Global steel industry and in particular China: future outlook
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share

Global steel industry and in particular China: future outlook

  • 2,373 views
Uploaded on

Mining On Top: Stockholm 2013 ...

Mining On Top: Stockholm 2013
26-27 Nov 2013

Global steel industry and in particular China: future outlook – Dr Nae Hee Han, World Steel Association; Chief Economist

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to like this
No Downloads

Views

Total Views
2,373
On Slideshare
1,945
From Embeds
428
Number of Embeds
2

Actions

Shares
Downloads
54
Comments
1
Likes
0

Embeds 428

http://www.miningontop.com 303
http://miningontop.com 125

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Global Steel Industry: Future Outlook Nae Hee Han/Director, Economic affairs Presentation to Mining on Top: Stockholm, 26-27, November 2013
  • 2. Disclaimer text This document is protected by copyright. Distribution to third parties or reproduction in any format is not permitted without written permission from worldsteel. worldsteel operates under the strictest antitrust guidelines. Visit worldsteel.orgAbout us for detailed antitrust guidelines. 2
  • 3. Current State of the Steel Industry     Slower growth of demand Overcapacity Low profitability Strengthening environmental regulations 3
  • 4. Steel Capacity Outgrows Demand Growth  During 2000~2012, global crude steel capacity ∆ 1,013 Mt to reach 2,063 Mt, whereas crude steel production ∆ 683 MT to 1,532 Mt  Chinese capacity ∆ 771Mt to 921 Mt, production ∆ 602 Mt to 731 Mt  After the global economic crisis, capacity expansion momentum slows, but the emerging economies continue to seek expansion Steed Demand vs Capacity (2000=100) Apparent steel use, crude steel equivalent Capacity, crude steel 2000=100 220 200 180 160 140 120 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 100 4
  • 5. Return of Overcapacity  While world steel demand continues to grow, capacity utilization ratio trends down  No easy solutions to overcapacity in sight 100% World crude steel capacity utilisation Jun-08 92.7% 90% Apr-10 84.5% Apr-11 83.4% Sep-13 79.3% 80% Aug-10 74.2% 70% Dec-12 71.5% 60% Dec-08 59.9% Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 50% 5
  • 6. Raw Materials Side Adds to Adversity  Value chain profits has been shifting away from the steel industry  Volatility and uncertainty in raw materials prices since departure from the benchmarking pricing system value chain profit pool split evolution 100%= Iron ore Coking coal 54 8 11 23 125 156 17 44 7 81 135 15 42 46 22 Steel making (HRC) 230 22 28 78 32 61 35 27 26 1995 2000 2005 10 2011 2017 Source: McKinsey & Company 6 6
  • 7. Steel Industry Performances Steel vs Raw materials prices Index 2005=100 7 Steel industry stocks vs Dow Jones Index 2005=100 7
  • 8. Steel Demand Forecasts for 2013-14 Apparent Steel Use, finished steel (SRO October 2013) Mt y-o-y % growth % Mt 14.0 15 10 1 403 1 219 5 125.0* 1 523 1 400 1 200 1 300 1 219 1 141 7.0 1 430 1 475 1 600 7.9 1 000 3.1 0 3.3 2.0 800 600 0.0 400 -5 200 -6.4 -10 0 2007 2008 2009 2010 2011 2012 2013 2014 *) 2014 as % of 2007 8
  • 9. Demand Forecasts for selected countries Apparent Steel Use, finished steel (SRO October 2013) Mt % 2012 2013 2014 12/11 13/12 14/13 2014 as % of 2007 World United States European Union (27) Japan China India Brazil ASEAN (5) MENA 1,430.3 1,475.1 1,523.2 2.0 3.1 3.3 125.0 96.2 96.9 99.8 7.8 0.7 3.0 92.2 140.2 134.9 137.8 -9.5 -3.8 2.1 69.1 63.9 64.0 63.0 -0.2 0.1 -1.6 77.6 660.1 699.7 720.7 2.9 6.0 3.0 172.2 71.6 74.0 78.2 2.6 3.4 5.6 151.8 25.2 26.0 27.0 0.6 3.2 3.8 122.3 54.8 57.3 60.4 12.8 4.6 5.4 149.7 63.2 64.3 69.0 2.2 1.7 7.3 127.2 Developed Economies Emerging & Developing Economies excl China World excl. China 390.2 384.1 390.5 -1.7 -1.6 1.7 82.4 380.0 391.4 412.1 4.2 3.0 5.3 126.0 770.2 775.4 802.6 1.1 0.7 3.5 100.3 9
  • 10. Key Trends in Post-Crisis Period Steel Demand  Multi-speed recovery continues driven by emerging economies, but weakening growth in the emerging world  Eurozone stabilizes and finally positive growth expected in 2014  China moves into slower growth phase  Key emerging economies struggling with structural issues Multi-Speed Recovery of Steel Demand 180 2007=100 World China Developed Economies Em. & Dev. Economies excl. China 160 140 120 100 80 60 2007 2008 2009 2010 2011 2012 2013 2014 10
  • 11. Regional Share in World Steel Demand Apparent Steel Use, finished steel (SRO October 2013) Emerging & Developing Economies 2000 2001 2002 2003 2004 Developed Economies 41.5% 16.4% 58.5% 46.1% 20.5% 53.9% 48.5% 23.3% China 51.5% 52.2% 27.4% 47.8% 53.0% 28.3% 47.0% 2005 33.3% 58.3% 41.7% 2006 33.1% 58.4% 41.6% 2007 2008 2009 61.1% 34.3% 38.9% 63.3% 36.7% 48.3% 36.7% 73.7% 26.3% 2010 45.2% 71.3% 28.7% 2011 45.7% 71.7% 28.3% 2012 46.1% 72.7% 27.3% 2013 47.4% 74.0% 26.0% 2014 47.3% 74.4% 25.6% 11 11
  • 12. China Entering a New Phase of Development  After soft landing, renewed focus on rebalancing of the economy  Less steel intensive growth to come, implying steel demand growth will underperform GDP growth  Future focus will be on capacity closures, environmental performance and upgrading Growth trend of China’s steel use Steel intensity (ASU/GDP) 12
  • 13. Economic Growth and Steel Demand S-Curve of different countries Thailand China Indonesia India United States Japan South Korea Per Capita Steel Use finished steel, kg, 2012 ASU per capita, ASU, crude steel equivalent per capita, kg 1 400 South Korea 488 506 1 200 1 000 305 800 279 222 Japan 220 127 600 China 40 57 400 Africa United States 200 India Brazil Middle United EU (27) China East States Japan World 0 0 10 20 30 GDP per capita, 2005 PPP$, 40 50 thousands USD 13
  • 14. How Far Will Chinese Steel Demand Grow? Positive Negative  Further room for urbanization and  Condensed growth, high share of Industrialization investment in GDP  Low level of development in the West  Environmental regulations, resource constraints  Manufacturing relocation out of China Speed and mode of development in the West China provincial steel use per capita (2011, kg/per, crude steel equiv ) China (2012) US (1973) Japan (1973) 14
  • 15. End of the China Effect, Next Growth Engine? Evolution of Steel Demand (1950-2014, crude steel equiv) Mt CAGR 2007-2014 3.1% 1 800 1 600 RoW CAGR 2000-2007 6.6% 1 400 1 200 China CAGR 1975-2000 1.1% 1 000 former USSR CAGR 1950-1975 5.0% 800 600 US, EU, Japan 400 200 2010 2005 2000 1995 1990 1985 1980 1975 1970 1965 1960 1955 1950 0 Contribution to Apparent Steel Demand Growth( ∆ Mt) World Developed China Other Emerging 1992-2000 142.6 84.1 51.1 7.4 2000-2007 480.3 74.2 297.8 108.4 2007-2014 320.2 -85.5 314.8 90.9 15
  • 16. Developing World: Strong Fundamentals Population (million) Urbanisation (%) GDP per capita, (PPP$) Steel Use/ capita(Kg) 2012 2020 2010 2020 2012 2020 2012 Mexico 116 126 77.8 80.5 14.4 17.3 173 Turkey 75 81 70.5 78.6 14.1 17.9 382 Brazil 198 210 84.3 86.8 11.0 13.8 127 Thailand 70 72 33.7 38.0 9.4 12.9 234 China 1 354 1 388 49.2 61.0 9.0 15.3 488 Indonesia 245 263 49.9 57.2 4.7 6.7 51 India 1 258 1 387 30.9 34.8 3.7 5.7 57 Vietnam 90 96 30.4 36.9 3.4 5.1 122 16
  • 17. Environmental Challenges  Energy use reduction efforts in developed world already at theoretical limit and limited progress in Break-Through technologies. Pressure on costs and also negative impact on steel demand growth  However. steel has been successful in providing solutions to the sustainability - lighter vehicles, renewable energy, etc … Energy Intensity of steel production (N America+Japan +EU27) Energy intensity of iron and steel production (GJ/t of crude steel) 17
  • 18. Steel as Solution to Sustainable Future  Innovative use of steel saves six times as much CO2 as is caused by the production of the steel → LCA approach Case study Net CO2 reduction potential 1 2 HH, ind., CTS1 3 Other renewables2 Efficient transformers 2.1 5 Traffic Wind power plants 4 Energy industry Efficient fossil fuel PPs Efficient e-motors 1.9 6 Weight reduction cars 7 Weight reduction trucks Emissions in the steel production3 8 29.5 ~ 400 : 1 <0.1 32 : 1 0.4 14.2 0.03 ~ 200 : 1 0.1 5.0 14 : 1 3:1 0.7 1.3 : 1 8.4 11.2 0.9 1.1 : 1 1.0 1.0 9:1 9.2 Combined heat/power 0 Ratio between CO2 reduction/emission4 5 10 30 0 1 10 11 Mt Mt ∑~ 74 Mt 9 ∑~ 12 Mt 6:1 1.HH = households; CTS = commerce, trade, and service 2. Geothermal, biomass, hydro 3. CO 2 expenditure for other materials not examined; values are rounded 4. Ratio relates exclusively to the emissions Source: BCG analysis 18
  • 19. Long Term View on Steel Demand  Global steel demand could reach 2.2~3.0 billion in 2050 Long Term Evolution of World Steel Demand Years 1 139 2010 1 404 2012 1870 1890 1910 1930 1950 1970 1990 2010 2030 2050 846 2005 0 743 2000 500 773 1995 1 000 719 1990 1 500 713 1985 2 000 640 1980 2 500 589 1975 3 000 Mt 1970 Mt 1 542 *apparent steel use, crude steel equivalent 19 19
  • 20. Conclusion  Despite current difficulties, future scenarios for the steel industry have optimistic starting point: Urbanization and population growth will support industry growth for considerable time  Surplus capacity in the industry will be difficult to reduce quickly, but can be absorbed in long term  Steel industry will continue to provide the basis for sustainability of the modern society through innovation  But the industry is facing formidable challenges ahead  Changing position in value chain through expanding product mix, development of new applications becomes crucial for steel industry  Sustainable development and, in particular, Life Cycle Assessment focus provides interesting challenges to the steel industry 20 20
  • 21. Steel touches every aspect of our lives. No other material has the same unique combination of strength, formability and versatility.
  • 22. Steel is a cornerstone and key driver for the world’s economy.
  • 23. Thank you for your attention. For further information contact: Nae Hee HAN| Director, Economic Affairs/Chief Representative, Beijing Office World Steel Association han@worldsteel.org | T: +86 (10)6464 6733| worldsteel.org
  • 24. worldsteel.org