russia 57,3 4,5% south korea 56,6 · 2016. 3. 29. · 582,2 0 200 400 600 800 turkey ukraine brazil...
TRANSCRIPT
07-Dec-2011
1
Vlasjuk V.S. SE UPE Co. Research & Consulting, Ukraine
71stSession of the OECD Steel Committee Meeting, Paris, 05-06 December 2011
SE UPE Co. Research & Consulting
Ministry of Economic Development and Trade of Ukraine
By the results of 10 months 2011 Ukraine holds the 9th place (with share 2.3% from the world
production) in the rating of the largest steel-producing countries
crude steel production
2,2%
2,3%
2,3%
3,0%
4,4%
4,5%
4,7%
5,6%
7,1%
45,5%
28,1
29,2
29,7
37,8
56,6
57,3
59,7
72,0
90,5
582,2
0 200 400 600 800
Turkey
Ukraine
Brazil
Germany
South Korea
Russia
India
United States
Japan
China
0% 20% 40% 60%
mln tonnes
Share, % 10 months 2011Ukraine
Source: WSA, State Statistics Service of Ukraine
Share %
07-Dec-2011
2
Despite the increase of the steel production in 2010-2011, two unfavorable factors for
steelmakers have dominated on the steel market – high cost and low demand
Overcapacities
Increasing cost
Capacity utilization %
Steel cost, $/t
83,1%
75,4%
70%
72%
74%
76%
78%
80%
82%
84%
before crisis (2007)
after crisis (2011)
365
600
0
100
200
300
400
500
600
700
before crisis (2007)
after crisis (2011)
After record 2007, in 2009-2011 Ukraine’s steel export reduced by 5.7 Mt,
especially to Africa, Turkey, America and CIS countries
Ukrainian steel products export,
mln. tonnes
* estimation based on 10 months 2011
Source: State Statistics Service of Ukraine
Decrease of Ukrainian exports to regional
markets in 2011 against 2007
28,226,3
22,523,8
22,5
0
5
10
15
20
25
30
2007 2008 2009 2010 2011*
-905
-1 811
-2 034
-2 251
-3 000 -2 000 -1 000 0 1 000
CIS
America
Turkey
Africa
th. tonnes
07-Dec-2011
3
31,833,1 34,1
36,938,7 38,6
40,942,8
37,1
29,5
32,734,8
0
5
10
15
20
25
30
35
40
45
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 E
This year crude steel production in Ukraine will increase by 2.1Mt (+6.4% y-to-y) to 34.8 Mt.
However, the losses in export prevent Ukrainian steel production from recovery to the pre-crisis level 2007
Source: State Statistics Service of Ukraine
Crude steel production, Mt
44,2 44,9 47,6 45,2 45,2 46,6
40,9 42,8
37,1
29,832,7
34,8
0,0
10,0
20,0
30,0
40,0
50,0
60,0
2006 2007 2008 2009 2010 2011E
capacity crude steel production
Now crude steel capacities in Ukraine make up 46.6Mt. During the year they were utilized
averagely by 74.8%, by 15% less than in 2007
Source: State Statistics Service of Ukraine
Capacity utilization (%) Ukrainian
Mt
Source: WSA, OECD, UPE Co.
85,8%
83,3% 78,6%
68,4%72,2%
75,8%
92,5%95,4%
77,9%
66,0%
72,4%
74,8%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
2006 2007 2008 2009 2010 2011
world Ukraine
07-Dec-2011
4
77,271,7
65,7
77,1 79,5
0
10
20
30
40
50
60
70
80
90
2007 2008 2009 2010 2011 est
20,619,5
17,418,6
19,7
0
5
10
15
20
25
2007 2008 2009 2010 2011 est
Growing demand for raw materials on the world market contributed to the rapid recovery of coke
and iron ore production in Ukraine
Source: State Statistics Service of Ukraine
Coke, Mt Iron ore, Mt
20,7 21,727,1 27,1 27,1 31,1
21,6 20,818,1 15,7 15,7 11,8
1,9 2,42,4
2,4 2,4 3,7
0
10
20
30
40
50
60
2005 2007 2008 2009 2010 2011
EAF
OHF
OBC
44,2 44,9 47,6
45,2 45,2 46,6
During 2011 4.0 Mt of open-hearth furnaces were decommissioned
whereas oxygen converters (4.0 Mt) and new EAF (1.3 Mt) were commissioned.
Complete replacement of open hearth technology in Ukraine is planned till 2018
Source: State Statistics Service of Ukraine
Mt
Ukrainian steel capacities by process
OBC67%
OHF25%
EAF8%
2011
OBC48%
OHF46%
EAF6%
2007
07-Dec-2011
5
Economic growth in Ukraine will continue in 2012, but it will be slightly lower in the background of
deteriorating finance climate
Source: State Statistics Service of Ukraine
GDP % Industrial production % Construction %
-15,0%
4,2% 4,7% 4,3%
-20%
-15%
-10%
-5%
0%
5%
10%
2009 2010 2011 est 2012 forecast
-21,9%
11,2%8,0%
5,5%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
2009 2010 2011 est 2012 forecast
-48,2%
-5,4%
11,7%8,0%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
2009 2010 2011 est 2012 forecast
3,44,2
4,9
6,87,5
8,28,7
11,2
9,3
6,2
7,5
9,410,4
0
2
4
6
8
10
12
The expected growth rate of apparent steel consumption is 10% in 2012 vs. 26% in 2011.
This year Ukraine will import up to 1.88 Mt of steel products or 20% of total consumption.
In 2012 steel import to Ukraine is expected nearly 2.1 Mt
Source: State Statistics Service of Ukraine, UPE Co. (forecast),
Steel products, Mt
total consumption
import
07-Dec-2011
6
31,833,1 34,1
36,938,7 38,6
40,942,8
37,1
29,8
32,734,8 35,9
0
5
10
15
20
25
30
35
40
45
Due to losses in export markets steel production in Ukraine in 2012 will rich about 36 million tons,
remaining at 2002-2003 level
Source: State Statistics Service of Ukraine (fact), UPE Co. (forecast)
Prices for iron ore and coking coal in Ukraine in 2012 is expected to decline by 13% and 5%
correspondently.
At the same time shortage of scrap will support growing price trend (+8.6% to 2011)
Source: UPE Co.
Iron ore concentrate (65% Fe),
$/t cpt, w/o VAT
Coking coal charge,
$/t cpt, w/o VAT
Scrap 3A,
$/t cpt, w/o VAT
44
79
127
110
0
20
40
60
80
100
120
140
2009 2010 2011 2012F
85
159
194 184
0
50
100
150
200
250
2009 2010 2011 2012F
170
269
382415
0
50
100
150
200
250
300
350
400
450
2009 2010 2011 2012F
07-Dec-2011
7
122175 152
96
118112
61
899239
4042
24
3129
17
1817
112
117117
0
100
200
300
400
500
600
700
2010 2011 2012 F
Other
Ferroalloys
Natural Gas
Transport
Scrap
Coking coal
Iron ore
Due to the expected decline in prices for iron ore and coking coal in 2012
Ukraine’s producers (non integrated) will be able to reduce production costs by 5%
Source: UPE Co.
470
588 560
+118$ -28$
Billet cost of non-integrated companies, $/t
Source: Bloomberg, UPE Co (est)
Steel (-6p.p.)
Iron Ore (+21p.p.)
Coal (+15p.p.)
EBITDA margin of world steel
producers is gradually recovering
EBITDA margin of mining companies will
stabilize in 2011-2012
0%
10%
20%
30%
40%
50%
60%
2003 2010 2011e 2012f
18%
11% 12% 13%
31%
49%54% 53%
20%
37% 36%33%
Steel Iron Ore Coal
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e 2012f
Emerging Markets Developed Markets
Russia Ukraine
The gap in the profitability of raw material producers and steelmakers will generally remain in 2012,
though steelmakers margin will rise slightly contrary to the diminishing earnings of raw material producers.
Presently some Ukrainian steel mills still remain not enough efficient.
2011 vs. 2003
07-Dec-2011
8
497
753
380
533
632 605
0
200
400
600
800
1000
1200
1400
Jan
Mar
May Ju
l
Sep
No
v
Jan
Mar
May Ju
l
Sep
No
v
Jan
Mar
May Ju
l
Sep
No
v
Jan
Mar
May Ju
l
Sep
No
v
Jan
Mar
May Ju
l
Sep
No
v
Jan
Mar
May Ju
l
Sep
No
v
2007 2008 2009 2010 2011 2012
Billet average price for a month
Billet average price for a year
In contrast to 2009-2011 when average prices for steel products abruptly increased by $100-150/t,
in 2012 we expect price weakening due to lower production costs and more enhance pressure of
market shortage and excess supply
Source: UPE Co.
excess supply
cost
$/t
fob B
lack S
ea
541
809
423
582
669 645
0
200
400
600
800
1000
1200
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
2007 2008 2009 2010 2011 2012
HR Coil average price for a month
HR Coil average price for a year
497
753
380
533
632 605
0
200
400
600
800
1000
1200
1400
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
Jan
Ap
r
Jul
Oct
2007 2008 2009 2010 2011 2012
Billet average price for a month
Billet average price for a year
During the 1st quarter 2012 market will remain unfavorable and prices will be at current low level.
Expected higher consumption in the second half of 2012 will cause a moderate rise in prices
Source: UPE Co.
$/t fob Black Sea
07-Dec-2011
9
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