Disappointing third quarter for metal industry

The volume of value added in the Dutch metal industry fell by 2.6 percent in the third quarter of 2005. The selling prices also fell. As a result the growth of value added in terms of euros came to a standstill.

Volume and value changes of value added

Basic metal industry accounts for ups and downs

Between the end of 2003 and the middle of 2005, turnover in the metal industry, especially the basic metal industry, grew every quarter. In 2004 the production volume of the basic metal industry rose strongly. In the first half of 2005 it levelled out, and in the third quarter of 2005 it started to fall. Selling prices rose substantially from 2004, especially in the ferro- industry. They stabilised in the first half of 2005, and subsequently fell. Provisional figures indicate a slight recovery for the fourth quarter of 2005.

Prices of ferro-products

Sharp drop in growth of value added

Lower production levels and the fall in selling prices of ferro-products resulted in a sharp drop in the growth of value added in the basic metal industry: from 40 percent in the first six months to 4 percent in the third quarter of 2005.

Falling demand

The turnaround in the basic metal industry in the third quarter of 2005 was caused by developments on the European steel market. The falling demand for steel from the construction and car industry within Europe was the main reason for this. Because of the lower demand stocks of ferro-products rose and the prices stopped increasing. Now demand and supply on the European steel market are more in balance and stocks seem to have diminished in the fourth quarter of 2005 as demand for steel picked up.

Sales of ferro-products

Exports most important by far

The Dutch basic metal industry is strongly dependent on the European demand for steel. Ninety percent of turnover of ferro-products is exported. In 2003 exports accounted for 80 percent.

Nico van Stokrom and Wim Tebbens