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Analysis of the CIS Raw Materials

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SteelOrbis Spring‘ 06 “Steel in the Raw“ Conference & 54th IREPAS Meeting. Analysis of the CIS Raw Materials. Andrey Pupchenko , Head of Raw Materials Research, Metal Expert Research Group, Ukraine. What Metal Expert are:. a part of Metal Courier information agency established in 1996.  

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slide1

SteelOrbis Spring‘ 06 “Steel in the Raw“ Conference & 54th IREPAS Meeting

Analysis of the CIS Raw Materials

Andrey Pupchenko, Head of Raw Materials Research,

Metal Expert Research Group, Ukraine

slide2

What Metal Expert are:

  • a part of Metal Courier information agency established in 1996.  
  • a reliable regional source for the CIS steel and raw materials markets.  
  • supplier of daily news, monthly analytical bulletins, quarterly forecasts, special reports and consulting services both in English and Russian.  
  • all the products in English are customized for the needs of the companies and specialists working with the CIS.
slide3

The main points of the presentation

  • The main focus is on ferrous scrap
  • Steel sector influence on raw materials
  • Forecasts of ferrous scrap consumption and export
slide5

The main focus is on ferrous scrap

World ferrous scrap deliveries

Source: International Steel Statistical Bureau

slide6

The main focus is on ferrous scrap

Ukrainian scrap collection decreased in 2005 by 2.2m tonnes vs 2001 figure…

‘000 tonnes

slide7

The main focus is on ferrous scrap

…whereas consumption in the domestic market increased by 1m tonnes

‘000 tonnes

slide8

The main focus is on ferrous scrap

Domestic market prevail in Ukrainian scrap deliveries

2004

2005

slide9

The main focus is on ferrous scrap

Correspondingly, export of ferrous scrap from Ukraine decreased substantially

‘000 tonnes

slide10

The main focus is on ferrous scrap

Strategical points of the Ukrainian ferrous scrap industry

  • Obsolete scrap reserves run out
  • A significant consolidation of the market operators took place in Ukraine in 2004-2005
  • The market is still under the restrictions adopted by government
slide11

The main focus is on ferrous scrap

Ferrous scrap collection in Russia almost stabilized in 2005…

‘000 tonnes

slide12

The main focus is on ferrous scrap

…although deliveries into Russian domestic market is still growing

‘000 tonnes

slide13

The main focus is on ferrous scrap

The share of domestic market in scrap deliveries have increased in Russia

2004

2005

slide14

The main focus is on ferrous scrap

Will huge ferrous scrap export from Russia be sustained?

‘000 tonnes

slide15

The main focus is on ferrous scrap

Strategical points of the Russian ferrous scrap industry

  • the industry still has a great potential
  • the structure of scrap export from Russia is rather diversified
  • moderate export duties (EUR15 or 15%)
slide16

The future export flows of ferrous scrap from Russia and Ukraine will be defined by:

  • domestic market situation
  • dynamics of world scrap prices
slide17

Steel sector influence on raw materials

Steel export prices - which way to follow: up or down?

slide18

Steel sector influence on raw materials

Turning point in steel industry – prices to go down

  • surplus of the steelmaking capacities in the world market
  • weakening influence of “raw materials factor” upon pricing due to increase in supplies of raw materials
  • reduction of steel output (and, consequently, the consumption of raw materials) in such regions as EU-25 and North America
slide19

Steel sector influence on raw materials

Turning point in steel industry – prices to go down

Consequences

  • prices in the world market of steel products will be preserved in a medium-term perspective at a current, relatively low, level
  • steelmakers will start to compete by reducing production costs
  • Likely bankruptcies of non-competitive producers will result in partial suspension of production facilities
  • further consolidation of buyers of raw materials, i.e. their negotiating positions will be strengthening
  • a growing number of anti-dumping investigations will result in lower export supplies, including those from CIS
slide20

Steel sector influence on raw materials

Will CIS steelmakers continue their growth even at descending world market?

Are they competitive enough?

What route will be chosen: pig iron or electrometallurgy?

slide21

Steel sector influence on raw materials

Semi-finished steel production cost, $ per tonne EXW

Source: Metal Expert Research, WSD

slide22

Steel sector influence on raw materials

The main competitive advantages of Russian steelworks

  • high quality of raw materials – both coking coals and iron orein comparison with Ukrainian
  • sufficient investments that have been made by the majority of Russian steelmaking enterprises during recent 5 years

- the growth of continue casting share

- open hearth furnace replacement

  • The share of steel products deliveries into domestic market is growing
slide24

Forecasts of scrap consumption and export

Raw materials consumption – growth or stabilization?

Russia

  • low production costs
  • plans of steelmakers and a number of new projects of mini-mills
  • replacement of open-hearth production will restrain the growth of steel output in Russia
slide25

Forecasts of scrap consumption and export

Raw materials consumption – growth or stabilization?

Steel production is to increase…

Russia: 2004-2007

…ferrous scrap consumption is to grow

slide26

Forecasts of scrap consumption and export

Estimation of ferrous scrap consumption growth in Russia, million tonnes

Estimation: Metal Expert Research

slide27

Forecasts of scrap consumption and export

Estimation of ferrous scrap export from Russia, ‘000 tonnes

slide28

Forecasts of scrap consumption and export

Raw materials consumption – growth or stabilization?

Ukraine

  • High production costs
  • A lack of preconditions for more investments in the enhancement of production capacities
  • A need to replace open-hearth production facilities with BOFs
slide29

Forecasts of scrap consumption and export

Raw materials consumption – growth or stabilization?

Steel production to remain stable…

Ukraine: 2004-2007

…whereas collection is to decrease

slide30

Forecasts of scrap consumption and export

Estimation of ferrous scrap export from Ukraine, ‘000 tonnes

slide32

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