If producers are able to capitalize on the expansion of the automotive industry in the country, Hungary’s steel production could increase dramatically, according to credit insurer Atraidus.
The economic crisis has heavily impacted the construction and automotive industries, the sectors that earlier used the largest quantities of steel, but this trend is now turning, said Balázs Vanek, country manager for Atraidus. The announcement of new car factory expansions by Audi, Opel and the construction of a Daimler plant in Kecskemét all lead to expectations that steel demand on the market will greatly increase.
Furthermore, there are also prospects in export. Atraidus predicts that Europe’s steel output will grow by an average of 4.1%, while the automotive industry will expand by 5.7% this year. The growth trajectory is likely to persist on the longer term with a 3.4% steel industry expansion predicted for 2012. The reflection of this continental trend in Hungary could well allow producers to boost their output by 10% in 2011 just to meet domestic demand, according to Vanek.
There are also ample opportunities on export markets given the rapid expansion of car production in general. In particular, Slovakia holds potential where VW, KIA, Peugeot and Citroen all operate factories and their outputs are set to expand in line with the general mood.
At the same time Vanek warned that the rapid run-up the market is seeing right now will likely compel new, non-established players to enter that are financing their operation from loans, and thereby carry risks of late payments or even bigger business troubles. Being bogged down with a vendor that lacks the proper financial and professional backing could bring down even middle-sized business, he said. As such, he advised companies to seek out preliminary evaluations of their prospective partners and also to consider credit insurance options to secure themselves.