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K atrina Barkova Global steel market specialist

Global Slab Market: current trends & future outlook. World Steel Semis Market October 6-8 2008, Istanbul. K atrina Barkova Global steel market specialist. Metal Expert in brief:. Reliable source of information on global steel and raw materials markets since 1994

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K atrina Barkova Global steel market specialist

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  1. Global Slab Market:current trends & future outlook World Steel Semis Market October 6-8 2008, Istanbul Katrina Barkova Global steel market specialist

  2. Metal Expert in brief: • Reliable source of information on global steel and raw materials markets since 1994 • Provider of daily news, weekly reviews, monthly analytical bulletins, quarterly forecasts, special reports and consulting services • Organizer of international steel and raw materials conferences • Offices in Dnipropetrovsk (Ukraine), Moscow (Russia), and Houston (Texas, USA)

  3. Content • World slabs trade in 2007: major suppliers and consumers • H1 2008: changes of global slab market picture • Outlook for slab market balance in 2009-2012

  4. Slab Exports in 2007 CIS is the major global slab supplier holding about 40% market share, with Russia being No1 having supplied over 8 mln tones Japan shipped 3.5 mln tones Brazil exported 2.7 mln tones and China was still an ambitious market player with 2.5 mln tones of slab exports In 2007 global slab market kept stable at the level of 31.2 mln tones

  5. Slab Imports in 2007 USA was still the biggest single slab importer (19% of world import), despite poor flat products market conditions South-East Asia is the biggest importing region in the world holding 48% of all imported slabs Namely, South Korea - 4.4 mln tones, Taiwan – 3.7 mln tones, Indonesia – 1.5 mln tones and Thailand - 1.3 mln tones Western European countries hold about 30% of global import Major buyers are Italy and Germany with 3.08 and 1.94 mln tones mln tones

  6. Price changes 2007-2008 Export price for CIS slabs, fob Black Sea During 2007 prices were fluctuating in the range slightly more then 100 usd when in H1 of 2008 the average number of increase was app 100 usd per month In the same time for the last two months prices have dropped with the average speed of app 200 usd

  7. Top slab suppliers changes in H1 2008 China’s leaving the market led to 2% decrease of global slab trade in H1 2008 despite grown supplies from other countries mln tones CIS countries are still keeping the first roles in slab trade but Brazil is only one step behind with the increase of almost 55% in H1 2008 compared to H1 2007

  8. Why CIS is increasing slab export? Good slab market fundamentals in general with rapid price growth in H1 08 supported by increased quotations for finished steel products, especially plate in Europe, where CIS companies operate captive re-rolling assets Italy: slab prices vs prices for flats SEA: slab prices vs prices for flats

  9. Shortage of slabs in South East Asia after China had stopped exporting Why CIS is increasing slab export? Import from CIS, ‘000 tones Export of slabs from Russia to SEA, `000 tons

  10. Slab market changes in H1 2008 Western Europe decreased imports both due to lowered HR flats output in H1 2008 (e.g. in Germany, France) and increased crude steel output (e.g. in Italy, Belgium) Iranian market sharply cut slab purchases due to unfavorable flats market situation. Still, rolling capacities exceed slab-making ones by around 2 mln tones

  11. Slab market outlook: CIS potential By 2010 CIS producers could ramp up merchant slab output (i.e. export) to over 23 mln tonnes through higher capacity utilization Currently with recent launches of new equipment slab-making capacities are used only by 50% in Ukraine and 70% in Russia In 2011-2012 further increase is expected due to projects at NLMK, Zaporozhstal and Vorskla Steel * - export volume ** - nominal merchant slab capacities

  12. Slab market outlook: CIS potential shipments, mt share, % CIS mills keep buying foreign assets Shipments to captive assets account for about 50% of all CIS export now The trend is obvious not only for CIS, but for ArcelorMittal group, several Brazilian projects etc. The trend is expected to persist

  13. Slab market outlook: Brazil

  14. Slab market outlook: Brazil Merchant slabs capacities, mln tones Brazil could become the second largest slab supplier in the world by 2010* * - Export from Brazil estimated according to Scenario1; Export from CIS estimated at the max level (see above)

  15. Slab market outlook: Turkey • Turkey formerly 1 mln tpy importer could easily become substantial slab exporter next year • Slab exports from Turkey in 2007 and 2008 is minor due to: • lack of steelmaking capacities (especially in case of Colakoglu) • good billet market fundamentals, as Colakoglu and Isdemir can both switch between slab and billet production • But already in 2011 shortage of slabs will arise, and even more substantially than in the past Hot-rolling vs slab capacities*, mln tones * - not taking into account actual steelmaking capacity and ability to switch to billet production

  16. World slab market outlook: consumers Merchant slabs requirements in MENA countries By 2010 major changes are expected to happen in Middle East (incl North African) and South East Asia. In particular, in Middle East substantial quantity of semis will be required by Saudi Arabia (2.15 mln tpy) and Morocco (1 mln tpy) due to installation of hot rolling mills by Al-Tuwairqi Group and Magreb Steel

  17. World slab market outlook: consumers SAE market in the coming years will still require substantial quantity of slabs due to continuous development of re-rolling facilities, but in the same time there a lot of ambitious integrated mills projects which can turn to real threat for traditional slab suppliers. In South Korea Dongkuk Steel in 2009 will enlarge plate-making capacities (not supported by casting ones) by 1.5 mln tpy to 3.9 mln tpy In Thailand Canadoil Group is planning to launch 1.2 mln tpy plate-making mill in 2009, which later possibly could be enlarged to 1.5 mln tpy. In the same time Sahaviriya Steel Industries in 2010 will start up 5 mln tpy conticaster to be self-sufficient Vietnam is turning to switch from import of HR products to their production. Among the projects there are Cuu Long (0.3 mln tpy of plates in 2009), of Essar Vietnam Steel Corporation (2 mln tpy of HR strip in H2 2010). Also must be mentioned greenfield project of Formosa Plastics Group (1.5 mln of merchant slabs), though dates are not confirmed yet In India all the major steel groups are investing heavily in crude steel production, including slab-oriented. As for re-rollers, Welspun Gujarat company has launched a 1.5mln tpy hot-rolling mill with intention to source slabs from domestic market as well as from Mexico and Europe

  18. Summary • Slab market have been changing in 2007-2008, and even more significant changes are expected in the years to come • Main slab exporters will be further increasing capacities on one hand, while trying to deminish spot sales on the other hand • In South East Asia many re-rolling as well as steelmaking facilities will be coming on stream, affecting the market • Expanding production of HR flats in Middle East will be supporting demand for imported slabs • But still ambitious projects of the major existing semis suppliers could lead to oversupply on the global scope

  19. Products Market & industry news, analysis, statistics, price database • - Raw materials (scrap, pig iron, DRI / HBI, iron ore, coal, coke, ferro-alloys) • Steel Semis (slab, billet, pipe billet) • Finished steel products (flats, longs, pipes) • Freight Regions • Turkey • CIS (Russia, Ukraine, Kazakhstan) • Europe: South Europe (Italy, Spain), Central Europe (Poland, Romania, Czech, Slovakia), Balkans (Bulgaria, Serbia, Albania, Bosnia) • MiddleEast (Iran, UAE, Syria, Saudi Arabia, Jordan) & North Africa (Egypt, Algeria) • India • US • China • SoutheastAsia (Taiwan, Thailand, Vietnam, Philippines, Singapore)

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