Outlook for Stainless Steel World Market
Outlook for Stainless Steel World Market
Outlook for Stainless Steel World Market
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<strong>Outlook</strong> <strong>for</strong> the<strong>Stainless</strong> <strong>Steel</strong> <strong>World</strong> <strong>Market</strong>-- In the Eye of the Storm --12 - 14 November 2008Feinox 2008 ConfernceSão Paulo, BrazilFeinox 2008© Copyright SMR GmbH 2008-0-presented byMarkus A. MollSenior <strong>Market</strong> Analyst<strong>Steel</strong> & Metals <strong>Market</strong> Research
Agenda1. Until Summer 2008:A bumpy Ride, but the <strong>World</strong> is basically OK2. After the Summer:What in Hell is Going On?3. The Key Challenges have not changed!Feinox 2008© Copyright SMR GmbH 2008-1-
<strong>Stainless</strong> <strong>Steel</strong> Products 2007 (Production in ‘000 metric tonnes)A mixed picture: Rising Prices (+20 to +30%) but No Volume Growth13 Cr OCTG TubeTotal <strong>World</strong>: 210SemisTotal <strong>World</strong>: 1.020 Seamless Tube**Share: 19% Total <strong>World</strong>: 370Long ProductsBarsCF-BarsTotal <strong>World</strong>: 5.250 Total <strong>World</strong>: 2.500 Total <strong>World</strong>: 800Share: 22% Share: 48%Wire RodWireTotal <strong>World</strong>: 1.730 Total <strong>World</strong>: 900Share: 33%All ProductsIngot Equiv.: 27.850Precision StripYield: 87% Total <strong>World</strong>: 400Total <strong>World</strong>: 24.300CR Flat*CR StripTotal <strong>World</strong>: 14.600 Total <strong>World</strong>: 1.800Share: 77%CR SheetFlat ProductsTotal <strong>World</strong>: 12.400 Welded Tube & PipeTotal <strong>World</strong>: 19.050 Total <strong>World</strong>: 3.420Share: 78%HRC***Total <strong>World</strong>: 2.600* incl. 200 series** excl. 13 Cr OCTGHR FlatTotal <strong>World</strong>: 4.450Decoiled SheetTotal <strong>World</strong>: 770*** excl. CRR to reporting companies Share: 23%**** incl. 'rolled slab'PMP****Total <strong>World</strong>: 1.080Feinox 2008© Copyright SMR GmbH 2008-2-
China is by far No. 1 of the stainless steel markets… 6 out of the 10 biggest <strong>Market</strong>s are already in Asia´Top 10` <strong>Stainless</strong> <strong>Steel</strong> <strong>Market</strong>s (86 % of Total <strong>Market</strong>)7.0006.5006.0005.5005.000Flat ProductsLong Productsin ´000 tonnes4.5004.0003.5003.0002.5002.0001.5001.000500-ChinaEU-25JapanUSAIndienSüdkoreaTaiwanThailandBrasilienKanadaFeinox 2008© Copyright SMR GmbH 2008-3-
Share ShareTop Top 10: 10:84 84 %Allegheny Ludlum (ATI)JFENippon Metal (Nikkinko)Jindal <strong>Stainless</strong>The ´Top 15` <strong>Stainless</strong> <strong>Steel</strong> Flat* Product Producers 2007Global Capacity Additions3.6003.3003.0002.7002.4002.1001.8001.5001.200900600300-2007 Add'l in Asia Add'l in Non-Asiain ´000 tonnesTK <strong>Stainless</strong> GroupPOSCO GroupAcerinox GroupArcelorMittal <strong>Stainless</strong> GroupShanxi TaigangOutokumpu <strong>Stainless</strong> GroupYUSCO GroupBaosteel <strong>Stainless</strong> <strong>Steel</strong> Branch / NBSSNSSCAK <strong>Steel</strong>Nisshin <strong>Steel</strong>* HRC, CRC, PlateFeinox 2008© Copyright SMR GmbH 2008-4-
The ´Top 20` <strong>Stainless</strong> <strong>Steel</strong> Long Product Producers 2007Global Capacity Additions4404003603202802402001601208040-in ´000 tonnesTsingshanSchmolz+BickenbachPSSRoldan + NASOutokumpuWalsin LihwaVirajCogneDaido <strong>Steel</strong>SMI*Valbruna GroupDongbei Special <strong>Steel</strong>SandvikNSSCBaosteel Special <strong>Steel</strong> BranchYongxing Special <strong>Stainless</strong> <strong>Steel</strong>**Rodacciai GroupJFE*STSSCarpenterFeinox 2008© Copyright SMR GmbH 20082007 Add'l in Asia Add'l in Non-Asia* 13CrOCTG** ex. Jiuli GroupCapacity is Rising …... but mainly within Asia-5-Share ShareTop Top 15: 15:58 58 %
2008: Surprisingly a new Destocking Phase has occured6.7501.500in tonnes6.5006.2506.0005.7505.5005.2505.0004.750392179-1.18280-25-800-510Stocking / Destocking (right scale)Total Supply (left scale)-9791.000500--500-1.000in tonnes4.500Total Demand (left scale)-1.500Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08Source: ISSFFeinox 2008© Copyright SMR GmbH 2008-6-
Agenda1. Until Summer 2008:A bumpy Ride, but the <strong>World</strong> is basically OK2. After the Summer:What in Hell is Going On?3. The Key Challenges have not changed!Feinox 2008© Copyright SMR GmbH 2008-7-
2008: Another Year dominated by De-stocking and Nickel Losses2009: Weakness in all Enduse <strong>Market</strong>sEUROPENAFTACHINAOth. AsiaTotal <strong>World</strong>OthersBlue = Change `07-`08Red = Change `08-`09Feinox 2008© Copyright SMR GmbH 2008-8-
Profits collapse: Financial Results1.1001.000900800EBIT/t 2006EBIT/t 2007EBIT/t 2008in US$ / tonne700600500400300200100-eeeFeinox 2008© Copyright SMR GmbH 20082008 = year to datee…. Estimated-9-
2009 will start on a significantly reduced consumption level (-25% y-o-y)... but is expected to improve as the year progresses2009ConsumerGoodsChange of <strong>Stainless</strong> <strong>Steel</strong> Consumption to Previous Year and VolumesBuilding /ConstructionAutomotive /TransportProcessIndustryOthers Total ktEU-27 -22,0% -14,0% -14,0% -12,0% -15,5% -14,3% 5,5NAFTA -22,0% -18,0% -10,0% -7,0% -14,3% -11,7% 2,3China 0,0% 6,0% -3,0% 2,0% 1,3% 2,2% 7,5O. Asia -11,0% -7,0% -16,0% -8,0% -10,5% -9,5% 4,8Others -3,0% 8,0% -3,0% -4,0% -0,5% -1,8% 3,4Total <strong>World</strong> -7,1% -3,7% -10,6% -6,1% -8,4% -6,5% 23,5'000 tonnes 5,0 5,2 2,7 9,2 1,4 23,5Structure 21,3% 22,0% 11,6% 39,3% 5,9% 100%Feinox 2008© Copyright SMR GmbH 2008-10-
Agenda1. Until Summer 2008:A bumpy Ride, but the <strong>World</strong> is basically OK2. After the Summer:What in Hell is Going On?3. The Key Challenges have not changed!Feinox 2008© Copyright SMR GmbH 2008-11-
<strong>Market</strong> will still reach 45 mill. tonnes by 2020But there is a ‘Bump’ ahead50.00045.000in `000 tonnes40.00035.00030.00025.00020.00020072008200920102011201220132014201520162017201820192020Feinox 2008© Copyright SMR GmbH 2008-12-
2014: <strong>Stainless</strong> <strong>Steel</strong> <strong>Market</strong> - Total <strong>World</strong>market will be 35 mill tChina will dominate and Turkey will replace Canada in the ´Top 10` ranking´Top 10` <strong>Stainless</strong> <strong>Steel</strong> <strong>Market</strong>s (88 % of Total <strong>Market</strong>)11.00010.0009.0008.000Flat ProductsLong Productsin ´000 tonnes7.0006.0005.0004.0003.0002.0001.000-ChinaEU-25IndiaUSAJapanSouth KoreaTaiwanThailandTurkeyBrazilFeinox 2008© Copyright SMR GmbH 2008-13-
Ni Substitution* will still go on300 Series Substitution will continue, but at a reduced speed62%200300CAGR0,7% p.a.3,7% p.a.1%Duplex4009,5% p.a.6,1% p.a.10%27%53%6%37%4%*based on an average Ni price $/t 17.500.-Feinox 2008© Copyright SMR GmbH 2008-14-
Are Chinese Mills Cost Leaders in Europe?No, not even with the ‘NPI’ advantage4.8004.600CRC, CRC, 304, 304, 2B, 2B, 2mm 2mmBased Based on on Ni Ni = 37,900 37,900 $/t $/t(Q1/2008)4.4004.200in US$4.0003.8003.6003.4003.200Net Raw Material Inputother variable costsSG&A CostsAgent CommisionEnergyFactory Labour CostsTransport to EURisk Discount3.000EU Cost Leader EU High Chinese MillFeinox 2008© Copyright SMR GmbH 2008-15-
Lack of Consolidation: <strong>Stainless</strong> <strong>Steel</strong> Producers are getting marginalizedSuppliers & Key Accounts increase their negotiation leverageRaw Material Suppliers<strong>Stainless</strong> <strong>Steel</strong> ProducersKey Customers<strong>Market</strong>Cap.: > 50 bill $ approx. 5 bill $ up to 20 bill $ConsolidationRatio (Top 10): > 90% 65 % up to 90%Feinox 2008© Copyright SMR GmbH 2008-16-
Substainable Profits can only be in Base Prices(not the alloy surcharge)!US$ / tonne6.4006.0005.6005.2004.8004.4004.0003.6003.2002.8002.4002.0001.6001.200800400-Base PriceAlloy SurchargePASTPROFITFUTUREPROFITQ1/97Q1/98Q1/99Q1/00Q1/01Q1/02Q1/03Q1/04Q1/05Q1/06Q1/07Q1/08Q1/09Q1/10Feinox 2008© Copyright SMR GmbH 2008-17-
After the Storm:Some Damage, but also a clean Scenery and a Clear View againFeinox 2008© Copyright SMR GmbH 2008-18-
Hear more Details at these eventsOur other events in 2009:June: Tianjin, ChinaSeptember: Düsseldorf, GermanyFeinox 2008© Copyright SMR GmbH 2008-19-
PRODUCTS LOCATIONOUR TEAMM. MollEnduse FocusedSingle-Client Researchwww.smr.atP. MollMulti-Client Projects &<strong>Stainless</strong> <strong>Steel</strong> Seminarswww.steel-intelligence.comO. Spaltmann T. Feichtner B. Blitz J. NormandeauR.-P. Hammerle E. Pfeifer J. Sancanin D. Bentley W. Lipp G. ButterfieldExecutive SearchKnow How – Know Whowww.steel-executive.comexecutive.comW. BullaAss. ConsultantS. SchratzB. HunterAss. Scrap Cons.Conferencesin cooperation withMumbai - Feb. ´09Tianjin - June ´09Düsseldorf- Sept. ´09MARKETRESEARCHFeinox 2008© Copyright SMR GmbH 2008Type of ResearchSingleClient90 %MultiClient10 %LongProducts50 %ProductsFlatProducts50 %-20-<strong>Stainless</strong><strong>Steel</strong>70 %<strong>Steel</strong> GradesTool <strong>Steel</strong>s,Eng. <strong>Steel</strong>s,Nickelalloys &Carbon <strong>Steel</strong>s30 %
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