The rising prices of raw materials coupled with fluctuating quotations for steel and other metals had a serious impact on steel and metallurgic industry producers last year. Nonetheless, the leaders of the two markets managed to significantly boost their profits.
In 2007, the Romanian steel industry felt the full impact of rising coal and iron ore prices, which translated, just like at an international level, into soaring profits for owners of deposits and shrinking margins for companies in the processing industry.
As a result, steel prices posted significant increases in the last half of 2007 and early 2008, fuelled by the booming commodities market amid the international financial crisis.
"Raw material prices rose significantly last year, above steel prices. In the future, we expect things to improve and the margin to narrow," says Augustine Kochuparampil, general manager of ArcelorMittal Galati.
Investments in steel plants in recent years, to retool and upgrade production capacities, have offset rising prices of raw materials. Thus, the biggest producer on the Romanian market, ArcelorMittal Galati, last year doubled its income, to 97m euros, after having stepped into the black in the previous year, when it posted 47.2m-euro profit. However, profits across the whole market were flat.
The steel industry continued to cut its personnel as retooling paved the way for rising operating efficiency. ArcelorMittal announced it would invest over 1bn euros in the next five or six years, in order to continue the retooling and modernisation process, with a view to boosting production and productivity.
Romanian steel industry may be completely reshaped in the next years as a new major player, Austria's Voestalpine, enters the market. It announced it considered building a steel plant in Romania, with a 5-million tonne capacity, with investments worth around 7bn euros.
ArcelorMittal could thus face a strong rival. Investments would create around 12,000 jobs and would absorb personnel laid off in the wake of the restructuring at the other Romanian plants.
Price increases in non-ferrous metallurgy cooled down last year, after some metal prices registered consolidation, while others continued their strong increase. Thus, Alro Slatina, leader of the market, last year saw its turnover go down to 613m euros, while net profit went up to 130.7m euros from 108.2m euros in 2006. Cuprom Romania copper producer strengthened the second position it held on this market, amid 67% turnover growth, which reached 277m euros.
Horia Simu, the company's general manager, expects the company to continue its strong advance, with turnover to rise by 60% to 600m dollars (437m euros) in 2008.
However, the most spectacular increase was registered by Sometra Copsa Mica lead and zinc producer, whose turnover more than tripled and reached 189m euros.
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