Presentation to SMR/Metal Bulletin Summit by John Rowe Secretary-General International Stainless Steel Forum

Transcription

1 Presentation to SMR/Metal Bulletin Summit by John Rowe Secretary-General International Stainless Steel Forum ISSF Stock statistics Hasenclever 9/2/ September 2014 Istanbul 1

2 ISSF Antitrust Policy The International Stainless Steel Forum binds itself to adhere to the strictest interpretation of the Anti-Trust Laws and Regulations. This presentation includes my own interpretation of the current market situation. You are free to draw your own conclusions about the condition of the market and you are encouraged to study the Annual Reports published by producing companies and Analyst Reports. 2

3 A Review of the Market Iposedthequestionataconferenceatthe beginning of this year of whether we were beginning to see the first green shoots of recovery, after what has been a very difficult period for the Stainless Steel Industry since the nickel price reversal in May 2007 and particularly the financial crisis of

4 The first green shoots??? The answer I gave at that time was a cautious yes and that message has since become stronger, but it is important to consider the reasons Economic indicators have been improving and the stainless steel market generally grows at a faster pace than GDP growth There has been some price recovery, but it has so far been muted and has primarily been driven by raw materials By far the most important factor has been the cost reduction programmes which were introduced by the leading industry players These have been extraordinarily successful and are continuing. 4

5 The first green shoots??? Re-structuring is underway, but the full extent of its value will only begin to be realised in this financial year and the following two years. Overcapacity still exists in the industry; and Financial constraints and a lingering uncertainty still inhibit re-stocking, although demand is clearly strengthening. 5

6 Ifo* World Economic Climate August 2014 *Institute for Economic Research 6

7 OECD Industrial Production Index [2010=000]

8 Selected Global Indices Oxford Economic Forecasting June 2014 [2005=100] Q1 2013Q1 2012Q1 2011Q1 2010Q1 2009Q1 2008Q1 2007Q1 2006Q1 2005Q1 Manufacturing Capital goods Consumer durables Construction 8

9 EU 28 July 2014 Eurostat Economic Sentiment Indicator

10 Ifo Asia Economic Climate August

11 OECD Asia Industrial Production Index [2010=100] Japan S. Korea India 11

12 China PMI Manufacturing vs. OECD CLI y-o-y Change China PMI OECD CLI China y-o-y change 12

13 GDP Oxford Economic Forecasting June 2014 [y o y change in %] China Asia w/o China NAFTA EU 27 World 13

14 Stainless Steel Melt Shop Production [mill t] e 2014e EuroAfrica Americas Asia w/o China China CEE 14

15 EU 28 Cold Rolled Shipments [kt/month] % 19 (6.4%) 26.0% 4 7 (1.4%) (2.2%) % % 16.8% % (5.7%) 6 (2.5%) 21.3% 8 (3.3%) 11 (4.3%) 14 (5.7%) (78.7%) % +60.5% 24 (8.2%) 23 (7.8%) 220 (74.0%) 25% 20% 15% % Eurofer participants Taiwan China, People's Republic of Korea, Republic of India Japan Others Import share (excl. S Africa) 10% 15

16 Stainless Steel Melt Shop Production by Grade [%] Q1 CrNi CrMn Cr others e 16

17 Stainless Steel Melt Shop Production by Grade and Region [%] Euro/Africa Americas Asia World CrNi CrMn Cr others 17

18 EuroAfrica* Cold Rolled Flat Product Apparent Stainless Steel Use vs. Real Stainless Steel Use [t] 1,200,000 1,100, % 4.3% 1,000, , , , , Q Q Q Q Q Q1 *EU28, S. Africa, Turkey, CIS Apparent supply Real stainless steel use 18

19 Americas Cold Rolled Flat Product Apparent Stainless Steel Use vs. Real Stainless Steel Use [t] 800, , % 600, % 500, , , , Q Q Q Q Q Q1 Apparent supply Real stainless steel use 19

20 China Cold Rolled Flat Product Apparent Stainless Steel Use vs. Real Stainless Steel Use [t] 2,600,000 2,400,000 2,200, % 5.7% 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , Q Q Q Q Q Q1 Apparent supply Real stainless steel use 20

21 Asia w/o China Cold Rolled Flat Product Apparent Stainless Steel Use vs. Real Stainless Steel Use [t] 1,400,000 1,300,000 1,200, % 5.3% 1,100,000 1,000, , , , , , Q Q Q Q Q Q1 Apparent supply Real stainless steel use 21

22 Global consolidation Cold Rolled Flat Product Apparent Stainless Steel Use vs. Real Stainless Steel Use [t] 6,000,000 5,500,000 5,000, % 5.2% 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000, Q Q Q Q Q Q1 Apparent supply Real stainless steel use 22

23 Real Stainless Steel Use Growth Rates by Region [y-o-y change in %] EuroAfrica Americas Asia China World 23

24 Stainless Steel Stocks Flat products* [000t] 1, % 1,400 90% 80% 1,200 70% 1,000 60% % % % 20% % 0 0% Hot rolled Cold rolled CR Flat Stocks as % of CR AC *Selected Countries: USA, Canada, EU 27, S. Korea, China, Japan ISSF Stock statistics Hasenclever 9/2/

25 Stainless Steel Growth vs. Competitors CAGR % Stainless steel 5.57 Carbon Steel 2.61 Aluminum 3.52 Zinc 2.48 Copper 2.56 Lead

26 Stainless Steel Cold Rolled Order Intake (2010=100) Euro/Africa Americas Asia excluding China China World

27 Stainless Steel Melt Shop Capacity Development Euro/Africa mill t Americas mill t Asia excluding China operating confirmed* * no new projects known * no new projects known operating confirmed* operating confirmed China World mill t mill t operating confirmed operating confirmed 27

28 Stainless Steel Cold Rolled Capacity Development Euro/Africa mill t Americas mill t Asia excluding China operating confirmed* * no new projects known * no new projects known operating confirmed* operating confirmed* * no new projects known China mill t World mill t operating * no new projects known confirmed operating confirmed 28

29 First Green Shoots of Recovery Selected Stainless Steel Producers EBIT [mill ] * * * HY HY Company A Company B Company C* Company D** Source: Company Websites, *EBITDA, **Company D discontinued operations at the close of

30 A look ahead The Indonesian nickel ore export ban will affect Nickel Pig Iron production until the new plants which are planned for Indonesia can be commissioned. This will tighten the supply of nickel units in 2015 and 2016 and with a knock-on effect on nickel prices.. The self-improvement programmes in place at many stainless steel producers will continue because the pressure to improve results will also continue. The restructuring process should be expected to eventually spread into China. The combination of the change in policy, a slower GDP growth rate, stricter financial controls and the weak results of existing producers in China should slow the rate of investments into new capacities. 30

31 A look ahead Stainless Steel continues to provide a reliable and sustainable solution for many applications in our daily lives and is irreplaceable in some of them. Demand will therefore continue to outperform that of competing materials. The state of the industry in 2014 is significantly better than it has been during the preceding five years. Many producers have taken the necessary measures to sustain this improvement and the prospects for further improvement are clear. But the hard work will need to continue. 31

32 Thank you for your attention! ISSF Stock statistics Hasenclever 9/2/