demand and issues in the substructure, companies are depriving from steel industry, e.g. ThyssenKrupp is seeking to sell the largest chromium steel steel mill called Acciai Speciali Terni.
- Pollution is a serious issue in the industry as its decrease requires high investings though of import for companies runing in EU due to rigorous demands. Largest Italian steel manufacturer in Europe Ilva is under particular disposal for 36 month period, enabling the authorities to take control and guarantee execution of an environmental clean- up boulder clay August, 2013. Ilva Co is controlled by the regulations imposed by the AIA and affecting the governments of the Puglia part. All environmental cleansing plants will be about EUR2 billion and should be paid by Ilva.
- Corruptness in Italy plays a major function in comparing to other EU states. Harmonizing to corruptness perceptual experiences index, Italy ranks 69th out of 177. High corruptness degree in Italy affected the biggest steel manufacturer Ilva in instance of high environmental pollution of the Ilva works. Ilva’s executives paid payoffs to local politicians and concern people to conceal the pollution of the works. Harmonizing to wellness ministry figures, deceases from malignant neoplastic disease are 15 % above the national norm in the south part of Italy. Due to these grounds, Ilva closed its largest mill in July, 2013.
- Coal is a primary input in production of basic Fe and steel merchandises from Fe ore. Australian coal monetary values declined by 12 % in 2013 and 17 % in 2014 due to increasing supply of coal, decelerating down economic system growing in China and coal permutation by shale gas in US. Lower monetary values of coal relieve some force per unit area on costs of basic Fe and steel industry in Italy.
- Though mean one-year Fe ore monetary value increased by 5 % in the universe during 2013, its monetary value plummeted by 28 % to US $ 96.4 per metric ton in 2014. Iron ore monetary values decreased as three major Fe ore mineworkers Rio Tinto, BHP Billiton and Fortescue Metals Group increased ore supply. The new monetary value degree is expected to stay low, as these companies increased end product in response to high gross net income border of Fe ore production in their mines. In consequence, costs related to press ore is worsening, diminishing the force per unit area on basic Fe and steel industry in Italy.
- Meanwhile, costs related to refined crude oil merchandises are on diminution as manufacturer monetary value index of refined crude oil merchandises in Italy contracted by 3.8 % in 2013 and by 6.3 % in 2014. The monetary values decreased due to overcapacity and increasing large-scale refineries in states as US, China and Saudi Arabia. As a consequence competition in refined crude oil merchandises affected positively basic Fe and steel market as a lessening in production costs.
- Electricity monetary values in Italy for industrial users declined by 3.4 % in 2013 but still was one of the highest in Europe and reached EUR0.172 per kWh, while the mean monetary value in Europe was EUR0.126 per kWh. . Meanwhile, baseload electricity monetary value declined by 16.6 % in 2013 to EUR0.063 per kwh as supply of hydropower, solar and wind energy increased by 25 % , 11.1 % and 13.9 % in 2013. Production of electricity in thermic workss declined by 11.5 % and its portion declined to 66 % . The worsening natural gas monetary value besides had some influence on lower energy baseload monetary values as gas histories for 58 % of thermic electricity production in Italy. Contracting electricity monetary values relieved cost force per unit area though remained above norm EU level..
COMPETITIVE LANDSCAPE
- Gruppo Rivais an Italian steel manufacturer dwelling of two companies, Riva Acciaio and Ilva. This group works in the field of long rolled merchandises. In 2013 Production of Gruppo Riva was 2 % lower compared to 2012 making 7.6 million metric tons of steel in entire due to Ilva works closing. The works was partly closed in July 2013 after an enquiry into detrimental environmental studies that showed pollution rates of the works are systematically above the allowed norms. In the begining of 2015, Ilva SpA was declared bankrupt with about three billion euros in debt.
- Marcegaglia SpA, a subordinate of Marfin SRL, is an Italian company that produces basic Fe and steel. In the terminal of 2014, Marcegaglia sold its works in the Puglia part to the Otlec group. The company opened a new production line for insulated edifice panels in Pozzolo Formigaro, Italy in 2015.
- ThyssenKrupp is a German transnational corporation which consists of 670 companies worldwide. ThyssenKrupp’s merchandises range varies form machines and industrial services to steel production and ship building. Italy is the no. 5 foreign market for ThyssenKrupp. There are two chief subdivisions in Italy by ThyssenKrupp – Group Acciai Speciali Terni S.p.A and Berco S.p.A. In 2014, due to hard market environment and structural jobs, the company presented a restructuring program for unstained steel works Acciai Speciali Terni ( located in Italy ) that entailed cutting about 550 occupations and EUR100 million in one-year costs.
- Ferriere Nord SpA, a subordinate of Gruppo Pittini SpA. It is an Italian company engaged in fabrication of basic Fe and steel. Primary sites of operations are located in Italy. The company is centred on an electric discharge furnace, a peal factory for wire rod and another for reenforcing bars. Furthermore it is fitted with workss destined to the production of electro welded girders, meshes and reenforcing constructions for the edifice industry. In 2013, the Pittini Group increased its capacity by geting BSTG Drahtwaren Produktions- und Handels-GmbH workss names Linz and Graz in Austria and Hungary.
- Dalmine SpA a subordinate of Tenaris SA is an Italian company that manufactures steel seamless pipes for the mechanical, oil, chemical, and petrochemical industries, every bit good as for structural utilizations and energy production. The parent company employed 2,352 employees in Italy as of 2014 12 31. In 2013, the parent company, Ternium SA and Tecpetrol International SA announced that they have entered into a memoranda of understanding to jointly construct natural gas-fired electric power works in Mexico.
Prospects
- Production of basic Fe and steel is expected to turn by CAGR of 4.4 % during 2013-2019 period making a entire turnover of EUR36,856 million in 2019. The growing will chiefly be driven by recovery automotive industry in Italy as chances for building industry continues to be pessimistic.
- Production of motor vehicles, dawdlers and semi-trailers is expected to retrieve and turn by CAGR of 1.4 % during 2013-2019 period. The recovery of the industry will be driven by both domestic demand and particularly convalescent German and US markets that together histories for 28 % of Italian automotive exports. The restructuring of the vehicles production industry and investings in new theoretical accounts is besides expected to positively impact the automotive production industry in Italy increasing demand of basic Fe and steel during the prognosis period.
- Constructional industry in Italy is expected to go on contraction though at decelerating down gait and a negative CAGR of 2 % during 2013-2019. Newly established Renzi‘s reform programme might take to take down recognition spreads and might promote domestic houses to spread out and put in this sector. Uncertainty sing Italian labor market, high mortgage rates and the trouble households encounter acquiring recognition will go on to halter the public presentation of the residential lodging building sector over the forecast period. In consequence, demand growing from domestic building industry for basic Fe and steel is dubious.
- Decelerating down growing of Chinese economic system and steel ingestion created overcapacity in the universe negatively impacting monetary values as competition additions. The state of affairs negatively affects Italian manufacturers of basic Fe and steel as companies are holding issues to vie with Asiatic manufacturers due to pricier energy resources every bit good as higher environmental demands. Prevailing glut in the universe market will forestall monetary values to increase.
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