B.S.Shetty Al Ghurair Iron & Steel LLC Abu Dhabi MENA Flat Steel Markets
CONTENTS 1. World Steel vs MENA Steel 2. MENA Flat Steel Industry 3. Challenges 4. AGIS
Disclaimer Al Ghurair Iron & Steel L.L.C. (AGIS) has prepared this document to provide general information on The Middle East Economy with relevance to the Steel Industry. AGIS has based the information in this document on primary and secondary researches and analyses. The information obtained from third party sources are all referenced in the relevant slides. AGIS does not express or imply any warranty pertaining to the accuracy or completeness of the information contained in this document or of any estimates, forecasts, numbers and assumptions in the presentation. All conclusions are subject to limitations such as time constraints and accuracy and easy availability of third party information and reflects the views of the presenter and not AGIS. No party shall be entitled to rely upon this document or any part thereof and any use of this presentation requires written permission of AGIS. Under no circumstances shall any party be entitled to assert any right, claim or other entitlement against AGIS as a result, or on the basis of this document. AGIS accepts absolutely no liability of whatsoever nature to anyone, to whom the contents of this document or any part thereof is shared with. This document should be construed in light of the accompanying narrations presented at the pertaining conference.
1. World Steel vs MENA Steel 2. MENA Flat Steel Industry 3. Challenges 4. AGIS
Crude Steel Production 1,800 1,600 1,400 1,200 1,000 800 600 400 200 40 35 30 25 20 15 10 5 2.2% of World Production World MENA 2010 2011 2012 2013 2014(YTD) Source: World Steel Association
18.00% 16.00% 14.00% Crude Steel Production (%) Second highest after Asia 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2010 2011 2012 2013 2014(YTD) MENA 11.54% 6.90% 6.45% 9.09% 3.45% World 15.75% 7.26% 1.43% 5.77% 3.17% Source: World Steel Association
Apparent Steel Use Finished Steel 1800 74 1600 1400 1200 1000 800 600 400 200 72 70 68 66 64 62 60 58 56 4.5% of World ASU World MENA Source: World Steel Association 0 2009 2010 2011 2012 2013 2014(f) 2015(f) 54
Apparent Steel Use Finished Steel SRO October 2014 2013 % 2014 % 2015 % World 1,530.90 3.8 1,562.0 2.0 1,593.9 2.0 European Union (28) 140.4 0.8 145.9 4.0 150.2 2.9 Other Europe 36.9 8.2 37.6 1.9 39.0 3.8 CIS 59.1 2.8 56.9 (3.8) 58.0 1.9 NAFTA 129.6 (2.4) 137.8 6.4 140.8 2.2 Central & South America 49.1 4.2 48.0 (2.4) 49.6 3.4 Africa 33.6 10.8 34.6 2.8 37.4 8.0 Middle East 50.4 0.2 51.5 2.3 54.7 6.0 Asia & Oceania 1,031.8 4.9 1,049.7 1.7 1,064.3 1.4 China 740.9 6.1 748.3 1.0 754.3 0.8 Million tonnes 2013 % 2014 % 2015 % MENA 65.5 1.8 67.6 3.3 72.1 6.6 Iran 16.7 (8.0) 17.3 3.1 18.0 4.1 KSA 13.1 9.5 14.0 7.2 4.2 1.9 Egypt 7.6 (5.0) 8.1 6.5 8.9 9.6 UAE 7.1 (3.0) 7.3 3.0 7.4 1.4 Million tonnes Source: World Steel Association
Japan N. America Europe Turkey Latin America CIS MENA Steel Consumption Longs Flats 34% 66% 35% 65% 45% 55% 47% 53% 49% 51% 49% 51% Steel consumption by product type Skewed towards Longs China Other Asia India \ MENA 50% 50% 51% 49% 53% 47% 66% 34% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: WSA, Steel Consult
1. World Steel vs MENA Steel 2. MENA Flat Steel Industry 3. Challenges 4. AGIS
Source: MBR 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 MENA Flat Steel 2010 2011 2012 2013 2014(F) 2015(F) 2016(F) Output Imports Exports App. Cons. Net importer of Flats
1000 Flat Steel Prices 2014 USD/MT CFR JEBEL ALI 900 800 700 600 HRC HDG PPGI Major dip since Q3 Margins squeezed 500 400 Source: MeSteel 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Gulf Projects Index Over $3 trillion Projects in the Gulf Source: MEED Projects
Projects 2014 9.56% 6.14% 13.02% 17.03% 42.87% 15.83% 31.60% 24.40% KSA Iran UAE Iraq Kuwait 18.60% 20.95% Transport Oil Construction Gas Power Source: MEED Projects
Top 10 Project Awards In Middle East Q2 2014 Rank Project Owner Country Sector Value ($m) 1 Riyadh Metro (Lines 1&2) Arriyadh Development Authority KSA Transport 9,450 2 South Pars Gas Field Development Ph19 21 Pars Oil & Gas Co. Iran Gas 9,000 3 Haramain High Speed Rail Network Ph2 Saudi Railways Organisation KSA Transport 8,396 4 Basmaya Housing Complex Iraq National Investment Commission Iraq Construction 8,000 5 Riyadh Metro (Lines 4,5 & 6) Arriyadh Development Authority KSA Transport 7,820 6 South Pars Gas Field Development Ph17 18 Pars Oil & Gas Co. Iran Gas 7,000 7 Karbala New Refinery Iraq State Co. for Oil Projects Iraq Oil 6,040 8 West Ethylene Pipeline Petrochemicals Industries Development Mgt. Co. Iran Gas 5,501 9 East West Motorway Highway Agence Nationale des Autoroutes Algeria Transport 5,340 10 Riyadh Metro (Lines 4,5 & 6) Arriyadh Development Authority KSA Transport 5,210 Source: MEED Projects
Top 10 Megaprojects In Middle East Q2 2014 Rank Project Owner Country Sector Budget ($m) Status 1 Iraq Housing Programme Iraq Ministry of Construction & Housing Iraq Construction 200,000 Execution 2025 Expctd Compl. 2 Renewable Energy Programme King Abdullah City for Atomic & Renewable Energy KSA Power 150,000 Study 2030 3 Dubailand Dubai Holding UAE Construction 146,855 Execution 2020 4 22,000MW Renewable Energy Programme Sonelgaz / Dii Eumena Algeria Power 120,000 Study 2030 5 King Abdullah Economic City Emaar Economic City KSA Construction 93,000 Execution 2034 6 Nuclear Power Reactor King Abdullah City for Atomic & Renewable Energy KSA Power 70,000 Study 2032 7 Saudi Housing Project Saudi Arabia Min. of Housing KSA Construction 68,000 Execution 2031 8 South Pars Gas Field Development Pars Oil & Gas Company Iran Gas 64,422 Execution 2017 9 Mohammed Bin Rashid City Dubai Holding / Emaar Properties UAE Construction 55,000 Design 2023 10 Lusail Development Qatari Diar Real Estate Investment Company Qatar Construction 45,000 Execution 2019 Source: MEED Projects
MENA Flat Steel Producers HRC CRC HDG Existing Proposed Existing Proposed Existing Proposed IRAN Mobarakeh 5,600 5,000 1,500 300 Ahwaz Pipe 600 Ferro Gilan 1,600 500 250 Haft Almas 200 Seven Diamonds 500 200 West Asia Steel 500 Kashan 250 150 Chahar Mahal 500 TOTAL 7,800 5,000 3,450 1,400 EGYPT Ezz Steel 2,200 Hadisolb 600 265 15 Kandil 750 600 Somico 120 200 TOTAL 2,800 1,135 815
MENA Flat Steel Producers HRC CRC HDG Existing Proposed Existing Proposed Existing Proposed KSA Hadeed 2,000 500 1,500 280 Unicoil 270 250 TOTAL 2,000 770 1,500 530 UAE AGIS 250 200 200 Asian Ispat 240 UIS 300 ESI 1,500 TOTAL 1,500 250 440 500 ALGERIA ArcelorMittal 1,800 1,200 300
MENA Flat Steel Producers HRC CRC HDG Existing Proposed Existing Proposed Existing Proposed LIBYA LISCO 580 2,000 140 500 80 350 MOROCCO Maghreb Steel 1,000 300 200 JORDAN Khalousi 150
1. World Steel vs MENA Steel 2. MENA Flat Steel Industry 3. Challenges 4. AGIS
140 120 100 80 60 40 20 0 Oil Price requirements in MENA Bahrain Iran Iraq Algeria Oman KSA UAE Qatar Kuwait 2014 fiscal breakeven oil price (USD/b) 2000 Impact of Oil Prices GCC Cumulative budget surplus 1500 1000 500 Source: IMF & HSBC 0 USD,bn 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Impact of Falling Oil Prices for the MENA Region Oil Exporters: Decline in Oil Revenues Tighter fiscal constraints & budget deficits: GCC fiscal surplus could decline to $100bn in 2015 from $275bn projected Decline in Current Account Balances & Net Foreign Asset accumulation Cut growth prospects by 1% if oil prices stay in $75 $80 range Oil Importers: Lower spending on oil imports improves trade balances But lower FDI & remittances from oil exporters outweigh trade benefits Aid levels are likely to decline as well Fall in oil prices hurt oil importers as well as exporters
Challenges to MENA Flat Steel Industry High Costs Inputs, Labour & Capital Global suppliers Dumping practices Unfair protection by other Nations Duty evasion by small manufacturers Loss to Govts. Lack of domestic industry protection
Recommendations Boost intra regional trade Quota for imports Local industry preference Introduce Anti dumping measures
1. World Steel vs MENA Steel 2. MENA Flat Steel Industry 3. Challenges 4. AGIS
Al Ghurair Iron & Steel First & only producer of HRPO, CRFH & Galvanised Coils in the UAE. Joint venture of the Al Ghurair Group, UAE and Nippon Steel & Sumitomo Metal Corporation, Japan. ISO 9001:2008 certified by BSI. ISO 14001:2004 & OHSAS 18001:2007 Certified by Bureau Veritas Capacity Expansion by 2015.
Current Production Lines 100k tpa HRPO 50k tpa CRFH 200k tpa HDG Finished Products
Production Lines Ph 2 200k tpa HDG 200k tpa HDG Finished Products
g{tç~ çéâ4 B.S.Shetty, Al Ghurair Iron & Steel LLC, P.O. Box 106065, Abu Dhabi UAE Tel : +971 2 659 3400 Fax : +971 2 550 0949 www.agis.ae