Canada Metals Report

Published 11 May 2015

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Canada Metals Report

BMI View: The Canadian met als sector will be supported in the years ahead by both an eventual recovery in domestic fixed asset investment and continued demand from US and Mexico. In particular, i ncreasing manufacturing and industrial activity in the latter two countries should help drive demand for metal inputs. Continued weakening of the Canadian dollar against the US dollar should also support exports.

Stronger economic growth in both the US and Mexico over 2015, combined with a weaker Canadian dollar (CAD) in the coming quarters, will support growth in the Canadian metals sector to 2019. Indeed, we expect both the US and Mexico will experience positive trends in real GDP growth in the coming years, with automotive and general manufacturing activity picking up. Since both countries import significant quantities of refined metal from Canada, they will help underpin metal production growth in the years ahead.

Foreign Growth To Support Canadian Metal Exports
US & Mexico - Fixed Capital Formation & Automotive Production, % chg y-o-y

Further depreciation of the Canadian dollar should help ensure the country's exports of aluminium, nickel, and steel remain competitive. We forecast the Canadian dollar will continue to weaken against the US dollar over the next two years, averaging CAD1.20/USD in 2015 and CAD1.21/USD in 2016, compared to an average of CAD1.10/USD in 2014. Both a relatively dovish monetary policy outlook and continued weakness in global oil prices into 2015 will keep downside pressure on the currency.

On the domestic front, we expect weak oil prices will hurt fixed investment growth, which will prolong the Canadian economy's rebalancing and lead to lower average growth over the coming years. Nevertheless, strong US demand and a weaker exchange rate will support exports and encourage higher fixed investment growth, maintaining long-term trend growth of 1.9% through to 2024. In terms of real GDP growth, we currently expect growth of 2.1% in...

Table of Contents

BMI Industry View
7
SWOT
9
Metals SWOT
9
Industry Forecast
11
Aluminium: Excess Supply To Ensure Status As Top Americas Exporter
11
Production Growth Ahead
12
Majority Of Metal Slated For Export
12
Table: Aluminium Production & Consumption (Canada 2011-2019)
14
Nickel: Production To Be Aimed For Exports
14
Indonesian Export Restrictions To Be Opportunity For Canada
16
Table: Refined Nickel Production & Consumption (Canada 2011-2019)
17
Steel: Consumption Fundamentals To Remain Stronger
17
Domestic Output To Remain Insufficient
18
Modest Demand Growth Ahead
19
Table: Steel Production & Consumption (Canada 2011-2019)
21
Table: Steel Industry Historical Data (Canada 2006-2013)
21
Regulatory Development
23
Transparency To Be Emphasized
23
Local Consultation & Environmental Stewardship To Remain Top Priorities
24
Tax Regime
24
Table: Canada Political Overview
25
Commodities Forecast
26
Commodity Strategy
26
Ferrous Metals
26
Iron Ore: Price Weakness To Continue Over Coming Years
26
Steel: Oversupply To Drag Down Prices
28
Non-Ferrous Metals
31
Aluminium: Continued Weakness, But No Sharp Downturn
31
Copper: Recent Relief Rally To Fade
33
Lead: Prices Weakness To Continue
34
Nickel: Subdued Prices Due To Weak Demand Growth
35
Tin: Supply Deficits To Underpin Rally In Tin Prices
36
Zinc: Positive Multi-Year Outlook, But Increasing Risks In Months Ahead
37
Table: Select Commodities - Performance & BMI Forecasts
39
Competitive Landscape
40
Table: Canada - Largest Listed Metals Companies
40
Company Profile
42
US Steel
42
Company Overview
44
Company Strategy
44
Latest Results
45
Table: US Steel - Supply Chain Analysis
45
Table: Financial Data
46
Address Details
47
Global Company Strategy - ArcelorMittal - Q2 2015
47
Company Overview
49
Company Strategy
49
Latest Financial Results
51
Company Details
51
Financial Data
51
Table: ArcelorMittal - Key Financial Data
51
Global Company Strategy - Rio Tinto
52
Company Overview
54
Company Strategy
55
Latest Financial Results
56
Table: Rio Tinto - Key Financial Data
57
Methodology
59
Cross Checks
59

The Canada Metals Report has been researched at source, and features latest-available data for steel, aluminium and other major globally-traded commodities. Our analysis covers all primary indicators, including production, exports and price, with our forecasts underpinned by Business Monitor International (BMI)'s macroeconomists global economic outlook. The report analyses trends and prospects and critically evaluates latest industry news, trends and regulatory developments in Canada.

BMI's Canada Metals Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the metals industry in Canada.

Key Benefits

  • Benchmark BMI's independent metals industry forecasts for Canada to test other views - a key input for successful budgeting and strategic business planning in the Canada metals market.
  • Target business opportunities and risks in Canada through our reviews of latest industry trends, regulatory changes and major projects and investments.
  • Exploit the latest competitive intelligence and company profiles on your competitors and peers.

Coverage

BMI Industry View

A comprehensive summary of the impact and implications of the latest regulatory developments and key forecast indicators covering metals production, consumption and upside/downside risks to our outlook. The Metals SWOT analysis outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.

Industry Forecast

Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:

  • Steel: Steel production & consumption (‘000 tonnes).
  • Aluminium: Aluminium consumption production & balance (‘000 tonnes).
  • Copper: Refined copper production & consumption (‘000 tonnes).
  • Zinc: Refined zinc production & consumption (‘000 tonnes).
  • Lead: Refined Lead production, consumption & balance (‘000 tonnes).
  • Nickel: Refined nickel production & consumption (‘000 tonnes).
  • Tin: Refined tin production, consumption & balance (‘000 tonnes).

Regulatory Development

Details of the industry regulatory framework, relevant key legislation and environmental standards that impact the metals industry. The regulatory developments section provides analysis of the overall regulatory burden, the tax regime (including income tax rates), bureaucratic framework, corruption and a country specific political overview. Details of the industry regulatory framework provide information on relevant key legislation and regulations that will impact the metals industry.

Commodities Forecast

Provides in depth coverage and forecasting of steel prices and includes BMI’s core view of what to expect in upcoming months. Within the monthly metals update, BMI provides performance data and key forecasts for select commodities, including prices for aluminium, copper, gold, iron ore, lead, nickel, palladium, platinum, silver, steel (MEPS Carbon Steel), tin and zinc.

Competitive landscape

The competitive landscape section provides comparative company analyses of detailed financial data for key listed metals firms, ranked in order of market cap (USDmn).

Company Profiles*

Examines the competitive position and short to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects. Details of products and services provide a full overview of each company’s operations.

Sources

The Metals Reports draw on an extensive network of primary sources, such as manufacturing associations, statistical bureaus, government ministries, national chambers of commerce and industry, national statistical offices, government ministries and central banks, and multinational companies.

*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc