European Steel and Steel Scrap Market • Christian RubachPresident EFR • Rolf WillekeExecutive Board Member BDSV • Ferrous PanelISRI Conference Las Vegas2006-04-05
Contents • Introduction • EU– Steel Production, Steel Scrap Consumption and Deliveries • Steel Scrap Deliveries, old and new scrap in the EU • Shredder Plants in the EU • EU Steel Scrap Trade Balance • EU Steel Scrap Export • Concentration of the EU Steel Industry • Concentration of the EU Steel Scrap Industry • Forecast 2006 Economic Development • Forecast EU Steel Production • Conclusion: Higher Steel Scrap Consumption world-wide
Introduction • The Western European steel industry has experienced a structural change during the last 20 years, a process that has not yet been finished. Until today 5 steel producers represent approx. 70% of the European steel market. • The European steel recycling industry has consequently also experienced a structural change, a process that has not yet been finished. • The European Commission is planning to build up a European Recycling Society. (Thematic Strategy on the prevention and recycling of waste). Moreover, Europe has the most restrictive environmental legislation. Therefore the thematic strategy is working on a simplification and modernisation of the existing legislation.
Introduction • One of the targets of the Thematic Strategy is to establish conditions for the End-of-Waste. We are confident that steel scrap prepared in a manner to ensure direct charging can be classified as a secondary product as is already done in the USA. • Currently 54% of the EU steel production is based on the consumption of steel scrap. Steel scrap is the second most important raw material for the steel industry both in the EU and world-wide. • Steel recycling will contribute to the resource base, essential for sustained steel production growth.
EU Crude Steel Production (million tonnes) 2000-2003: EU 15 2004: EU 25 Source: IISI
EU Crude Steel Production (million tonnes) Source: IISI
* Steel Scrap Consumption for the Crude Steel Production EU(million tonnes) 2000-2003: EU 152004: EU 25 *provisional Source: IISI
EU 25 – Steel Production, Scrap Consumption and Deliveries 2005 * Basic Oxygene Furnace ** Electric Arc Furnace Source: IISI, Statistic Bureau Germany
Steel Scrap Deliveries, old and new scrap in the EU 25 • We think that steel scrap deliveries to steelworks will mostly be of the following combination in the EU 25: • 65% old scrap • 35% new scrap
Shredder Plants in the EU 25 Total no. Of Shredders: Approx. 220 Source: EFR
EU Steel Scrap Trade Balance(million tonnes) * *provisional 2000-2003: EU 152004: EU 25 Source: Statistic Bureau Germany
EU 25 Steel Scrap Trade Balance(million tonnes) Source: Statistic Bureau Germany
Total exports 8.9* EU Steel Scrap Export 2005(million tonnes) Biggest Buyers Malaysia0.29 Turkey: 2.82 Switzerland: 0.33 India: 2.07 USA: 0.77 China: 0.41 Pakistan: 0.39 * provisional Source: Statistic Bureau Germany
EU Steel Industry highly concentrated • 4 of the biggest steel producers have their headquarters in Europe. * Dofasco 4.4 Source: IISI
EU Steel Industry highly concentrated • Until today 5 steel producers represent approx. 70% of the European steel market. • Before beginning of 2004 the Arcelor Group was the biggest steel producer in the word. Its world market share was about 4%. • Meanwhile the Mittal Group has taken over the world market leadership. If Mittal succeeds in taking over Arcelor, it would become a global player in the steel market with a raw steel production of more than 100 million tonnes/year world-wide. Target for 2015: 200 million tonnes/year. • All signs indicate that the concentration process will go on. The forecast of Deutsche Bank Research: The world steel market will be dominated by steelworks with a yearly capacity of more than 100 million tonnes in 10 to 15 years from now.
Concentration of the EU Steel Scrap Industry • Over 10 large companies handling over 100 000 tonnes of steel scrap per month. The biggest company group of these large companies has a turnover of approx. 10 million tonnes per year. • 20% are larger medium-sized companies handling over 10,000 tonnes of steel scrap per month. • 30% are normal medium-sized companies handling between 3,000 and 10,000 tonnes of steel scrap per month. • 30% are smaller companies handling between 1,000 and 3,000 tonnes of steel scrap per month. • Nearly 20% are very small companies handling less than 1,000 tonnes per month.
Concentration of theEU Steel Scrap Industry • The concentration process in the EU steel industry resulted in yet another concentration process in the EU steel recycling industry. • Among the 7 biggest European steel recycling companies are: • TSR, Germany • EMR, UK • CFF, France • Stena, Sweden • Interseroh, Germany • Scholz, Germany • SIMS, UK
Concentration of theEU Steel Scrap Industry • Currently the 7 steel reycling companies provide some 40% of the total steel scrap deliveries to steelworks in the EU and elsewhere. • Currently Arcelor with its yearly steel scrap consumption of 15 million tonnes influences the European steel scrap market with divers instruments. Therefore, the necessary critical size of the European steel recycling industry has to be measured differently as five years ago. • Effect: The concentration processs within the steel industry results in a further concentration process within the European steel recycling industry.
Forecast EU Steel Production Source: EUROFER
Forecast EU Steel Production • The Western European steel industry only expects a marginal growth. *provisional Source: DB Research
Forecast EU Steel Production – High-Tech Steel • The EU Steel industry concentrates on high-grade qualities where the global competition is not so strong. • Examples for high-grade qualities: • Constructing thinner and even more long-lasting steel products using new technologies (e. g. Tailored Blanks for the automobile industry). • The so-called HSD steel (High Strength and Ductility). Components based on this material weigh less than those made of aluminium by showing equal performance figures
Forecast EU Steel Production – High-Tech Steel • Europe will long-term continue to be an important place for the steel industry, since it benefits from manufacturing inter-connections with principal buyers (automobile, mechanical engineering, and electro-technology industries). • The EU members from Eastern Europe still have a long way to go to complete the necessary structural changes of their steel industries.