This report covers the developments in Romania’s iron and steel industry in the second half of 2014 – plus early 2015. Industrial output is available for full 2014, foreign trade until November and detailed quarterly foreign trade for Q3, 2014 included. Based on available data, we have compiled detailed industry balances for the 12-month period ending September 2014.

The output of crude steel slightly recovered in 2014 by 6% y/y to 3.16mn tonnes – after it hit in 2013 the lowest post-crisis levels, except for 2009. For the 12-month period ending September 2014, crude steel output was only 2% up y/y to 3.10mn tonnes, while the growth accelerated to 7% y/y in Q4.

Apparent intake of raw steel goods increased by 6% y/y to 4.1mn tonnes for the 12-month period ending September 2014 (1mn tonnes from import, notably) and the apparent intake of finished steel increased by 3% to 3.8mn tonnes. The rise in finished steel use is notable amid the subdued investments, but it still lags 22% below the level of 2006 – before country’s EU accession and 33% below the peak level reached in 2007-2008. Assuming rising investments in 2015 (not yet confirmed by microeconomic evidences), the domestic demand should further strengthen.

Key Points:

• Output of crude steel, hot rolled goods virtually unchanged y/y in 12M to Sep-14
• Cruse steel output at 3.1mn tonnes, half of 6.2-6.3mn tonnes in 2005-2007; it stabilises, might rise moderately amid favourable energy regulations – but the future is still uncertain
• Use of raw steel products up 6% y/y to 4.1mn tonnes -- of which only 37% from local production and 1mn tonnes net imports. There is room for further expansion of raw steel production depending on the local energy prices
• Intake of finished steel products up 3% y/y in 12M to Sep-14 despite subdued public and private investments. Of this, 83% is from local production. Export of finished goods is larger than import in volume terms – but not in value terms. Gross imports were 0.637mn tonnes -- one sixth of consumption, but it is unsure whether local producers can deliver the specific high value added items.
• Export of un-welded pipes 12% up y/y to 360,629 tonnes in Jan-Sep, average price up 2% y/y to €1,174 per ton
• Export of other pipes, tubes, profiles, up 36% y/y to 101,551 tonnes in Jan-Sep, average price down 7% y/y to €614 per ton
• Export of scrap iron down 23% y/y to 1.20mn tonnes in Jan-Sep, average price 6% down y/y to €254 per ton
• Import of thick, flat, cold rolled goods – covered, up 16% y/y to 335,249 tonnes in Jan-Sep, average price 5% down y/y to €752 per ton
• Import of profiles up 30% y/y to €159,044 tonnes in Jan-Sep, average price 7% down y/y to €642 per ton
• Import of semi-finished goods down 43% y/y to 85,373 tonnes in Jan-Sep, average price up 5% y/y to €505 per ton
• In value terms, exports of raw steel products contracted by 8% y/y in 12M to Nov-14, imports increased by 7% y/y – an effect of high local energy prices, and the trade gap consequently more than doubled to €523mn. In volume terms – in 12M to Sep-14, the trade gap widened by only 20% y/y – with the differential explained by the deterioration in the terms of trade[price of exports relative to price of imports]
• Also in value terms, exports of finished steel increased by 8% y/y and imports by only 4% y/y – with the gap narrowing by 19% y/y to €244mn. In volume terms, for 12M to Sep-14, the surplus surged by 75% y/y as exports increased by 15% y/y. Terms of trade also deteriorated.