World Steel Outlook 2015-2016 Adam Szewczyk / Manager, Economics and Statistics
Х Metal Expert’s Conference, April 20-21, 2015, Kiev, Ukraine
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Global macro environment remains difficult
4
Global GDP growth has slowed
down
Global economic recovery
continues to disappoint despite
drop in oil prices
Structural problems in many advanced
and emerging economies
Ongoing geopolitical conflicts
Overall divergence in growth
rates among countries and
regions
Low oil price to generate overall
positive net impact on growth
Sources: IMF, Haver Analytics
5
100
120
140
160
180
200
220
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2000=100 Apparent steel use, crude steel equivalent
Capacity, crude steel
Production slowing down with strong increase of exports in 2014
Excessive steel capacity expansion during the boom period
World capacity utilisation in 70-80% range
Overcapacity to stay
Global Capacity vs Demand (2000=100)
Source: OECD, worldsteel
100
120
140
160
180
200
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2000=100 Production, crude steel
Exports, f.&sf.
Indirect Exports, fs. equiv.
Production, Exports, Indirect Exports (2000=100)
7
Sources: different, companies’ reports, Thomson Reuters
Steel industry stuck in low performance
Steel companies’ profitability converges at a low level due to
overcapacity and high raw material prices
9.8%
2.5%
3.3%
9.3%3.1%
2.7%
3.5%
65.8%
Share of ASU
by regions in 2016, %
European Union (28)
Other Europe
CIS
NAFTA
Central and South America
Africa
Middle East
Asia and Oceania
Source: worldsteel
NAFTA
CENTRAL and SOUTH
AMERICA
EUROPEAN UNION (28)
OTHER EUROPE
MIDDLE EAST
AFRICA
ASIA and OCEANIA
CIS
WORLD
Short Range Outlook (SRO) 2015-16: Regional Overview Apparent Steel Use, finished steel (SRO April 2015)
9
2015 2016
143 Mt
145 Mt
2015 2016
46 Mt
48 Mt
2015 2016
150 Mt
154 Mt 2015 2016
52 Mt
52 Mt
2015 2016
1 544 Mt
1 565 Mt
2015 2016
1 021 Mt
1 030 Mt
2015 2016
40 Mt
42 Mt
2015 2016
53 Mt
56 Mt
2015 2016
38 Mt
39 Mt
- 0.3%
- 7.3% - 0.9%
1.3%
3.4%
2.8% 1.4%
7.4%
4.9%
2.1% 2.8%
2.8%
4.2%
0.6% 0.9%
0.5% 1.4%
-3.4%
Source: worldsteel SRO
Steel demand shifts to low gear with China deceleration
10
474 447300 373 397 389 388 412 413 420
329 332299
348 374 391 406 415 425 442
418 447551
588641 660 735 711 707 704
6.8
0.4
-6.1
13.7
7.9
2.0
6.2
0.6 0.5 1.4
0
500
1 000
1 500
2 000
2 500
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
China, Mt Developing ex China, MtDeveloped, Mt World, y-o-y % growth
-40
-30
-20
-10
0
10
20
30
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
China Developing ex China Developed
y-o-y % growth
Apparent Steel Use, finished steel (SRO April 2015)
Lack of growth engine after China
Post-crisis recovery led by the emerging economies
Source: worldsteel SRO
Developed Economies in Focus Apparent Steel Use, finished steel (SRO April 2015)
2014 2015 2016 14/13 15/14 16/152016 as
% of 2007
World 1 537.3 1 544.4 1 565.5 0.6 0.5 1.4 128.2
United States 106.9 106.5 107.2 11.7 -0.4 0.7 99.0
European Union (28) 146.8 149.9 154.1 4.5 2.1 2.8 76.9
Japan 67.5 65.9 66.6 3.5 -2.4 1.1 82.0
South Korea 55.4 56.9 58.0 7.0 2.7 2.0 105.1
Developed Economies 411.9 412.6 420.3 6.2 0.2 1.8 88.7
Mt %
11
Strong growth seen in 2014 in the developed world on the back of
strength in the US, 'but moderate growth in 2015-2016
US steel demand to stagnate in 2015 due to high base and strong
dollar, material competition in the auto sector
Spain showing signs of recovery after a long crisis
Japan and Korea continued to show moderate growth
Source: worldsteel SRO
Emerging Economies in Focus Apparent Steel Use, finished steel (SRO April 2015)
2014 2015 2016 14/13 15/14 16/152016 as
% of 2007
World 1 537.3 1 544.4 1 565.5 0.6 0.5 1.4 128.2
China 710.8 707.2 703.7 -3.3 -0.5 -0.5 168.2
India 75.3 80.0 85.8 2.2 6.2 7.3 166.7
Brazil 24.6 22.7 23.4 -6.8 -7.8 3.1 106.2
Mexico 22.5 23.1 24.0 11.7 2.6 3.9 140.1
Russia 43.1 40.2 39.6 -1.4 -6.7 -1.6 98.1
Turkey 30.7 31.7 32.0 -1.8 3.0 1.1 134.6
MENA 70.1 72.9 76.3 5.0 4.1 4.7 139.9
ASEAN (5) 61.4 65.3 68.5 4.2 6.4 4.9 169.6
Emerging & Developing
Economies excl. China414.7 424.5 441.5 2.3 2.4 4.0 134.1
Mt %
12
Subdued outlook in major emerging economies, e.g. Russia and Brazil
India’s outlook brightens with new reform initiatives
High growth expected in ASEAN with strong fundamentals
Source: worldsteel SRO
40
60
80
100
120
140
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2007=100
World CIS
Russia Ukraine
Weak performance of CIS countries Apparent Steel Use, finished steel (SRO April 2015)
13
Mt %
2014 2015 2016 14/13 15/14 16/152016 as %
of 2007
World 1 537.4 1 546.1 1 567.2 0.6 0.6 1.4 128.3
CIS 56.5 52.4 52.2 -4.9 -7.3 -0.3 92.7
Russia 43.1 40.2 39.6 -1.4 -6.7 -1.6 98.1
Ukraine 4.3 3.4 3.8 -23.5 -21.0 14.0 47.7
Russia:
Structural slowdown aggravated by geopolitical tensions and weaker oil prices.
Investment activity undermined by curtailed access to capital markets, both domestic
(tight monetary policy) and international (sanctions).
Private consumption to decline, fiscal stimulus will be capped by tight budget.
Decline in steel-using sectors on the back of investment activity downturn and shrinking
real income.
Ukraine:
Weak performance of economy in 2015.
Apparent Steel Use, finished steel (SRO April 2015)
Source: worldsteel SRO
Diverging growth prospects of the developing economies
Structural reform will define growth potential
• Brazil and Russia trapped in structural problems
• Mexico has brighter prospects thanks to the strong reform agenda
• MENA outlook clouded by low oil prices and geopolitical instability
• ASEAN countries with reform agenda will outperform others
• India getting ready for a take off with renewed reform initiatives
Unleashing potential of emerging markets
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Sources: UN, Global Insight, worldsteel
GDP/capita,
USD Urbanisation,
%
Population,
(mln)
Steel use
per capita,
kg
2014 2030 2015 2030 2014 2030 2014
India 1 636 9 489 33 40 1 267 1 476 59
Indonesia 3 401 12 312 54 63 253 294 54
Vietnam 2 012 8 096 34 43 93 102 138
Thailand 5 561 14 391 50 64 67 68 258
Egypt 3 376 9 109 43 47 83 103 122
Conclusion
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The steel industry faces new normal of low growth with
peaking of Chinese steel demand and structural changes in
the world economy
• With Chinese deceleration the world lacks a strong growth
engine
• Unleashing the potential of other emerging economies
takes time
Capacity build ups in newly emerging economies cause
concern
Focus on value creation rather than expansion
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Thank you for your attention.
For further information contact:
Adam Szewczyk | Manager, Economics and Statistics
World Steel Association [email protected] | T: +32 (0)2 701 96 68 | worldsteel.org