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1
Global Stainless Markets –
Where Are they Heading
For?
Dr. Gerhard C. Pariser
Heinz H. Pariser Alloy Metals & Steel Market Research
Xanten / Germany
10th China Nickel Conference
Shanghai 15-16 March 2013
Stainless Steel – A Longterm Success Story
2
0
100
200
300
400
500
600
700
800
900
1975 1980 1985 1990 1995 2000 2005 2010
Ind
ex
19
75
= 1
00
Stainless Steel
Aluminium
Copper
Crude Steel
OECD IP
Plastics
© Heinz H. Pariser
5.3%
3.4%
5.4%
2.1%
2.4%
1.9%
Growth Rates
1975 - 2012
Sources: USGS, International Aluminium Institute, ICSG, Plastics Europe, Worldsteel, OECD, Heinz H. Pariser
3
Outline
1. Stainless Steel – Profitless Prosperity
2. Market Concentration …
3. … and it„s Impact on Raw Materials
4. Stainless Vision 2030
5. Conclusions
4
Chromium & Stainless Steel Stainless Steel:
Profitless Prosperity
Return on Sales 2008-2012 (Selected Companies)
5
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
TISC
O
ATI
, Fla
t
Jin
da
l
PO
SC
O
NA
S
Ap
era
m
NSSC
*
Sa
nd
vik
Yie
h U
nit
ed
*
Nip
po
n Y
ak
in
Nis
shin
Ste
el
Ba
ost
ee
l
ZP
SS*
Ac
eri
no
x G
rou
p
Ac
eri
no
x C
olu
mb
us
AK
Ste
el
Thy
sse
nK
rup
p
Ou
tok
um
pu
Nip
po
n M
eta
l*
Re
turn
on
Sa
les
20
08
-2
01
2, i
n %
Weighted Average 1.5%
Asia
USA
EU
* Year 2011
© Heinz H. Pariser
“Stainless Cluster” Return on Sales
6
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
2006 2007 2008 2009 2010 2011 2012
An
nu
al R
etu
rn o
n S
ale
s, i
n %
RSH-Stahl: 3.4%
Nickel & FeNi (incl. Norilsk): 28.4%
FeCr (incl. ENRC): 27.5%
© Heinz H. Pariser
Global Stainless Melting Production
7
2010 2011 2012 Change 2013e Change
12/11 13/12
in % in %
USA 2,201 2,074 1,964 -5.3 2,300 17.1
Brazil 433 399 391 -1.9 405 3.5
European Union 7,497 7,559 7,455 -1.4 7,300 -2.1
Other Europe 240 264 229 -13.5 226 -1.0
Japan 3,427 3,256 3,132 -3.8 3,175 1.4
S. Korea 2,048 2,157 2,167 0.5 2,220 2.4
Taiwan 1,523 1,203 1,106 -8.1 1,118 1.1
S. Africa 478 444 505 13.6 586 16.1
Subtotal 17,847 17,355 16,948 -2.3 17,328 2.2
China 12,350 14,460 16,372 13.2 18,450 12.7
India 2,170 2,265 2,469 9.0 2,616 6.0
Subtotal 14,520 16,725 18,841 12.6 21,066 11.8
Total 32,367 34,081 35,788 5.0 38,394 7.3
© Heinz H. Pariser, Alloy Metals & Steel Market Research
in ´000 t
A Look at Global Demand
8
Quarterly Apparent Consumption
vs Real Demand
China
Europe (EU27)
9
Chromium & Stainless Steel Market Concentration
10
Structural Supply Changes
6.0
19.0
8.3
48.1
0
5
10
15
20
25
30
35
40
45
50
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Ma
rke
t Sh
are
(C
rud
e M
eltin
g)
in %
USA
EU
Japan
China
© Heinz H. Pariser
Stainless Steel Market Concentration
11
EU, Japan, USA South Korea, Taiwan India, China
HHI = Herfindahl Hirschman Index; illustrates the level of concentration in an industry
0
500
1,000
1,500
2,000
2,500
3,000
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
HH
I In
de
x
© Heinz H. Pariser
StSt Production
StSt Consumption
me
diu
mh
igh
low
0
5
10
15
20
25
30
35
40
45
0
2
4
6
8
10
12
14
1970 1980 1990 2000 2010
Ch
ina
Sh
are
of
Glo
ba
l D
em
an
d,
in %
Ch
ina
Sta
inle
ss S
tee
l U
sag
e,
in M
ill t
© Heinz H. Pariser
China: The Industry Growth Driver…
12
Stainless Steel Demand Growth Long-term Ranking
(1970-2012)
© Heinz H. Pariser
© Heinz H. Pariser
1970: 23
1980: 49
1990: 313
2000: 1,450
2010: 10,065
2012: 12,727
in ´000 t
1. China 96.7
2. Japan 87.7
3. USA 70.0
Stainless Usage, in Mill t
1. Japan 126.4
2. China 88.9
3. USA 78.1
Stainless Output, in Mill t
…Building further Capacity
13
0
20
40
60
80
100
120
140
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2001 2003 2005 2007 2009 2011 2013 2015
Ca
pa
city
Utilisa
tio
n,
in %
Cru
de
Sta
inle
ss O
utp
ut,
in
Mill
t
10th Five-Year-Plan 11th Five-Year-Plan 12th Five-Year-Plan
Source: CSSC, Antaike, 51BXG, Heinz H. Pariser
© Heinz H. Pariser
Melting Capacity
G.R.: 26.9%
Crude Output
G.R.: 26.5%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
1990 1995 2000 2005 2010
Ne
t Ex
po
rt V
olu
me
, in
Mill t
Su
pp
ly /
Usa
ge
, in
Mill t
Apparent Use
G.R.: 3.0%
Supply
G.R.: 2.2%
Net Exports
G.R.: -2.4%
~ 1.30 Mill t
~ 1.00 Mill t
~ 0.75 Mill t
© Heinz H. Pariser
14
Europe – Once Export-Oriented
RoS: +10%
RoS: +6%
RoS: -2%
15
... Eventually Cutting Capacity
1.6
6.0
9.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
1970 1980 1990 2000 2010 2020
Cru
de
Sta
inle
ss,
in M
ill t
Stainless Output
(EU27)
Peak Capacity
Growth Rates
1970 - 2006:
4.9%
2006 - 2012:
-3.1%
>2012:
0.2%
Global
Financial Crises
Exit Krefeld
Exit
Bochum ?
© Heinz H. Pariser
16
But Global Capacity Utilisation Remains Low
50
60
70
80
90
100
110
0.0
10.0
20.0
30.0
40.0
50.0
60.0
1990 1995 2000 2005 2010 2015
Ca
pa
city
Utilisa
tio
n,
in %
in M
ill t
Crude Melting
G.R.: 5.2%
Peak Capacity
G.R.: 5.9%
© Heinz H. Pariser
Capacity Utilisation
17
Chromium & Stainless Steel Impact on Nickel
18
Demand Driver: China
1,219
1,773
89.7%
55.0%
10.3%
45.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Ch
ina
/ R
oW
Sh
are
of
Co
nsu
mp
tio
n,
in %
Nic
ke
l C
on
sum
ptio
n,
in '0
00
t
Global Nickel Demand
G.R.: 3.0%
China
G.R.: 22.8%
RoW
G.R.: -2.4%
© Heinz H. Pariser
19
China„s Demand for Primary Nickel -
Stainless Steel Dependent
20
Nickel Ore & Concentrate Trade Flow 2012 in „000 t Nickel Content
South
Africa
USA
© Heinz H. Pariser, Alloy Metals & Steel Market Research
Lateritic Ore
Sulphide Concentrate
Australia New
Caledonia
Indonesia
Philippines
Greece
9.0
Ukraine
17.3
Japan
21.7
334.4
15.3
17.4
18.4
1.6
22.4
193.2
7.2
Finland
Canada
S. Korea 24.3
2.8
Zambia 3.4
16.4
13.9
China
25.9
.
.
Brazil
8.4
0.8
Guatemala
Rising Primary Nickel Supply
21
1.2
1.7
1.6
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Pri
ma
ry N
i O
utp
ut,
in
Mill
t N
i
Nickel Metal
G.R.: 1.4%
Ferronickel
G.R.: 1.4%
NOS / Chemicals
G.R. -0.2%
Nickel Pig Iron
G.R.: 71.6%
18% Market Share
in 2012
© Heinz H. Pariser
Total Production
G.R.: 3.5%
Ni Demand
G.R.: 3.0%
Nickel as the Major Cost Component (Proportion of Raw Material Cost, Nickel Input Cost of Total Cost)
22
23
Nickel Valuation Comparison
0
5
10
15
20
25
30
35
2009 2010 2011 2012 2013
Pri
ce
, in
'000 U
S$ /
t
LME Ni Cash
Ni in Scrap
(Europe)
Ni in NPI
(China. 10%)
Ni Spot
(China +VAT)
Ni in NPI
(China. 5%)
© Heinz H. Pariser
24
Stainless Mills Realising Better Prices (Nickel Input Basket – Scrap, FeNi, NPI, Ni Metal)
1.281
-4.158
-1.375
-5.0
-3.0
-1.0
1.0
3.0
5.0
7.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2009 2010 2011 2012
De
lta
Ch
ina
-EU
In
pu
t C
ost
Av
. N
ick
el
Inp
ut
Co
st,in
'0
00
US$
/ t
Europe
China
LME Cash
© Heinz H. Pariser
25
Chromium & Stainless Steel Stainless Vision 2030
Long-term „Megatrends“
26
Future Stainless
Market
2030
„Megatrends“ – Source: Roland Berger, Thoughts
Globalisation
Population
Urbanisation
Technology Knowledge
Resources
Climate
Change
• China reaching saturation at earlier stages
• Or other negatively impacting scenarios
• Return to historic levels of
expansion • Assumption CAGR of 6%
• Led by growth in China and India, coupled with a
• Revitalisation of „tradional“ markets
Stainless Demand Growth Potentials
27
Base Case: 4 - 5%
Historical: Up to 6%
„China Saturation“: < 4%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
1970 1980 1990 2000 2010 2020 2030
Glo
ba
l Sta
inle
ss U
sag
e,
in M
ill t
Actual Forecast
1970 - 2012
Long-term Growth Rate:
5.20 %
Base Case
"Historic" Expansion
"China Saturation"
© Heinz H. Pariser
Impact on Stainless Raw Materials 2030
28
Stainless Market
Expansion
Base Case: 4 - 5%
Ferrochrome
Demand
Primary
Nickel Demand
Ext. Stainless
Scrap Input
2012 2030
9.7 Mill t
> 22 Mill t
9
G.R.: 4.6%
© Heinz H. Pariser
2012 2030
3.8 Mill t
1.6 Mill t
G.R.: 4.6%
© Heinz H. Pariser
2012 2030
7.7 Mill t
G.R.: 5.9%
> 20 Mill t
© Heinz H. Pariser
29
Chromium & Stainless Steel Conclusions
30
Stainless Rising – Pulling Nickel with It
0.0
0.5
1.0
1.5
2.0
2.5
0
5
10
15
20
25
30
35
40
45
2003 2005 2007 2009 2011 2013 2015
Ni D
em
an
d,
in M
ill t
Cru
de
Ste
el
Pro
du
ctio
n,
in M
ill t
Crude Steel
Production
G.R.: 5.2%
Nickel
Demand
G.R.: 4.2%
Actual Forecast
© Heinz H. Pariser Americas
G.R.: 0.8%
Europe
G.R.: -2.2%
China
G.R.: 19.8%
Other Asia
G.R.: -2.0%
Others
G.R.: 0.2%
Conclusions
31
• Stainless Steel is a successfull and versatile material that can look back on
a long track record of healthy historic growth of between 5 and 6%
• During the last decade, however, markets concentrated more and more
on one country: China. And China‘s industrial landscape is still in an
expansion mode. This has pushed stainless from one volume record to another,
as other markets, in particular the EU, became weaker
• However: (global) market growth does not necessarily translate into a profitable
industry! This is true for stainless steel, but has become more and more a reality
in steel making raw materials as well – including nickel recently as well
• On a global scale, medium to long-term demand for stainless steel looks
bright, albeit at somewhat reduced growth rates. While this will also increase
the need for steel making metals and ferroalloys, it does not imply that
profitability is to return fast!
32
Dr. Gerhard C. Pariser
Heinz H. Pariser
Alloy Metals & Steel Market Research
Scharnstr. 51
46509 Xanten
Germany
Tel.: +49 2801 77 11 0
Email: [email protected]
You are always welcome
to contact us.
Contact Details