Situation in 2005
It is possible to characterise Year 2005 like the year of privatisation enclosure for the Steel industry. The last privatised Company was Vitkovice Steel, Inc. The new owner is Russian Evraz Holdings. The Steel industry couldn't in 2005 repeat the rate of production growth of 2004. On the contrary it came to the drop. But impact on effect on incomes was essentially smaller. Besides influence of world prices development, also positive changes in production structure contributed to it. Production drop was affected also by conscious production restraint to help keep the balance relation between offer and demand. Steel industry was filling - up also liabilities accepted by state in terms of National restructuring programme authorised by European Commission. The trend of higher y/y growth of import volume than of export continues, thereby in 2005 the import volume equalled that one of export (former ratio 1:1,5). Domestic market consumption reached in 2005 5,1 millions tons of steel products. Major take - up branches are: metallurgy and machinery with 41 %, manufacturing transport equipment with 20 % and building industry with 19 %. Its' share modestly increases transport equipment production. Ongoing restructuring caused the further reduction of employment. The decline round 8,5% led to the average number of workers 25 Thousand Persons. Successful restructuring and fulfilling of viability criteria will be decided for Czech steel industry in 2006 year.
Very favourably high base 2004 markedly affected the steel industry results in 2005 measured by dynamic against 2004. Volume of production in tonnage was about 10,0 % lower. Total volume deliveries on home market, incl. self - consumption of metallurgical companies, lowered in Y to Y comparison by 12 %. As concern development of final steel products’ average prices it is possible the situation to evaluate as stagnation. Increasing rate of apparent consumption of steel products reached purely +0,4 %. High stocks of final products from 2004 caused it. It caused especially in the H1 of 2005 the drop of prices. The gradual regulation of production together with reduction of stocks at trading and manufacturing companies stopped the price fall in Q3 and new balance was achieved by the end of the year. Market prices development of steel products was all the time still impressed by the growth of raw materials cost (iron ore +60 %, scrap +5,6%, pig iron +15,6%). Despite of that circumstances the flat rolled products' prices grew by 10 %, whilst the ones of long products fell about 5,5 %. Nominal average earnings grew by 4 - 5% (preliminary). It is possible to assume that in spite of production fall the financial situation will stay favourable at the biggest producers and thereby at the whole Steel industry, among others thanks to price level maintenance sufficient for profitability preservation. We estimate the incomes about Crown120 billions that means a drop by 5%.
