India & Asia Steel Scrap Industry BY: VED PRAKASH GEMINI CORPORATION N. V., BELGIUM 1
GEMINI CORPORATION N. V. Steel, Recyclable Plastics, Rubber and Engineered Wood Panels 2
Content How competitive are Asian EAFs compared with cheap iron ore consuming BFs Which have been the most active Asian trade routes from the USA this year? India: how is India streamlining its import systems? How healthy is demand? North Asia: what are Korean, Taiwan and Japanese prices and demand like? Where are these regions getting their material from? South-East Asia: how much scrap are they consuming? 3
Scrappy Year 2015 Shredded Scrap (EUR/MT) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 January 165 198 181 213 261 208 218 358 321 303 281 241 February 184 206 187 232 268 177 220 321 314 288 265 223 March 211 190 203 247 276 151 255 329 326 291 250 224 April 201 185 217 245 352 166 320 309 325 290 262 235 May 184 158 218 235 433 183 292 314 321 275 262 237 June 157 140 224 236 441 158 260 327 300 256 259 236 July 196 174 224 237 429 175 249 318 285 254 261 217 August 232 194 212 228 364 190 276 321 295 265 264 197 September 237 215 207 227 259 202 286 313 292 271 268 182 October 247 178 209 228 201 177 251 302 268 261 251 149 November 235 187 213 222 154 172 274 287 290 275 234 December 201 183 210 224 209 195 308 300 297 277 234 Source: eurofer.org 4
EAF vs BF Country Steel Production (MMT) BF (%) EAF (%) China 822.7 94% 6% India 86.5 42% 58% Japan 110.7 77% 23% South Korea 71.5 66% 34% Taiwan 23.1 59% 41% Other Asia 20.3 0% 100% Total 1,134.8 84% 16% India, an exception amongst the major Asia s steel makers, relies primarily on EAF. 500 450 400 350 300 250 200 Turkish Billet vs Chinese Billet (Scrap Route vs BOF Route) Domestic Billet Prices EXW (USD/MT) Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 China Turkey 5
Asian Steel Scrap Industry 2014 Steel Scrap Imports PAK 2.4 MMT THAI 1.4 MMT VIET 2.1 MMT IND 5.7 MMT BAN 0.2 MMT MAL 0.9 MMT INDO 2.13 MMT CHI 2.5 MMT KOR 8.0 MMT TAI 4.2 MMT Major Exporters: Europe 2.2 MMT South Africa 1.1 MMT UAE 1.0 MMT USA 0.9 MMT Australia 0.3 MMT Singapore 0.3 MMT Brazil 0.1 MMT Major Exporters: USA 1.6 MMT Australia 1.5 MMT Japan 1.4 MMT Singapore 0.6 MMT Hong Kong 0.4 MMT Brazil 0.3 MMT South Africa 0.2 MMT Major Exporters: Japan 5.9 MMT USA 2.5 MMT Europe 0.5 MMT 6
Asian Steel Scrap Industry US Trade Routes 2014 Exports H1 2015 Exports Change from H1 Country (MMT) (MMT) 2014 (%) Turkey 3.616 1.963 10.20% India 0.558 0.498 85.10% Taiwan 2.253 1.181-19.10% South Korea 1.738 0.472-42.90% China 0.795 0.406 2.80% South East Asia 1.601 0.700-14.20% Overall Scrap Exports 15.330 6.902-9.10% Silk Route trades (US WC to Taiwan & Korea) fell to 2.0 MMT from 2.3 MMT 7
North East Asia Steel Scrap Industry Korea Korea slipped from 2 nd to 3 rd largest scrap importer Steep fall in scrap imports by 35.5% to 2.778 MMT in H1 2015. Steel industry heavily dependent on steel exports (prod. 71.5 MMT, exports 32 MMT) Taiwan Scrap imports were 5.3 MMT in 2010 & have fallen gradually to 4.2 MMT in 2014. Minor rise in import volumes by 4% to 2.3 MMT. China Reliance on scrap is falling continuously from 6 MMT in 2010 to just 2.5 MMT last year. China imports 90% of its scrap from Japan. Import volumes fell by 2.4% to 1.274 MMT in H1 2015. Steel Production Jan to Sep 2015 China -1.7% Japan -5.2% South Korea -3.4% Taiwan -0.6% Thailand -8.0% Asia -1.7% Japan Exports around 7.5 MMT 50% to Korea & 30% to China. Surge of 10.8% in exports of Scrap to 4.137 MMT owing to significant rise in Viet Nam & Taiwan trades. 8
Indian Steel Industry 90 MMT in 2015 Production grew from 49.5 MMT to 90 MMT over 10 years 10% India: Steel Production YoY Growth (%) YoY production growth rate is inconsistent. As planned in 2011, India should have reached to 115 MMT production in 2015. YoY Growth (%) 9% 8% 7% 6% 5% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Fragmented Steel Industry. Growth in Steel production differs from state to state. NO TREND IN STEEL SCRAP IMPORTS. YoY Growth (%) 60% 40% 20% 0% -20% 3.1 3.0 India: Steel Production vs Steel Scrap Imports 8.2 6.2 5.6 5.7 4.6 4.7 4.6 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 Steel Scrap Import (MMT) Steel Scrap Imports (% growth YoY) Steel Production (% growth YoY) Steel Scrap Import (MMT) -40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 0.0 9
Indian Steel Industry 90 MMT in 2015 Unique raw material consumption patterns: Steel scrap consumption +/- 20.5 MMT, imported scrap around 6 MMT. Steel from Iron Ore route +/- 50 MMT & DRI +/- 20 MMT. DRI production capacity reached to 45 MMT. India will have lot of choice for imported scrap. Imported scrap will play only a balancing role, unlike Turkey (steel production of 34 MMT, scrap imports of 19 MMT). Finished steel imports rose significantly to 71% (to 9.32 MMT in Financial Year 2014-15). 10
Indian Steel Industry Chinese entrepreneur Zhao Qingfeng s shop sits hidden in a maze of several thousand outlets at the Yiwu market the world s largest commodity market. Such small entrepreneurs have Made in listed China annual sales of over 10 million Yuan. 11
Emerging Scenario in Asia Asian steel scrap is around 30 MMT import market. Emerging exporters Singapore & Hong Kong, exporting 1 MMT and 0.5 MMT, respectively. Brazil is another emerging scrap exporter to Asia. Major importers - Korea & Taiwan are gradually decreasing scrap imports causing Australia & Japan to change the gears towards Indian subcontinent. Scrap importers Taiwan, Korea & China are likely to become scrap exporters. Pakistan & Bangladesh will increase scrap imports Chinese dominance on Steel will continue. 12
Steel Scrap - Hong Kong 13
Steel Scrap - Japan 14
Steel Scrap - Taiwan 15
International Scrap Trade Volumes Million Tons 1800 1600 1400 1200 1000 800 600 400 200 0 98 105 103 95 95 92 2010 2011 2012 2013 2014 2015 (e) World Crude Steel Production Seaborne Iron Ore Global Trade Of Steel Scrap 16
What is scrap going to do? If I knew that, I wouldn t be sitting here! THANK YOU Ved Prakash vp@geminicorp.be Data Sources: BIR, World Steel Organization, Steel First, etc. 17