PowerPoint PresentationDr Bar Çiftçi | Head, Strategic Initiatives and Raw Materials Markets
World Steel Association (worldsteel)
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Antitrust
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• No discussions on current or future pricing, pricing terms or any component of price
• No discussions on current or future production output or current or future capacity or capacity utilisation involving non-public information, or desired capacity or production output or capacity utilisation levels, or coordinated capacity, capacity utilisation or production output increases or decreases
• No discussions on allocating geographical or product markets or customers or classes of customers
• No discussions on concerted actions involving costs (including concerted actions against suppliers)
• No discussions on future raw material prices, price terms or negotiating strategies
• No discussions regarding how to respond to price increases or other charges from suppliers or whether or how to pass on any costs to customers
• No discussion on contemplated trade actions or complaints about trade flows
• No discussion on non-public company-specific forward looking commercial strategies or plans
Visit worldsteel.org\About us for detailed antitrust guidelines.
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Contents
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World Steel Association
COVID-19 impact on steel output and demand in 2020 and in the short-run
Potential impact of COVID-19 pandemic in the long-run
Steelmaking materials markets
The World Steel Association (worldsteel) is a non-profit organisation.
It has headquarters in Brussels, Belgium. A second office in Beijing, China, opened in April 2006.
worldsteel represents steel producers, national and regional steel industry associations, and steel research institutes.
Members represent around 85% of global steel production.
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worldsteel – our key focus areas worldsteel is active in key areas of interest to the steel industry:
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Climate change and environment
Sustainability Technology
demand in 2020 and in the short-run
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End-2019: The global steel industry felt considerable recessionary
pressures in 2019 and was hoping for a mild recovery in 2020
2020: the COVID impact
Many countries still having difficulty in containing the pandemic and saw number of new cases increasing again since mid-August
Source: CEIC
The COVID impact – China BFs
Continued BF output surge in China: up 4.9% yoy in 10m-20 Source: worldsteel
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The COVID impact – world ex-China BFs
World ex-China BF output down 13% in 9m-20: EU, US, Japan down about 20%, India down 14%, Korea down 6%, CIS up 2% yoy
Source: worldsteel
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The COVID impact – steel demand Steel demand, finished steel (SRO October 2020)
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Mt %
2019 2020 2021 19/18 20/19 21/20 2021 as %
of 2007 World 1 766.7 1 726.4 1 795.1 3.5/ 1.3* -2.3 4.0 146.5 European Union (28) 158.3 134.5 149.2 -5.5 -15.1 10.9 73.5 Other Europe 33.8 35.2 39.3 -10.0 4.0 11.9 130.0 CIS 58.9 53.6 56.5 5.9 -9.0 5.5 99.1 NAFTA 135.3 114.6 122.2 -4.0 -15.3 6.7 86.7 Central & South America 41.6 35.4 38.8 -3.0 -15.1 9.8 91.1 Africa 36.4 30.6 33.4 0.4 -16.0 9.3 146.5 Middle East 47.9 38.5 40.9 -3.5 -19.5 6.2 93.8 Asia & Oceania 1 254.5 1 284.1 1 314.7 6.6/ 3.4* 2.4 2.4 192.0
China 907.5 980.1 980.1 8.5/ 4.0* 8.0 0.0 234.2 Developing Asia excl. China 201.7 176.4 200.3 5.1 -12.5 13.6 204.4 Developed Asia 138.7 121.5 127.9 -2.4 -12.4 5.3 80.0
World excl. China 859.2 746.3 815.1 -1.4 -13.1 9.2 101.0
* World growth rates based on adjusted Chinese growth rates
db
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Austria
4.090
3.885
3.105
3.510
3.894
3.658
3.566
3.606
3.905
3.836
4.095
4.185
3.979
3.465
3.598
Belgium-Luxembourg
5.600
5.400
4.100
4.611
5.034
4.248
4.191
4.323
4.329
4.386
4.557
4.639
4.639
4.314
4.659
5.686
5.830
4.304
4.775
4.964
5.403
6.774
7.113
7.363
7.102
7.189
7.395
7.216
6.519
6.959
9.186
10.743
12.224
11.622
11.301
12.182
12.796
13.385
13.460
13.945
13.442
13.606
13.143
10.879
11.069
332.854
336.930
303.195
355.502
381.759
398.560
416.081
429.861
437.532
445.254
453.872
461.981
465.787
409.378
451.480
4.894
6.658
7.394
9.564
8.619
8.958
10.564
10.679
11.334
9.894
8.709
9.939
10.657
8.525
9.378
603.574
596.946
479.997
581.191
620.053
644.770
660.775
691.752
679.142
680.327
695.435
703.523
700.880
611.842
665.899
140.902
130.821
83.912
111.747
123.175
132.686
131.074
146.204
133.947
130.709
138.271
140.885
135.270
114.571
122.221
6.613
7.275
5.523
7.602
8.379
9.190
8.955
9.491
10.321
9.232
9.968
9.340
9.402
7.479
8.606
Mercosur
30.534
32.434
24.705
33.919
34.494
34.927
36.414
33.119
28.861
23.908
25.454
26.852
25.539
21.846
23.769
Scrap has remained at relatively low cost levels
Source: Platts Note: Note: BF basket is 1.6 x IODEX and 0.735 x (PLV HCC Premium Low Vol FOB AUS+Panamax AUS-CHN) EAF basket: Scrap HMS CFR Turkey*1.1.
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Stark contrast between China and the RoW: 2020 steel demand: China 8%, RoW -13.3%
Recovery in 2021 expected to be partial only Projected steel demand for 2021 for the RoW 815 Mt, 45 Mt lower than 2019
Possibility of sustained demand loss over several years…
Also expectations for long-term impact from the pandemic
Potential impact of COVID-19 pandemic
in the long-run
Categorising megatrends
16 Source: Adapted from Blackrock, 2019, “Megatrends: the forces shaping our future”, report accessed here on 18 June 2020.
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Global SB IO supply to grow by about 130 Mt over 2019 (85 Mt over 2018)
19 Source: worldsteel seaborne iron ore supply model
Issues in iron ore supply
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Questions over Brazilian supply: risk of delays in return of operations
Brumadinho dam disaster posing continued regulatory risk
Stricter use of wet processing of fines causing quality deterioration
Continued process on regulation of tailings dams and dry stacking
Continued disruption risk from the pandemic, particularly in Brazil
Questions over Australian supply
Quality issues faced by Rio Tinto in 2019, BHP reduced Fe content
Impact of growing importance of ESG scrutiny
Issues in iron ore supply
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Lower quality reserves, increasing environmental costs limiting low-Al supply growth
Questions over new supply areas
China’s interest in developing projects in Africa appears to increase
Responsible procurement practices gaining ground
Impact of harm caused by Rio Tinto project on aboriginal caves
CO2 emission for beneficiation at mine sites vs CO2 emission at the steelmaking sites
Global seaborne metcoal supply
very limited growth of about 10 Mt till 2025 (CAGR: 0.7%), insufficient to mitigate weather or operational disruptions
Source: worldsteel seaborne metcoal supply model
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Outlook for new projects still insufficient to mitigate increasing risks of supply disruptions
Some companies avoiding coal investments, some financial institutions ceased support for coal investments
Severe price volatility and increasing trade frictions might also be taking a toll on interest in project development
Metcoal demand growth expected from India, especially considering large room for increasing PCI rate
Relocation of steel mills to coastal areas in China might support growth in China’s demand for seaborne metcoal
Steel industry’s CO2 emission reduction efforts might have a growing impact on metcoal demand in the medium to long-term
China scrap import bans
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Chinese ferrous scrap imports have fallen drastically since 2017, as China has taken steps towards tightening solid waste material imports since end-2016
Imports of some scrap were banned from 2019: Steel slag with Mn>25% or Fe>80%, Jan 1, 2019 White goods for steel scrap collection, Jan 1, 2019 End of life ships for breaking, Jan 1. 2019 Compressed piece of scrap automobiles, Jan 1. 2019 Stainless steel scrap, July 1, 2019
China scrap imports 2.3 Mt in 2017, 1.3 Mt in 2018, less than 200 th tons in 2019, remained negligible so far in 2020
Source: ArgusMedia, https://www.argusmedia.com/en/news/2119661-china-on-track-to-revive-ferrous-scrap-imports
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Work underway to exempt ferrous scrap from the ban on solid waste imports effective next year, renaming it as the recycled steel material*
China association of metal scrap utilisation (Camu) and the China metallurgical information and standardisation institute working on compiling a new standard for foreign scrap imports
The new standard to specify the definition, category, technology requirements, quality examination and transportation among other features.*
Scrap imports might resume in 2021 according to market reports, considering the lead time required to finalise the standardisation, ratification by authorities and so on**
Source: *ArgusMedia, https://www.argusmedia.com/en/news/2119661-china-on-track-to-revive-ferrous-scrap-imports
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Availability estimates from Sep-19 and hence do not reflect the impact of pandemic
2018 390 Mt
2030 600 Mt
2050 900 Mt
China scrap availability
Obsolete scrap availability: ~60 Mt in 2018; ~125 Mt by 2025; ~280 Mt by 2050
China has the potential to become a scrap exporter
Increase in scrap availability seem to be increasing scrap charge ratios and usage
Source: worldsteel
China is consuming almost all of scrap availability domestically
Higher uncertainty both for availability and usage of scrap due to the pandemic
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Steel demand might see sustained negative impact due to pandemic and this can have an impact on future scrap availability
Impact on employment & income Might lead to delays of purchases of white goods, auto, housing
Might lead to reduced office, schooling, hospitality activity space and this might have an impact on demolishment activity
Concluding remarks on steelmaking materials markets
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Impact of growing importance of ESG scrutiny
Very limited growth of metcoal, insufficient to mitigate weather or operational disruptions
Obsolete scrap availability should continue to grow
The pandemic brought new uncertainties over the future of scrap demand and availability
Increasing scrap availability and environmental pressures should support EAF growth and increasing demand for metallics
worldsteel.org | constructsteel.org | steeluniversity.org | worldautosteel.org | issf.org
worldsteel – our key focus areas
COVID-19 impact on steel output and demand in 2020 and in the short-run
End-2019: The global steel industry felt considerable recessionary pressures in 2019 and was hoping for a mild recovery in 2020
2020: the COVID impact
The COVID impact – world ex-China BFs
The COVID impact – steel demandSteel demand, finished steel (SRO October 2020)
Relationship between feed costs
Potential impact of COVID-19 pandemic in the long-run
Categorising megatrends
Steelmaking materials markets
Global SB IO supply to grow by about 130 Mt over 2019 (85 Mt over 2018)
Issues in iron ore supply
Issues in iron ore supply
Global seaborne metcoal supply
Issues in metcoal supply
China scrap import bans
China scrap import bans
Obsolete scrap wave approaching
China scrap availability
Higher uncertainty both for availability and usage of scrap due to the pandemic
Concluding remarks on steelmaking materials markets
Slide Number 30