This report covers the developments in Romania’s iron and steel industry in the first half of 2014 – plus revised 2013 data. Key statistics data up to June 2013 for part of the indicators are analysed. A summarisation of the current market trends is included, as well as a long-term QuERI forecast by 2025.

The broad picture for Romania’s steel industry has not changed dramatically since our previous report eight months ago [February 2014], and shares pretty much the same patterns with the European steel industry: the high energy prices remain the main issue faced by local companies. While in Europe on average domestic demand is expected to rise moderately this year, domestic demand in Romania remains volatile and features definitely no upward pattern; the external drivers remain critical for overall demand. Indeed, the domestic sales of iron and steel processed goods increased in H1 of 2014 by 6% y/y after but this occurred after 8% contraction in 2013.

SEPARATE DYNAMICS FOR INDUSTRY’S TWO LEVELS. The two levels of the local steel industry – raw steel production and steel processing, evolve along very different patterns: while the steel making loses ground pressured by high energy prices, more value-added segments in the steel processing are doing much better.

Key Points:
• Industrial output in metal production eases by 9% y/y in 2013 and loses further ground by 1% y/y in H1, 2014.
• Industrial output in metal processing segment increases by 3% y/y in 2013, despite the 2% contraction in sales. The differential has been driven by a combination of inventory build-up and prices declining -- most likely on the domestic market, following weak demand;
• Later in 2014, H1, output expanded even stronger, by 5% y/y, while the companies’ turnover has recovered robustly by 10% y/y.
• Output of crude steel down some 10% y/y to 3.06mn tonnes in 2013 from 3.42mn tonnes in 2012 and around 6.2mn tonnes in 2005-2007; H1, 2014 brings further decrease
• Domestic demand for raw steel goods [intake] contracts by 12% y/y to 3.72mn tonnes in 2013; recovers partly by 9% y/y in H1, 2014
• Quarterly exports of iron&steel products above EUR 400mn in Q2, 2014 – the highest level in past decade, one third above Q2/08 peak level and double Q2/09 level