EY ROMANIA

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ADRIAN NETEA

  |  10.12.2014

Nerves of steel

Romania’s metals sector registered a modest compounded average growth in recent years as it slowly recovers from the global economic crisis. This is primarily the case for steel, the largest subcomponent of Romania’s metals sector which demonstrated an increase of 1% in production in 2013

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EY Romania

ADRIAN NETEA

ADRIAN NETEA

CONSULTANT TRANSACTION ADVISORY at EY ROMANIA

In Romania, the effects of the global economic and financial crisis were strongly felt in 2009, when the production of iron and steel decreased from 8 million tonnes in 2008, to 4.3 million tonnes in 2009, representing a 45.8% decrease. In 2010,  Romania’s steel production partly recovered, increasing the output by 34.8%. The production growth was due, to some extent, to the implementation of the Romanian metallurgy restructuring programs according to the European Union’s requirements, which led to the modernization of several steel production facilities. These measures also impacted the production of crude steel in 2011, when the output registered an increase of 2.9%. Despite this recovery, in 2012, the production of crude steel decreased by 14%.


As previously mentioned, in 2013, the steel output increased by 1%, mainly supported by ArcelorMittal Galati’s new steel plant in Hunedoara, put in function in Q3 2012, at the end of a EUR 43 million investment in a brand new rolling mill. The move is in line with the steel mill’s shift toward higher value-added segments.


A negative impact on the output levels of iron and steel was the decision of Mechel to dispose of all its Romanian steel assets, which was having a negative impact on the Group’s financial results and cash flow for some period of time. The group of five steel plants abandoned by Mechel and currently under the ownership of a small Russian investor (Nikarom) is struggling to continue operations.

 

 

Main recent events

According to a local business publication, Romania’s steel roof tile producer Bilka Steel put into operation a new production line at the end of April, part of an investment program of EUR 5 million carried out between 2014 and 2016.


Higher performances were also recorded by TMKArtrom, which, according to their representatives, managed to boost sales by 13% in the first quarter of 2014, compared with the same period from last year, and the company expects a 25.4% increase in its full-year sales to RON 1.1 billion in 2014.

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