GLOBAL TRADE OF CLINKER, CEMENT & CEMENTITIOUS MATERIALS
ASBA ANNUAL CARGO CONFERENCE OCTOBER 3, 2013 MIAMI FLORIDA
ZAG INTERNATIONAL TODAY
“Stand Alone” Privately Owned Company
o Materials Sourcing & Sales, Strategic Services & Project Execution o Focused on Global Cement & Construction Industry o Committed to Environmental Improvements & Benefits
12 Years Of Steady Expansion & Financial Success
o Emerged Healthy & Growing From Global Financial Crisis
o Dynamic & Competent Leadership Team With Techno Commercial Skills
o Global Presence & Perspective With Offices in USA, Europe, Japan, Australia and Singapore
o Up-To-Date Global and Regional Market Insights & Information
o Established In–House Freight Brokering & Operations Capability
o Global Fly Ash Marketing & Sourcing Alliance With STEAG POWER MINERALS GmbH -- Major German Power Group & Fly Ash Producer
o Extended Long Term RM & GBFS Contracts (NA, Japan, China & Europe)
o Strategic “Partnering” Concept With Customers And Suppliers
o Established Strong Base For USA Recovery
ZAG INTERNATIONAL PORTFOLIO
PRODUCTS
Cement & Clinker
Limestone & Lime
GBFS (Slag Granules)
GGBFS (Slag Powder)
Fly Ash (Bottom, Conditioned & Dry)
Natural & Synthetic Gypsum
Pozzolans & Silica Fume
Pumice
Mill Scale
Iron Silicate Granules & Powder
Abrasives & Garnet
Bauxite & Alumina Powders
Clays
Coal, Pet Coke & Fuels
SERVICES & PROJECTS
Market Information & Data
Strategic Planning
Feasibility Studies
Market Surveys
Purchasing & Sourcing
Supply Chain Management
Contract Negotiations
Freight Management & Brokering
Ocean & Land Logistics
Storage & Distribution Terminals
Grinding Plants
Co-Product/Waste Stream Analysis &
Optimization
Coal Regeneration
WHAT WE KNOW
WE DON’T KNOW
WHAT WE
DON’T KNOW
WHAT WE
KNOW
INDUSTRY TRENDS & FORECASTS
• GBFS
• FLY ASH
• HANDLING & LOGISTICS
• REGULATIONS
• SUPPLY & DEMAND
• SHIPBUILDING & DESIGN
• ECO SHIPS
• CARGOS TYPES
• RATES & ROUTES
• OIL & BUNKER COSTS
• GLOBAL & REGIONAL GROWTH
• SUPPLY & DEMAND SHIFTS
• TRADE FLOWS/PATTERNS\
• “GAME OF THRONES
MULTINATIONALS VS
EMERGING PLAYERS
• COAL & PETCOKE
• ALTERNATIVES
• BIOMASS
• SHALE GAS
•Global Cement Usage = 3.7 Billion Growing 5% per year
•Emerging Countries Continued Growth
•US Recovery Underway
•Basic Technology Unchanged – Emissions Increasing
•Shifting Global Supply & Demand and Trade Patterns
•Key Strategic Drivers – Cost, Freight & RM Availability
•Benefits of SCM’s
•Increasing Government & Social Pressures
•Supply will Shift - Dictated by External Factors
•Strategic Issue - Short Term View is Dangerous
•Freight Rates Will Rise & Bunker Prices Will Fluctuate
• Exactly What/How/When This Will Happen
• To What Degree & What Are the Implications
• What Are Possible Competitive Actions & Reactions
7
GLOBAL CEMENT DEMAND 1982-2012
8
GLOBAL CEMENT DEMAND THROUGH 2025 (Billion MT)
COUNTRY 2006 2008 2010 2012
EST CAPACITY
CHINA 1200 1372 1850 2165 2200
INDIA 152 174 221 225 301
USA 130 93 71 77 114
BRAZIL 41 52 60 70 70
RUSSIA 52 61 50 63 80
IRAN 36 45 55 59 71
TURKEY 42 43 50 58 82
INDONESIA 32 38 41 55 51
SAUDI ARABIA 25 30 41 53 55
EGYPT 30 38 50 51 48
VIETNAM 32 40 51 45 73
SOUTH KOREA 48 54 46 45 50
JAPAN 59 51 42 44 65
TOTAL WORLD 3700
(YEAR TO YEAR % CHANGE)
GLOBAL CEMENT DEMAND 2012
Region 2006 2007 2008 2009 2010 2011 2012 2013E
N. America - 0.8% - 7% -15% - 25% - 0.9% +2.5% +7% +9%
S. America +8.9% + 7.5% + 6% - 3.0 +4.4% +5.6% +5% +5%
W. Europe + 4.0% + 0.7% - 1.4% -18.5% - 6.2% +1.0% +2% -5%
E. Europe + 12% + 13.% + 11% - 23.7% +5.4% +8.5% +4.5% +2%
Africa + 9% + 9.5% + 10% +7.7% +5.3% +5.2% +4.5% +6%
Middle East + 10% + 11% + 8% +3.5% +7.4% +5.1% +6% +5%
N Asia (Excl. China)
+ 1.8% + 4% + 2% - 2.4% +1.1% +3.4% +2.4% +2%
China + 18% +12% + 10% +17.4% +15.6% +10.5% +8% +6%
SE Asia + 2% + 4% + 5% +2.1% +5.5% +7.5% +6% +6%
Oceania +1.3% + 1.6% + 4.3% -1.5% +1.2% +4% +2% +1%
+ 11% + 8.4% + 7.3% +5.8% +9.1% +7.1% +5.2% +4.1%
o 2006 global cement consumption reached 2.2 billion metric tonnes
o Seaborne trading =120 million mt = 5% of total cement volumes
o Housing bubble led to higher US imports which reached 38 million MT
o The high oil price led to surging middle east demand
o China emerged as the world’s leading exporter
GLOBAL CEMENT TRADE CIRCA 2006
36
6
5
11
9 7
7
12
23 3 3
5
3
8
35
26
5
4
10
Imports
Exports
1
o 2011 global cement consumption reached 3.3 billion tonnes;
o Seaborne trading = 90 million MT = 2.7% of total cement volumes
o Chinese less keen to export due to very strong domestic demand and high prices
o US market down nearly 50% in five years imports are sharply down to 5 million MT
GLOBAL CEMENT TRADE CIRCA 2011
6
4
4 15 12
19 10 4
8 5
2
12
10
13
4
5
9
Imports
Exports
2
1
5 3
USA INHERENT DEMAND GROWTH
Economic Factors
o Large, Resilient Economy oHigh Productivity & Public/Private Centers of Research & Innovation o Educational Institutions Foster Entrepreneurial & Leadership Skills
Population & Demographic Factors o Steady Immigration & Desire To Improve Life o Population Will Grow Another 60 Million By 2030 To 370 Million o 60 Million = More Drivers, Roads, Schools, Homes, Offices, Hospitals
Energy Independence & Renewable Energy Factors oDiscovery of Shale Gas – More Domestic Investments & Infrastructure oMore Wind, Hydro & Nuclear Facilities
Legislation & Regulation Factors oMore and More Stringent CO2 & Emissions Reductions o Incentives for Residential & Nonresidential “Green” Buildings
14
USA CEMENT CONSUMPTION (PCA FORECAST)
RECOVERY HAS BEGUN – INHERENT DEMAND IS IN PLACE
USA CEMENT DEMAND GROWTH
PCA USA Cement Consumption
PCA USA Cement Production
v.s.
Worst Case Scenario
Supply Gap
112 MMT
IMPLICATIONS RE FACILITIES, TERMINALS, CEMENT IMPORTS & SCMS
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GENERATION OF CO2 IN CLINKER & CEMENT PRODUCTION
17
BENEFITS OF SCM’s
o BETTER ECONOMICS o IMPROVED PROPERTIES, PERFORMANCE & ESTHETICS o LOWER CO² EMISSIONS o LESS ENERGY CONSUMED o REDUCED RAW MATERIAL USAGE o EXTENDED QUARRY LIFE o BENEFICIAL RECYCLING OF WASTES & BY PRODUCTS
TRENDS o DEVELOPED MARKETS WILL “RE-EMBRACE” USE OF SCM’s o KNOWLEDGE/USE WILL GROW IN EMERGING MARKETS
18
GRANULATED BLAST FURNACE SLAG (GBFS) SUPPLY
SOURCE: WORLD STEEL ASSOCIATION
2007 2011 2012 Δ
2007 - 2012 BF Steel
CHINA 494.9 683.3 711.7 + 43.8% 630
E.U. 209.7 177.4 139 - 33.7% 94
JAPAN 120.2 107.6 106.5 - 11.4% 81
USA 98.1 86.2 91.1 - 7.1% 30
RUSSIA 72.4 68.7 71.2 - 1.6% 48
INDIA 53.1 72.2 75.7 + 42.5% 39
S. KOREA 51.5 68.5 69.3 + 34.5% 42
R.O.W. 251.4 245 257.5 + 2.4% 118
WORLD 1,351.3 1,508 1,522 +12.6% 1,082
19
GBFS SUPPLY = 6% OF TOTAL CEMENT CAPACITY
20
SCM SUPPLY & DEMAND – SOME KEY DISTINCTIONS
• GBFS oGlobally Traded oRecognized As “Products” Under REACH and Basel Conventions oSafe & Easy To Handle – Can Be Stored Openly oMoved in Bulk
• GGBFS & CCP’S oTypically Supplied Locally & Regionally oConsidered To Be “Waste Materials” oRestrictive Permitting & Environmental Regulations oChallenging To Handle oRequire Silos, Special Loading/Unloading Equipment or Pneumatic Carriers
21
COAL FIRED POWER PLANTS - “THE PERFECT STORM”
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COAL FIRED POWER PLANTS -- “ THE PERFECT STORM”
High Cost Of Compliance – New EPA & State Laws
De-Regulated Markets (NE, Midwest, California, Texas)
Require Low Cost Plants
Shale Gas “Revolution”
oAbundant Supply
o50% Less GHG Emissions
oLower Cost
2008 $8/MMBTU 2013 $3.75/MMBTU
Cost Prohibitive 1960’s Vintage Coal-Fired Plants
23
COAL FIRED POWER PLANTS ANNOUNCED CLOSURES
• 204 Generating Units in over 25 States
• >11% Reduction in Total Coal-Fired Generating Capacity
• >40% of Capacity Reduction in Midwest, Mid Atlantic and Southeastern States
• >7 Million Ton Reduction in Fly Ash Generation
SCM
FLY ASH SUPPLY
COAL VS GAS VS
NUCLEAR EUROPE RECOVERY
USA GROWTH
& EMERGING REGIONS
LIMITED GBFS
SUPPLY
SUPPLY SECURITY
& QUALITY
SCM DEMAND
IN EMERGING REGIONS
HANDLING ISSUES & FREIGHT
RATES
MAJOR TRENDS
CONCLUSIONS
Overall Global Cement Industry Is Growing Steadily Strong Emerging Markets With Sustained Growth North America Cement Demand Will Rise Steadily Western Europe Could Be In A Prolonged Slump Supply/Demand Challenges – The China Capacity
“Overhang” Drive For Sustained Profitability & Long Term Investment
Returns Environmental Pressures & Regulations Will Increase SCM Needs & Usage Will Be Key Strategic Considerations Raw Material Availability Will Become More Critical Logistics, Freight & Handling Issues Are Of Paramount
Importance
ASBA ANNUAL CARGO CONFERENCE
THANK YOU FOR YOUR ATTENTION