challenges for the european steel market today · pdf filechallenges for the european steel...
TRANSCRIPT
Challenges for the European steel market today and tomorrow Platts 3rd Annual Steel Distribution & Supply Chain Meeting – 15 October
0
50
100
150
200
250
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
EU27 – Apparent steel consumption (Mt per annum)
Demand is expected to remain below 2007 peak for the period up to 2020
Demand to return to pre-boom
levels only by 2018
Current estimated EU production capacity ~215
million tonnes
European steel demand will not recover to pre-levels until 2020
Forecast
3
In Europe, the market for steel lags behind, and is forecasted to do so for the next years
ASU (Mt) Annual Change (%)
2012 2013 2014 2012 2013 2014
World 1413 1454 1500 1.2 2.9 3.2 Developed Economies 389 390 400 -1.9 0.4 2.3
Emerging & Developing Economies
1024 1063 1101 2.5 3.9 3.5
EU27 142 137 140 -10.0 -3.1 1.8 NAFTA 131 135 139 7.8 2.9 3.0
Other Europe 35 37 38 4.1 6.1 4.1
CIS 56 58 60 3.3 2 3.8 Central & South America 47 50 52 2.6 6.2 4.3
Africa 27 29 31 7.1 8.1 7.6
Middle East 49 49 52 -1.2 0.8 6.1
Asia & Oceania 928 957 984 1.8 3.2 2.8
China 646 669 686 1.9 3.5 2.5
Apparent Steel Use (ASU) by Region
3 3 Source: Worldsteel, Eurofer
70%
123%
163%
0% 50% 100% 150% 200%
EU27
NAFTA
CIS
Middle East
Other Europe
World
C & S America
Asia & Oceania
Africa
China
Apparent Steel Consumption 2014 Compared to 2007, %
At the same time there are good opportunities in Europe in selected geographies and industries
4
Apparent Steel Consumption 2014 Forecast change vs. 2007, %
Source: Eurofer
Selected Sector Output by Country 2014 Forecast (Index, 2010 = 100)
Increased sector activity vs 2010
Decreased sector activity vs 2010
But will there still be room for all of us?
5
2,5
4,2
8,4
12,5
7,2
12 10 8 6 4 2 0
Kloeckner
TSE
TKS EU*
AM
VA
EU27 Apparent Consumption Mt, annualised
020406080
100120140160180200220
-29%
Q4-14
Q3-14
Q2-14
Q1-14
Q4-13
Q3-13
Q2-13
Q1-13
Q4-12
Q3-12
Q2-12
Q1-12
Y14 Y13 Y12 Y07
3-year average Flat Long Semi
EBITDA margins Q2 2013 (% of revenue)
Two scenarios for our industry to respond to the future…
Shape the future together
Adapt Shape
• Take the industry spread dynamics as a given
• Close down marginal capacity • Continuously improve efficiency • Adapt to regulatory environment • Reduce risk exposure
• Influence the fundamentals of the industry
• Influence regulatory environment • Innovative products and services
to open up untapped markets • Develop high value steel-using
supply chains in Europe
USA China India
GDP by segment
Source: EU Industrial Structure, EU Commission 2011 Factories of the Future – 2020 Roadmap EU Factories of the Future Research Association 2012, CIA world factbook
European Manufacturing
Employs 37 million people across 2 million enterprises
Key enabler for Europe’s
Grand Societal Challenges: Employment and Poverty Innovation and Education
More absolute GDP value than
USA and India
7
And the manufacturing industry will continue to play a vital role in Europe
GDP EU28: $16 trillion
GDP: $15.9 trillion GDP: $12.6 trillion GDP: $4.7 trillion
Services, 72%
Industry, 25%
Agriculture, 3%
EU28
EU28 USA China India
Services 11,52 12,72 5,67 2,68
Industry 4,00 3,02 5,67 1,22
Agriculture 0,48 0,16 1,26 0,80
Total 16 15,9 12,6 4,7
*All figures in trillion US$
Our customers will become more demanding due to long term mega trends affecting their business
Mega trends
TechnologyImpact for industry• Limited impact in short term• Growing substitution threat in
specific markets e.g. auto, construction
Suppliers - raw materialsImpact for industry• Power to remain with miners• Raw materials to remain expensive• Price volatility management essential• Mining asset valuation to remain high
RegulatoryImpact for industry• EU ETS III requires more flexible
TSE asset base• Resource nationalism increasingly
important
CompetitorsImpact for industry• Increasing comp. intensity in India• Upcoming ‘smart’/global alliances • China Inc. gradually going global
CustomersImpact for industry• Shift to green & cost/energy
effective products and solutions• More focus on joint
innovation/design
The shifting customer needs arising from this, provide opportunities for the European steel industry
• Energy efficiency • Accelerated energy
transition • Unlock & squeeze
energy sources
Energy, power, utilities
• Equipment efficiency & durability
• Stronger supplier relationships
Lifting & Excavation
• Cost of ownership • Rise of mega cities • Earthquake
resistant
Construction
• Stronger supplier relationships
• Green products & technologies
• Affordable vehicles
Automotive
Next 5 years
Timing of significant impact for industry
• Globalisation of value chain
• Unlock clean water sources & distribute
5-10 years
• Zero carbon/ energy buildings
• Globalisation of value chain
9
Development of steel grades for automotive illustrate the innovative power of the European steel industry
10 Source: Metal Forming magazine
• Over the past 20 years the steel industry has developed multiple innovative steel grades for automotive customers
• These developments were driven by the need for:
o Lowered weight o Increased safety o Improved sustainability
• 1990 – 2000: the decennium of
conventional high strength steels
• 2000 – 2010: the decennium of advanced high strength steels
• What will this decennium bring?
Automotive steel grade development
Service differentiation is a focus area for building further customer intimacy and capturing value
• Services additional to “standard services” • Differentiated services aimed at building a
competitive advantage • Services should complement the existing or
future product offering and is not aimed at developing “stand alone services” for customers
Service differentiation
• Helps to better understand customers
• Improves customer intimacy
• Drives product innovations
• Relatively short lead time for implementation
• Combining the right service offering with
even a commodity product can create value.
Benefits of services differentiation
Scope of potential services is wide
But key is that the service offering complements and strengthens the product offering!
Source: BCG (The road to service excellence)
Layde
Unitol
Degels
Feijen and JV Laura
Blume
Gelsenkirchen
Blume
MultiSteel
JV Norsk Stal JV Norsk Stal Tynplater Norway
IJmuiden Port Talbot
Scunthorpe
Light Gauge Germany/Benelux
Heavy Gauge Distribution Europe
Light Gauge France and Spain
Mill Tata Steel Europe Llanwern
Steelpark Wednesfield
Tata Steel Distribution UK/I*
* after consolidation, plus one site in North Ireland
Shotton
12
Network with several SSC sites in Europe Common Strategy as part of Tata Steel Europe Close collaboration in the network by sharing of
know-how for functional excellence
Acting as a network is essential to meet European wide customer requirements
Producing advanced steel products is critical for a sustainable future
13
Steel not only supports the future of energy generation, but new steels make the generators themselves more efficient
Durability, efficiency and flexibility make steel the material of choice for the world’s most sustainable buildings
Steel remains the essential ingredient for sustainable vehicles and new grades make them even more efficient
To adapt or to shape…?