Romania’s metallurgical industry, in decline

The metallurgical industry in Romania, once one of the key branches of the economy, has been facing a strong decline during recent years, its turnover reaching the lowest level of the last 4 years.

by Ada Gavrilescu

The Romanian metallurgical industry barely manages to get orders and the turnover is about 33.5 billion lei, which represents the lowest level of the last 4 years; at the same time, trade in metallurgical products barely passed the level of 6 billion lei.

Over 100 companies disappeared in three years

The drop in business in this sector has to be directly linked to the disappearance of more than 100 companies in the market over the past 3 years and a drop in the number of specialists by almost 1000 between 2013 and 2016, according to a Keysfin study.

In 2014, 7,694 companies in the metallurgical industry were active in the Romanian economy, out of which 948 in the specific commerce sector, while two years later the statistics of the Ministry of Finance and Trade Register marked the existence of 7,592 companies, out of which 798 in the sector of trade.

Statistics also show that, while in 2013 the metallurgical sector had 6,287 employees, in 2016 there were only 5,400 employees, a phenomenon which seems almost inexplicable, given the fact that the Romanian economy is growing year after year.

Indicator of the evolution of the real economy

“The metallurgical sector is a sensitive indicator of the evolution of the real economy. The decrease in export demand, the strategic decisions taken by the big players in the field, who own or have had units in Romania, the absence of a sustained demand from the local market and, last but not least, the imports, have made this area significantly reduce its activity. And the significant decrease in public infrastructure projects and rising commodity prices have added to this cumulative challenge. If, in 2000, metallurgy – starting with  primary aluminum and aluminum alloys to hot steel, hot rolled steel sheets, steel pipes, cold rolled steel sheets and strips, galvanized wires, and welding electrodes – was reaching significant production increases of more than 10 per cent, the 2009-2013 crisis has led to the final closure of many combinations. And the results are still visible today,” analysts say.

At present, Romanian metallurgy has focused on areas with economic potential, such as Bucharest-Ilfov. Most companies are registered in the North-West area (1,485 companies), out of which 1,394 are involved in production activities and 91 are involved in trade in the Center (1,189/63) and Bucharest-Ilfov (1,053/216). The last in this top are the North-East region (719/64) and the Southwest (597/48).

Arcelor Mittal Galati, on top

The metallurgical industry has been in the hands of foreign investors for years. Arcelor Mittal Galati is still the most important player in the market, with the largest turnover among all active companies.

Arcelor Mittal Galati reported in the year 2016 business numbers of 3.47 billion lei.

ALRO SA (ROL 2.14 billion), SILCOTUB SA (ROL 1.23 billion), TMK-ARTROM SA (761.9 million lei) and ALUM SA (556 million lei) are among the top companies. The top is completed, taking into consideration the turnover, by ARCELORMITTAL HUNEDOARA SA, BAMESA STEEL SA, TMK – REŞIŢA SA and FAIST MEKATRONIC SRL.

In terms of trade in metallurgical products, KeysFin data places the company MAIRON GALATI SA on the first place, with a turnover of 819.2 million lei in 2016. ROTTCO CONSULT SRL, A-KEMI SRL, BAUROM CONSTRUCT SRL, DAMILA SRL and MIRAS INTERNATIONAL SRL were in the following places with business situated between 170 million and 357 million lei.

The difficult situation in this sector is also highlighted by the statistics concerning insolvency. According to KeysFin data, over the past three years in the statistics (2014-2016), 1,258 firms have declared their insolvency, as the financial aspects in this industry continued to be challenging. The average collection time for metallurgical products was 116 days last year, which represents a strong growth compared to 2014 (88 days), while the average payment time was 145 days (compared to 141 in 2014) .

In the metallurgical production sector, payments were made last year at 187 days on average, while the collections were made at 93 days, showing a better situation compared to 2014.

Published in EnergyWorld magazine, January/February issue 2018, #22

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