Construction - industriAll

Report
OUTLOOK FOR THE
STEEL MARKET
Sherpa group meeting, Bruxelles, 13 March 2014
Agenda
• Current situation: global demand is
slowly recovering
• Prospects for global steel demand until
2025
• Structure of EU steel exports
• EU steelmaking excess capacity
• Financial health of the European steel
industry
Apparent consumption of steel by region
(Index 2007Q2=100, data from CRU)
104
100
96
92
88
84
80
EU
76
North America
72
Japan
68
CIS
64
60
56
52
48
44
2007
2008
2009
2010
2011
2012
2013
Production shares by region, % of world
(before and after the crisis)
2007
2013
Rest of the world
Africa
4%
1%
South America
4%
Africa
Rest of the world 1%
4%
South America
3%
North
America
10%
North
America
8%
CIS
7%
CIS
9%
European
Union
16%
Asia
56%
European
Union
10%
Asia
67%
Steelmaking capacity shares by region
(% of world capacity)
World total 1372 MT in 2005
World total 2268 MT in 2015
Oceania
0.4%
ceania
0.6%
Others
12.7%
Japan
9.0%
India
3.7%
Japan
5.8%
Europe
20.0%
United States
7.9%
Brazil
2.7%
Middle East
1.4%
Africa
2.2%
Europe
13.6%
CIS
7.1%
India
6.0%
CIS
9.1%
China
30.9%
Others
11.0%
China
44.1%
United States
Brazil
5.2%
2.3%
Africa
1.7%
Middle East
2.6%
Jan/13
Sep/12
May/12
5,000
Jan/12
Exports
Imports
Sep/11
Asia (excl. China)
Jan/11
China
6,000
Exports
Imports
4,000
3,000
2,000
1,000
0
Oct/12
Jul/12
Apr/12
Jan/12
Oct/11
Jul/11
Apr/11
0
May/11
0
Jul/10
1,000
Oct/10
NAFTA (external trade)
Jan/11
500
Sep/10
2,000
Jan/10
1,000
Apr/10
3,000
May/10
1,500
Jan/10
4,000
Jul/09
6,000
Oct/09
2,000
Sep/09
5,000
May/09
2,500
Apr/09
Exports
Imports
Jan/09
Jan/13
Oct/12
Jul/12
Apr/12
Jan/12
Oct/11
Jul/11
Apr/11
Jan/11
Oct/10
Jul/10
Apr/10
Jan/10
3,500
Jan/09
Jan/13
Sep/12
May/12
Jan/12
Sep/11
May/11
Jan/11
Sep/10
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
May/10
South America
Jan/10
3,000
Oct/09
Jul/09
Apr/09
EU (external trade)
Sep/09
May/09
Exports
Imports
Jan/09
Jan/13
Oct/12
Jul/12
Apr/12
Jan/12
Oct/11
Jul/11
Apr/11
Jan/11
Oct/10
Jul/10
Apr/10
Jan/10
Oct/09
Jul/09
Apr/09
Exports
imports
Jan/09
Oct/12
Jul/12
Apr/12
Jan/12
Oct/11
Jul/11
Apr/11
Jan/11
Oct/10
Jul/10
Apr/10
Jan/10
Oct/09
Jul/09
Apr/09
Regional steel trade developments
(Thousands of tonnes)
CIS
7,000
Exports
Imports
Sectors driving steel demand growth (in
tonnage) during the next ten years
• 3 sectors expected to represent 90% of
global steel demand growth up to 2025
– Construction (68%), driven by residential,
infrastructure projects in emerging economies
– Mechanical engineering (13%)
– Energy transportation(9%), pipelines,
OCTG and other tubes.
Global steel demand by sector in 2011
and 2025
mmt and % of total steel demand
Others, 59
mmt
4%
Others, 88
mmt
4%
2011
2025
Mechanical
engineering,
355 mmt
15%
Mechanical
engineering,
235 mmt
17%
Transport,
275 mmt
19%
Construction
, 845 mmt
60%
1414 mmt
Source: Metal Bulletin Research
Transport,
398 mmt
17%
CAGR 3.7%
2349 mmt
Construction,
1506 mmt
64%
Construction sector value added :
growing share of emerging economies
• Shares in world construction value added in 2025:
– NAFTA (18.3%), EU (10.8%), Japan (6.2% ), China (24%)
• China’s construction VA: CAGR 5.9% in a catching-up process
– 175 airports in China in 2010 compared to 5,194 in the US
– Urban residential floor space in 2011 was 31 m² per capita in China
compared to 82 in the US.
– The urbanisation rate is expected to reach 51.5% in 2015 (target of
12th Chinese Five-Year Plan): 10 million new urban residents/year
• India’s construction VA: CAGR 8.1% faster than China but
from a much lower base.
– By 2025, India could have two cities of more than 25 million
inhabitants (New Delhi and Mumbai)
• Strong infrastructure building also expected in South East Asia,
Africa and the Middle East.
Global steel demand for energy-related
construction in 2011 and 2025
mmt and % of total steel demand
Nuclear, 1
mmt
2%
Nuclear, 1
mmt
2%
2011
2025
Wind, 5 mmt
16%
Wind, 5 mmt
17%
Hydro, 3
mmt
10%
Coal, 17 mmt
56%
Coal, 16 mmt
51%
Natural gas,
5 mmt
16%
31 mmt
Source: Metal Bulletin Research
Hydro, 4
mmt
13%
Natural gas,
5 mmt
17%
CAGR 0%
31 mmt
Global steel demand in the
transportation sector in 2011 and 2025
mmt and % of total steel demand
Containers, 8
mmt
3%
Others, 9
mmt
3%
Pipelines, 67
mmt
25%
2011
2025
Vehicles,
146 mmt
37%
Vehicles, 132
mmt
48%
Pipelines,
154 mmt
39%
Railways, 21
mmt
8%
Shipbuilding,
37 mmt
13%
274 mmt
Source: Metal Bulletin Research
Others, 15
mmt
4%
Containers, 8
mmt
2%
CAGR 2.7%
Railways,
34 mmt
8%
398 mmt
Shipbuilding,
40 mmt
10%
The steel industry is a major supplier to the
energy industry
Consumption of steel by energy industries (Mt)
178 MT that is 12 % of total finished steel production
Source : Worldsteel, Eurofer, Laplace Conseil analysis & estimates
Reducing quantity of steel per auto will limit
growth in steel demanded by auto sector
Strong growth of auto production
expected to continue in China
Regional demand for automotive steels,
% share
Global excess capacity situation
mmt
2400
World steel capacity and demand until 2015
Capacity/demand gap
Steelmaking capacity
2200
2000
Apparent consumption (finished steel)
Apparent consumption (crude steel)
1800
Capacity/demand gap
mmt
800
700
600
500
1600
400
1400
300
1200
200
1000
800
100
600
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
EU has been a net steel exporter
since 2009
Net Exports
Exports
Imports
EU trade balance (total steel products)
(External trade)
Thousand
tonnes
60000
50000
40000
30000
20000
10000
0
-10000
-20000
Source: Eurostat.
2007
2008
2009
2010
2011
2012
EU steel exports have shifted towards
African markets from 2007 to 2012.
Asia
Middle East
Other Europe
North America
South America
Africa
Oceania
Others
80%
90%
EU iron and steel exports by area
(External trade)
2007
2012
0%
10%
20%
30%
40%
50%
60%
70%
100%
The structure of exports -capturing the
growth opportunity in emerging markets• The share of pipes and tubes (a major export item),
has declined from 14.8% (2007) to 13.1% (2012)
while bars became the largest export item in 2012.
• Exports of long products have been increasing
steadily supported by robust construction activity
in North Africa.
• Exports of high value-added products (e.g.
galvanized sheets) have been increasing along with
the growth of the auto sector in emerging markets.
• EU can take advantage of its good access to
growing steel markets in Africa and Middle East.
Demand growing strongly in Europe’s
neighbouring regions
Other Europe
CIS
Africa
Middle East
Evolution of steel demand (2002 = 100)
Apparent steel use, finished steel
250.0
200.0
150.0
100.0
50.0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Semi Finished Products
Bars
Hot-rolled Sheets & Strips (Carbon Steels)
Galvanized Sheets
Pipes & Tubes
Sections
Wire Rods
Cold-rolled Sheets & Strips (Carbon Steels)
Tin Plates
Alloy Flat Steels
EU iron and steel exports by product
(External trade)
2007
2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
EU iron and steel exports (external trade)
matrix in 2012 (thousands of tonnes)
Asia
Japan
China
Chinese
Taipei
Thailand
India
Middle East
Iran
Europe (excl.EU)
Norway
Switzerland
Russia
Turkey
North America
South America
United
Canada
Mexico
States
Africa
Oceania
Others
Total
Morocco
Share
Share
(2012)
(2007)
Iron Products
48.8
41.0
22.5
12.8
11.7
178.4
0.2
12.0
3.2
16.8
8.6
26.5
72.7
3.8
31.5
35.3
1.3
13.5
2.3
7.0
1.2
0.4
320.5
0.8
Ferro Alloys
23.5
4.8
0.6
1.1
7.0
44.7
1.0
5.3
1.2
7.9
6.0
13.9
63.1
6.5
153.2
159.6
4.4
17.3
4.3
20.3
6.3
0.0
316.6
0.8
0.5
Ingots & Semi Finished Products
4.2
31.3
67.9
1339.1
19.9
1526.8
0.0
122.9
7.4
70.9
4.1
734.1
891.3
90.1
472.2
562.3
49.9
85.6
350.7
544.7
6.9
0.0
3740.4
9.2
10.3
Rails & Accessories
1.3
16.3
6.4
4.6
13.3
69.4
6.7
154.1
7.8
67.1
83.0
59.5
276.7
50.7
89.9
140.6
3.7
136.8
1.7
123.1
12.3
0.0
912.9
2.2
2.0
Steel Sheet Piles
0.0
10.0
1.2
0.0
8.6
25.5
0.4
58.6
25.1
14.7
72.3
3.9
124.9
8.9
95.5
104.5
19.7
46.2
0.4
27.3
12.7
0.0
399.6
1.0
1.3
Sections
9.8
39.9
2.2
1.6
7.0
157.3
6.8
371.8
105.4
187.4
130.2
477.2
1075.0
186.8
177.4
364.2
118.0
471.5
127.5
662.9
8.3
0.2
3111.1
7.6
6.5
Bars
6.2
116.5
16.4
9.0
57.5
392.2
1.2
243.4
145.0
357.7
62.2
106.9
1050.8
84.0
305.0
389.0
55.9
308.9
104.7
3559.2
112.8
1.2
6057.5
14.9
8.6
14.9
36.5
68.1
15.0
56.6
262.6
13.4
67.8
17.5
359.0
18.3
334.6
871.3
63.3
264.4
327.7
34.6
137.5
129.5
825.2
6.9
0.0
2499.0
6.1
4.1
Plates (Carbon Steels)
0.0
9.4
0.0
18.5
326.4
429.8
4.3
171.1
49.7
127.1
91.0
464.8
914.3
59.7
230.1
289.9
10.1
206.7
10.6
148.0
1.9
0.0
2161.9
5.3
9.2
Hot-rolled Sheets & Strips (Carbon Steels)
0.3
10.7
0.0
16.7
236.8
373.4
0.1
244.4
15.3
292.4
7.5
1376.6
1932.1
11.1
532.9
544.0
94.8
133.1
90.2
586.3
0.4
0.1
3813.7
9.4
11.1
Cold-rolled Sheets & Strips (Carbon Steels)
2.9
82.8
0.4
1.6
74.6
289.6
3.2
48.0
37.9
197.0
13.3
284.0
642.3
19.5
115.8
135.3
25.3
110.2
32.3
166.2
0.2
0.2
1392.0
3.4
4.3
Galvanized Sheets
1.8
148.0
0.0
2.9
49.8
348.7
8.2
155.7
66.6
139.7
145.1
506.9
1042.3
7.4
199.6
207.0
239.7
317.4
42.6
225.7
0.8
1.6
2299.2
5.6
4.8
Tinplates
0.4
26.4
0.2
9.5
47.7
122.8
0.0
90.1
2.6
10.5
58.9
70.5
169.5
0.1
192.5
192.6
54.9
126.8
23.2
124.2
20.7
0.1
846.8
2.1
3.3
Tin free
0.0
0.7
-
4.4
7.6
20.3
-
9.2
0.0
0.0
1.8
10.2
13.7
-
20.2
20.2
14.0
59.7
1.8
21.0
1.6
-
145.7
0.4
0.6
Other Coated Sheets
0.9
34.4
0.1
3.8
34.2
113.7
3.0
42.8
33.5
52.0
204.6
68.5
505.9
8.6
85.1
93.8
8.5
80.7
24.4
82.8
3.2
0.1
922.9
2.3
2.2
Electrical Sheets
0.2
45.3
2.5
5.5
112.4
191.3
0.0
21.8
0.7
54.8
2.1
47.8
123.4
10.1
24.1
34.2
2.3
20.7
4.0
21.6
0.9
29.7
443.7
1.1
0.8
Alloy Flat Steels
25.6
377.0
56.8
31.1
206.2
994.9
2.8
108.4
71.9
219.0
145.5
518.8
1026.7
64.8
654.6
719.5
348.1
550.7
32.4
460.1
49.6
30.4
3940.4
9.7
10.3
Pipes & Tubes
4.6
103.8
14.3
107.2
114.5
796.0
325.2
873.3
230.2
147.8
179.0
135.2
863.4
93.8
1455.6
1549.4
39.2
252.9
15.3
377.2
80.7
558.0
5351.0
13.1
14.8
Others
3.7
14.4
2.7
1.7
15.2
50.5
7.8
48.3
33.0
183.4
27.9
23.6
321.1
15.4
54.7
70.2
15.3
127.9
30.7
96.5
5.8
24.5
744.9
1.8
1.5
76.8
1103.5
239.5
1572.1
1388.3
6164.8
383.1
2831.6
849.6
2480.4
1246.8
5223.3 11844.9
774.4
4969.8
5744.2
1133.9
3173.4
1022.0
8051.9
325.7
646.1 38782.5
95.2
95.7
0.3
Wire Rods
Total Steel Products
0.4
Cast Iron Pipes
0.0
0.2
0.4
0.0
0.3
2.9
0.0
16.2
12.2
17.6
3.3
3.7
54.3
0.1
0.9
1.0
0.1
12.5
1.6
11.3
0.2
0.0
98.4
0.2
Secondary Products
4.8
102.5
3.0
6.3
20.2
168.2
6.2
82.8
106.7
112.8
71.5
53.6
463.3
24.9
155.6
180.5
30.5
125.5
17.9
143.5
18.6
19.8
1202.2
3.0
3.1
154.0
1251.9
266.0
1592.3
1427.5
6558.9
390.5
2948.0
972.8
2635.5
1336.3
5321.0 12498.3
809.6
5311.0
6120.6
1170.2
3342.1
1048.1
8234.0
352.0
666.3 40720.2
100.0
100.0
Share (2012)
0.4
3.1
0.7
3.9
3.5
16.1
1.0
7.2
2.4
6.5
3.3
13.1
30.7
2.0
13.0
15.0
2.9
8.2
2.6
20.2
0.9
1.6
100.0
Share (2007)
0.2
3.7
0.8
0.9
4.0
15.1
2.9
10.7
3.6
7.8
3.4
15.0
37.6
1.6
14.7
16.3
2.8
6.6
1.7
12.5
0.8
0.3
100.0
Total Iron & Steel Products
Explanation of colors (Growth rate (%), 2012/2007):
Source: Eurostat.
■:Decrease
□:+0-99%
■:+100-199%
■:+200-299%
■:+300% or over
Frequent cycles of excess capacity in
the EU
Evolution of EU 28 crude steel production and capacity (Mt)
1974, just before
the first oil shock 1979, just before
the 2nd oil shock
1990, just before
the USSR collapse
Davignon plan
Manifest Crisis
Source : Worldsteel, Laplace Conseil analysis
2007, just before
the financial crisis
EU Enlargement process
30 to
40 Mt
Most flat steels are produced in BF/BOFs
Most long steels are produced in EAFs
EU Crude Steel production in 2013
EU Finished Steel production in 2013
Recycled yield losses 16 Mt
BOF
100 Mt
EAF
70 Mt
Source : Worldsteel, Laplace Conseil analysis
FLAT
92 MT
LONG
62 MT
EBITDA on sales (EU and the rest of the
world) in %
22
20
EBITDA / Sales Europe
18
EBITDA / Sales ROW
16
14
12
10
8
6
4
2
0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
EBITDA on sales (EU steel industry) and
global capacity utilisation ratio in %
20
18
16
14
EBITDA / Sales Europe
Global capacity
utilisation ratio (RHS)
12
10
8
6
4
2
0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
90
88
86
84
82
80
78
76
74
72
70
68
66
64
62
60
EBITDA on sales distribution for EU
steelmakers in %
15
10
5
0
0
10
Sources: Facset, OECD calculations
20
30
40
50
EBIT on sales (EU and the rest of the
world) in %
18
16
14
EBIT / Sales Europe
12
EBIT / Sales ROW
10
8
6
4
2
0
-2
-4
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
Debt on Ebitda (%) – European
steelmakers
6
5
4
3
2
1
0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
Interest on assets (%) – European
steelmakers
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
Price to book ratio – European
steelmakers
2.5
2.0
1.5
1.0
0.5
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
0.0
Sources: Facset, OECD calculations
Investment on assets – European
steelmakers (%)
26
24
22
20
18
16
14
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
R&D on assets – European
steelmakers (%)
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Sources: Facset, OECD calculations
Thank you for your attention

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