Alloy Market: Present Situation & Trends
Metal Bulletin India Ferroalloy Conference
Hyderabad 8-10 February 2004
Introduction
1. BHP Billiton’s position in the carbon steel materials and ferroalloy industry
2. Trends in world steel and ferroalloy demand3. Possible implications for India
Part 1BHP Billiton and Samancor in the
Ferroalloy Industry
Angl
o Am
erica
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Alco
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Newm
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CVRD
Alca
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Barri
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Angl
ogol
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Ampl
ats
Gold
Fiel
ds
Plac
er D
ome
Impa
la
Xstra
ta
Inco
Pech
iney
Phel
ps D
odge
Free
port
Alum
ina
BHPB
Rio
Tint
o
0
5
10
15
20
25
30
35
40
45
Mark
et C
ap. o
n 22
/08/
03 (U
S$Bn
)BHP Billiton - The largest company in a consolidating sector
Source: Datastream
Market value of minerals industry US$306 bnValue of Top Five US$141 bnValue of BHP Billiton US$ 42 bn
A global footprint
Energy CoalDiamonds & Spec Prod
Aluminium
Carbon Steel Materials
Base Metals
Petroleum
Stainless Steel Materials
Carbon Steel Materials – 27% of BHPB EBIT
Data for year ended 30 June 2003
Customer Sector Group EBIT:
Energy Coal5%
Aluminium15%
Diamonds & Spec. Prod.
10%
Carbon Steel Materials
27%
Base Metals8%
Petroleum31%
Stainless Steel Materials
4%
100% nominal production capacity
Carbon Steel Materials Assets
Illawarra Coal (100%)Prod: 7MtpaYears of Life: 45Niche supplier
QLD Coal (50 – 80%)Prod: 52MtpaYears of Life: 50No 1 Seaborne supplier
WA Iron Ore (85-100%)Prod: 77MtpaYears of Life: 35No 3 Seaborne supplier
Boodarie Iron (100%)Prod: 1.7Mtpa
Samarco Iron Ore (50%)Prod: 15MtpaYears of Life: 40Low cost pellet producer
Manganese (60%)Prod: Ore 4.1MtpaAlloy etc 0.7MtpaYears of Life:Aust 25SA 30No 1 Supplier
Samancor Manganese
•Wessels•Mamatwan•Gemco
AlloysMinesAlloys
Samancor
Mines
SamancorManganese
Chrome
BHP Billiton Anglo American
•Metalloys•Temco
South African operations
60% 40%
Hotazel Johannesburg
SaldanhaBay Port Elizabeth
SOUTH AFRICA
Metalloys
GEMCOGroote Eylandt
TEMCOBell Bay
Samancor Managese Operations
AUSTRALIA
INDIA5%
CIS11%
CHINA35%
JAPAN9%
EUROPE14%
AMERICAS6%
OTHER3%
OTH AFRICA5%
SAMANCOR12%
Source: IMnI
Samancor share of world Mn Alloy productionHCFeMn
INDIA6%
CIS29%
CHINA34%
EUROPE12%
AMERICAS9%
OTHER2%
JAPAN1%
OTH AFRICA3%
SAMANCOR4%
SiMn
World Mn Alloy Production 2003 = 8.9Mt
Part 1 Summary• BHP Billiton is the world’s largest supplier of steelmaking
raw materials
• Samancor is the world’s largest producer of manganese units
Part 2Trends in world steel and ferroalloy
demand
Annualised crude steel production
800
840
880
920
960
1000
1040
Janu
aryMarc
h
May July
Septem
ber
Novem
ber
Janu
aryMarc
h
May July
Septem
ber
Novem
ber
(Mt)
Totals2002 903Mt2003 962Mt
Annualised pig iron production
560
580
600
620
640
660
680
Janu
aryMarc
h
May July
Septe
mber
Novem
ber
Janu
aryMarc
h
May July
Septem
ber
Novem
ber
(Mt)
Totals2002 610Mt2003 655Mt
Seasonal Trends
2003
Annualised steel and pig iron production trends
Seasonal Trends
Seasonal Trends
Seasonal Trends
2003
Source: IISI
Seasonal Trends
Divergent trends emerged during the yearMonthly YOY % Change Crude Steel
-16-12-8-4048
1216202428
December
Januar
yFeb
ruary
Mar
ch
April
May June
July
August
Septem
berOctob
erNove
mberDece
mber
Global EU China Japan US India
Monthly YOY % Change Pig Iron
-24
-16
-8
0
8
16
24
December
Januar
yFeb
ruary
Marc
h
April
May
June
July
August
Septem
berOctob
erNovem
berDece
mber
Global EU China Japan US India
1998 1999 2000 2001 2002
Crude Steel 12 month running totals
Pig Iron 12 month running totals
Source: IISI
560
580
600
620
640
660
2001 2002 200344
46
48
50
52
54
56
58
60
12 months running total actual monthly data
de-seasonalised monthly data
820
840
860
880
900
920
940
960
2001 2002 200362
66
70
74
78
82
86
90
12 months running total actual monthly data
de-seasonalised monthly data
600
650
700
750
800
850
900
950
1000
95 96 97 98 99 '00 '01 '02 '034.0
5.0
6.0
7.0
8.0
9.0
Crude steel Mn alloy demand
Crude steel (Mmt) Mn Alloy Demand (Mmt)
Source:IISI, IMnI
World Mn Alloy Demand
3.9
4.1
4.3
4.5
4.7
4.9
94 95 96 97 98 99 '00 '01 '02 '03 '040.6
0.65
0.7
0.75
0.8
0.85
0.9
0.95
1
1.05
World Mn Alloy Consumption Trends
Source: IISI, IMnI
HC,SiMn (Kg Aly/ ton steel) MC/LCFeMn(Kg Aly/ ton steel)
MC/LCFeMn (3%pa)
HCFeMn (-1.4%pa)
SiMn (0.4%pa)
Steel industry/technological trends Manganese consumption
?
World Mn Alloy Capacity History
9,628
12,100
0
2,000
4,000
6,000
8,000
10,000
12,000
1975
1985
1989
1991
1993
1995
1997
1999
2001
2003
'000 Mt Thyssen,BS closures
Huta Pokojclosure
SFPO closureMoi Rana start-up
Source:- IMnI
$400
$450
$500
$550
$600
$650
$700
$750
$800
$850
Jan-
02
Feb-
02
Mar
-02
Apr
-02
May
-02
Jun-
02
Jul-0
2
Aug-
02
Sep
-02
Oct
-02
Nov
-02
Dec
-02
Jan-
03
Feb-
03
Mar
-03
Apr
-03
May
-03
Jun-
03
Jul-0
3
Aug-
03
Sep
-03
Oct
-03
Nov
-03
Dec
-03
Jan-
04
HCFeMn SiMn
MN Alloy Pricing trends – US monthly$/t (Fob Warehouse)
Source: CRU
€400
€450
€500
€550
€600
€650
€700
€750
€800
Jan-
02
Feb-
02
Mar
-02
Apr
-02
May
-02
Jun-
02
Jul-0
2
Aug-
02
Sep
-02
Oct
-02
Nov
-02
Dec
-02
Jan-
03
Feb-
03
Mar
-03
Apr
-03
May
-03
Jun-
03
Jul-0
3
Aug-
03
Sep
-03
Oct
-03
Nov
-03
Dec
-03
Jan-
04
HCFeMnSiMnHC$Si$
Euro/t (Del)
Source: CRU
MN Alloy Pricing trends – Europe monthly
Part 2 - Summary• Global Steel production has grown dramatically over the last 2
years, driven by Asia, and in particular China and India• The fall in HCFeMn consumption per ton of steel has now
stopped• Alloy Capacity has fallen consistently over the last few years• Prices have increased as supply has failed to keep up with
demand
Part 3Implications for India
0
500
1000
1500
2000
Mt
World Manganese Alloy Supply – 2003
0
500
1000
1500
2000
Mt
North America
South America0
500
1000
1500
2000
Mt
0
500
1000
1500
2000
Mt
China
Japan& Korea
0
500
1000
1500
2000
Mt Australia
Europe
India
Source:- CRU, Reuters, Interfax
0
500
1000
1500
2000
Mt
HCFeMn
0
500
1000
1500
2000
Mt
RSA
0
500
1000
1500
2000
Mt
FUSSR
SiMn
0
500
1000
1500
2000
Mt
0
500
1000
1500
Mt
World Manganese Alloy Demand – 2003
0
500
1000
1500
Mt
North America
South America0
500
1000
1500
Mt
0
500
1000
1500
Mt
China
Asia excl China
Europe
India
Source:- CRU, Reuters, Interfax
0
500
1000
1500
Mt
HCFeMn
0
500
1000
1500
Mt
Africa
0
500
1000
1500
Mt
FUSSR
SiMn
0
500
1000
1500
Mt
500
1,500
2,500
3,500
4,500
5,500
6,500
7,500
95 96 97 98 99 '00 '01 '02 '030
500
1000
1500
2000
2500
3000
Mn ore imports Domestic ore Mn alloy apparent cons
Mn ore (‘000mt)
Source:IISI, China trade statistics, IMnI
Manganese supply:demand in China
Mn alloy (‘000mt)
2003 Domestic alloy apparent consumption increase ±500Kt met by imported ore
0
500
1000
1500
2000
2500
3000
3500
95 96 97 98 99 '00 '01 '02 '030
50
100
150
200
250
Mn alloy apparent cons Mn alloy export Crude steel
Crude steel (Mmt)Mn Alloy (‘000mt)
Source:IISI, China trade statistics, IMnI
MN Alloy exports from ChinaMn alloy exports showing signs of slowing down from Q4 2003
050
100150200250
Q1 Q2 Q3 Q4
Kt China exports Mn alloy - 2003
Indian Mn Alloy Industry 2003
CAPACITY PRODUCTION APPARENT
CONSUMPTN
EXPORT6m annualised
IMPORT6m annualised
‘000 Mt
TOTAL
432
570
15
230
309
0
172
258
13
10
42
1
1
2
7
HCFeMn
SiMn
Refined
1 017 539 443 53 10
Source:CRU, India trade statistics
10
20
30
40
95 96 97 98 99 '00 '01 '02 '03200
300
400
500
Crude steel Mn alloy apparent cons
Crude steel (Mmt) Mn Alloy (‘000mt)
Source:IISI, IMnI
Mn Alloy consumption in India
10
110
210
310
410
510
95 96 97 98 99 '00 '01 '02 '03
Mn alloy production Mn alloy exports Mn alloy demand
Mt Alloy (‘000)
Source:IMnI, India trade statistics
MN Alloy supply and demand in India
Mn Industry issues for India
CRUDE STEEL
• Production fcst to increase to 33-35 mt in 2004 +5 mt on 2003, and reach 47 mt by 2007 Majority of this increase will be via BOF capacity expansions (Source: CRU)
MANGANESE
• Power availability and cost
• Coke availability and cost
• Steady increase in Mn ore production in next few years
• Transport logistics for both ore and alloys
• Reduction of import duties on ferroalloys from 25% to 15% could in the long run induce imports into India
Part 3 - Summary
• India is in the unique position, similar to China, of being both a large user and a large producer and exporter of ferroalloys
• As steel production takes off, India will quickly need to make decisions about:
– whether to continue exporting ferroalloys– whether sufficient high quality ore can be sourced in India to make
HCFeMn in particular– If not, whether the best option is to buy HCFeMn or high quality Mn Ore
– depending on factors such as power, coke and transport logistics
Summary1. BHP Billiton is importantly placed to meet demand for all carbon
steel materials.2. Samancor is well placed to supply not only Mn ore and also high
quality HCFeMn and SiMn3. Demand for these products is growing sharply as the steel
industry grows and makes more steel via the BOF route4. India will soon need to make decisions about where to source
Mn units in the futureWe look forward to discussing the options!