Boston, MA -- (ReleaseWire) -- 03/14/2014 -- An up-tick in Belgium's economic growth in 2014 is unlikely to filter down into the country's steel sector with the industry continuing to be hit by overcapacity coupled with sluggish demand deriving, in part, from weak growth across the region's automotive sector. The country's largest producer ArcelorMittal continues to downsize its Belgium operations, in favour of channelling investment to neighbouring regions, such as France.
Meanwhile recent calls to introduce subsidies to support the European steel industry have led to suggestions that the Belgian government may move to nationalise ArcelorMittal's steel operations in Liege.
Nationalisation may provide support for Belgium's steel sector which is being hit by flatlining demand from across the eurozone region, including from its main export market, Germany. Falling local demand has been exacerbated by an influx of cheap Chinese steel following increasing production from Chinese steel works leading to overcapacity.
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Pessimism surrounding future levels of demand across Europe has led to led to cut-backs being made by a number of the country's major steel producers including ArcelorMittal and Duferco. ArcellorMittal has pledged to keep its five core finishing lines open at Liege due to their ability to produce dedicated high quality products, which are still in demand within Europe. Meanwhile, the company has been looking for outside investment in the plant's additional facilities. Expected furnace closures by both companies mean that Belgium will not return to pre-crisis volumes of production even after a recovery in European demand. The BMI Q1 2014 report analyses the impact this will have on Belgian steel production as a whole.
BMI does not foresee significant improvement in demand over the coming months; EU automotive demand is set for another year of weak growth having suffered a contraction of 5.2% year-on-year (y-o-y) during the first eight months of 2013.
- We are forecasting negative growth in Belgium steel production over the medium term. Output is set to decrease by 2% y-o-y in 2014 to 6.98mnt.
- Crude steel consumption is also expected to contract and will remain below 5mnt during the remainder of our forecast period. An average decline of 0.1% y-o-y is expected over 2013-2017 with consumption falling to 4.6mnt by the end of our forecast period
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