Steel as the Backbone of the Modern Economy
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Steel as the Backbone of the Modern Economy

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A presentation by Dr Nae Hee Han ...

A presentation by Dr Nae Hee Han
Director, Economic Affairs and Chief Economist / Chief Representative, Beijing Office, worldsteel

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  • 1. Steel as the Backbone of the Modern Economy Nae Hee Han LCA AND STEEL Seminar, Beijing, 19 July 2012
  • 2. This document is protected by copyright. Distribution to third parties or reproduction in any format is not permitted without written permission from worldsteel .19 July 2012 2
  • 3. Content  Steel as the Backbone of the Modern Economy  Evolution of World Steel Production and Use  A Glance at the Chinese Steel Industry  Future of Steel – Challenges and AnswersJuly 19, 2012 3
  • 4. Steel as Backbone of the Modern Economy  Steel was the key driver of the Industrial Revolution: steel is essential in transport, construction, power generation, machinery  Steel is the most widely used material in modern society thanks to its unique combination of strength, formability and versatility - steel is everywhere in your life  Steel is a key material needed for industrialization and urbanization, hence strongly associated with status of a nation’s economy. Often times, steel industry is a barometer of the economic health of a nationJuly 19, 2012 4
  • 5. Economic Development and Steel Dynamic Relationship between GDP per CapitaStages of Steel Use and Steel Use per Capitaper Capita1. Very low level before economic take-off2. Rapid rise3. Leveling off4. Decline5. StabilizationSource: worldsteel 5
  • 6. Steel as Basis for Economic Take Off Steel Use per Capita vs GDP per Capita in Different CountriesJuly 19, 2012 6
  • 7. Emerging Economies: Engine of Growth for Steel Emerging Economies’ Share in World GDP vs Steel Use Collapse of USSR Source: worldsteel, Global Insight Note: for 1982-1990 share of emerging in GDP does not include former USSR and some countries of Eastern EuropeJuly 19, 2012 7
  • 8. Steel as Barometer of Economic Strength Per capita crude steel use kg 900 800 Japan 700 600 Per Capita Steel Use 530 500 400 460 US 300 290 200 100 China 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010July 19, 2012 8
  • 9. Steel Using Sectors  Construction  Mechanical Machinery  Metal Products  Automotive World, 2011  Other Transport  Electrical Equipment  Domestic Appliances Source: worldsteelJuly 19, 2012 9
  • 10. Steel Using Sectors Emerging, 2011 Advanced, 2011 Source: worldsteel 10
  • 11. Evolution of World Steel Demand Apparent Crude Steel Use (1950-2011) 2000-2007 CAGR: +6.8% 1975-1999 CAGR: +0.5% 1951-1974: CAGR: +5.6% Source: worldsteelJuly 19, 2012 11
  • 12. Shifting Centre of Gravity World Crude Steel Production, 1950 World Crude Steel Production, 1975 World Crude Steel Production, 2001 World Crude Steel Production, 2011Source: worldsteel 12
  • 13. The China Phenomenon Mt 700 50% China csp Chinas share in world csp 600 World No.1 40% 500 30% 400 300 20% 200 10% 100 0 0% 1950 1960 1970 1980 1990 2000 2010 Contribution to Steel Demand Increase ( ∆ Mt) World Developed China Other Emerging1990-2000 115 75 71 -312001-2007 447 59 260 1282008-2011 155 -54 177 32July 19, 2012 13
  • 14. Driving Forces of China’s Steel Growth  From 2000s: steel Intensive growth driven by investment and urbanization China’s steel demand drivers Source: worldsteel, Global InsightJuly 19, 2012 14
  • 15. New Phase of the Chinese Steel Industry  End of steel intensive growth era  From construction and investment driven to consumption driven  Shifting steel demand Driver  Inland provinces will derive steel demand  Motorization and Newly emerging sectors will be demand driver  Sustainability ChallengesJuly 19, 2012 15
  • 16. Multi Speed Growth within China Group C Group A Group B Population Population Population 55.6 mln 647.4 mln 370.1 mln Group D Heilongjiang Population Jilin 259.8 mln Liaoning Xinjiang Beijing Gansu Nei Mongol Tianjin Hebei PPP$ Ningxia Shanxi Shandong25000 Qinghai Henan Jiangsu Shaanxi Xizang Anhui Shanhhai20000 Hubei Sichuan Zhejiang Jiangxi Hunan15000 Guizhou Fujian Yunnan Guangxi Guangdong10000 Hainan 5000 0 Ningxia Guangxi National Total Guizhou Yunnan Shanghai Hebei Hubei Anhui Liaoning Chongqing Henan Shaanxi Shanxi Qinghai Guangdong Hainan Hunan Sichuan Jiangxi Jiangsu Shandong Inner Mongolia Jilin Gansu Beijing Fujian Zhejiang Heilongjiang Tibet Tianjin Xinjiang Source: worldsteel, Global Insight 19 July 2012 16
  • 17. Regional Shift in China’s Steel Demand China’s Provincial Development Pattern: ACSU/cap vs GDP/ cap Source: worldsteel, Global InsightJuly 19, 2012 17
  • 18. Motorization in China  The automotive market in China has taken off Stage1 Stage2-1 Stage2-2 Stage3 Incubation & Take Off Popularization Popularization Maturity Pass. Cars per 1000 people Growth rate: 0~5% China nowJuly 19, 2012 18
  • 19. China’s Emerging Strategic Sectors19
  • 20. Future of Steel - Challenges  Rebalancing in the developed world, China’s slow down: New growth engine?  Environmental regulations  Decreasing steel intensity  Inter-material competitionJuly 19, 2012 20
  • 21. Future of Steel – Answer  Steel demand will continue to grow to meet the need of human civilization in the emerging and developing world World Steel Production Per Capita Finished Steel Use Mt 2011, kg30002500 506 4602000 3101500 285 234 2151000 123 500 57 35 0 Africa India Brazil Middle US EU China Japan World 1870 1890 1910 1930 1950 1970 1990 2010 2030 2050 East July 19, 2012 21
  • 22. Future of Steel - Answer  Steel will continue to remain the backbone of the economy by providing solutions to the sustainability of the future economy - lighter vehicles, renewable energy, energy conserving machinery, etc… Growth of Wind Energy in EuropeJuly 19, 2012 22
  • 23. Future of Steel – Answer  A new thinking is emerging  Think “Value”, not just Volume  Think “Sustainability” and “LCA”July 19, 2012 23
  • 24. worldsteel.org