uk-damstahl report february 2017...of which around 0.6 mill. t will be transformed into cold rolled...

Damstahl Stainless Steel Report No. 109 – February 20171 © Damstahl 2017. Damstahl - a member of the NEUMO-Ehrenberg-Group

DamstahlStainless Steel Report #109

February 2017


Stainless Steel at a Glance 3

European Industry News / PMI Status 7

Relevant Issues in Damstahl-Land 10

Imports all Damstahl Countries 11

Germany 13

The Netherlands 17

Denmark 21

Sweden 25

Norway 29

Slovenia 33

Finland 37

Raw Materials 41

Focus of the Month 46

Reflection of the Month by Markus Moll 50

Contents


Stainless Steel at a Glance

Market: Off to a good start in 2017

• After a really bad start into 2016, market conditions in the stainless steel industry improved in the second half of the year and provided a good basis for a better start into the new year.

• Market activity increased in the first weeks of 2017 and distributors are trying to keep their stocks high enough to adapt to the lengthening lead times of up to three months from mills. Inventory levels are not too high but reasonable.

• Nevertheless, the market sentiment in Europe remains mixed as recent nickel price drops below 10,000 USD/t created some uncertainty.

Alloy Surcharge:

• The hike in raw material prices towards the end of the year led to another increase of the alloy surcharge in January 2017, marking the highest level in almost two years.

• Outokumpu set the surcharge for type 304 (1.4301) to 1,340 EUR/t in January 2017 up from 1,196 EUR/t in December 2016. The surcharge for type 316 (1.4401/1.4404) was raised from 1,680 EUR/t in December 2016 to 1,873 EUR/t in January 2017.



Building & Construction:

• According to Eurostat, the statistical office of the European Union, production in construction in November 2016 was only improving marginally (+0.2% yoy) due to building construction rising by 1.1% yoy, while civil engineering fell by 2.1% yoy.

• In the euro area construction remained stable as the increase in civil engineering of 2.2% yoywas balanced out by a decline of 0.6% yoy in building construction.

• Highest increases were seen in: Sweden + 7.6%The Netherlands + 7.0%United Kingdom + 3.0%

• Largest decreases were recorded in: Slovenia -15.0%Hungary -14.4%Romania -13.9%

Consumer Goods:

• Order intake in the German electronics industry in October 2016 was 4.2% lower than in October 2015 as domestic orders declined by 2.1% yoy and orders from abroad by 6.0% yoy.

• For the first ten months of 2016, order intake fell short by 1.3% mainly due to domestic orders declining by 0.4% and orders from abroad going down by 2.0%.

• While the current business situation in November 2016 was rated slightly worse than in October 2016, expectations for business in the forthcoming months somewhat improved. All in all the business climate in November 2016 remained on the same level as in October 2016.



Automotive:

• In its recent press release the European Automobile Manufacturers’ Association (ACEA) reported from the strongest December result on record. New passenger car registrations in December improved by 3.0% yoy, totalling 1,143,653 units.

• For the full year 2016 14,641,356 passenger car registrations were recorded in Europe, corresponding to an annual increase of 6.8%.

• Main contributors to the overall growth for the full year 2016 were the following five countries:

Italy +15.8%Spain +10.9%France + 5.1%Germany + 4.5%United Kingdom + 2.3%

• Declines were only registered in the Netherlands (-14.7% yoy) and Switzerland (-2.0% yoy).



Process Industry:

• Order intake in mechanical and plant engineering in Germany rose by 5% yoy in November 2016 compared to November 2015, German engineering association VDMA reported. Domestic demand went up by 3% yoy while orders from abroad moved up by 5% yoy.

• According to the VDMA the growth in orders goes along with the improvement of the Purchasing Manager Index (PMI) since August 2016.

• For the period from January to November 2016, production in mechanical and plant engineering in Germany saw only a marginal increase of 0.1% which meets the zero-growth forecast from Fall 2015 for the full year 2016.


European Industry News / PMI Status

• European Industry News

• Where do we stand in the Business Cycle? – PMI Status


European Industry News

• At the Swiss Equities conference in Bad Ragaz, Switzerland, Schmolz+Bickenbach (S+B) stated that its fundamentals continued to moderately improve during Q4/16 and the start into 2017 went better than into 2016. For the full year 2016 Schmolz+Bickenbach expects its adjusted EBITDA to be at the lower end of range between 150-190 mill. EUR and its capital expenditures around 100 mill. EUR. Compared to the full year 2015 in full year 2016 Schmolz+Bickenbach saw a weaker first half-year and a stronger second half-year. Key financial figures will be available in our April report.

• Aperam is reportedly contemplating a binding offer for its French stainless steel tube division received from the German investor group Mutares AG, which is based in Bavaria and listed on the Frankfurt stock exchange (DAX). The bid covers a mill in Ancerville in north-eastern France and a distribution centre in Annecy, near the French-Swiss border. In 2015 the two units recorded shipments of 20,000 t and a revenue of 67 mill. EUR. In case Aperam accepts the undisclosed bid, the divestment is expected to be completed by the end of HY1/17. The divestment is part of Aperam’s strategy to focus more on its core businesses.

• Under its new three-year industrial plan Acciai Speciali Terni (AST) will produce 1.4 mill. tpy of crude steel of which around 0.6 mill. t will be transformed into cold rolled coils. The reallocation of a rolling mill from Turin is approaching completion, which will help the company to produce an extra 0.1 mill. t of cold rolled coils per year from March 2017 onwards. In 2016 the company produced 0.94 mill. t, close to the previously set target of 1 mill. t.

• German BGH Edelstahl announced to start trial operation of its new wire pre-treatment installation once the construction works at the company’s site in Lugau, Free State of Saxony, are finished. The capacity will remain the same, as the new installation will be a pure replacement measure. The old plant will be gradually switched off and dismantled in mid-2017. The empty halls will be used for the construction of a wastewater treatment facility. A new wire drawing station and two new annealing furnaces became operational in early January.

A sigh of relief at European stainless mills – First signs of improvement visible


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EU USA China

Where do we Stand in the Business Cycle?

PMI Status December 2016

Europe and USA further improved, China slowed down towards the Lunar New Year (28th of January)


Relevant Issues in Damstahl-Land

• Flat Product Imports 2016 vs. 2015

• Long Product Imports 2016 vs. 2015

• Relevant Issues, Imports and Market Volume Index by country

Germany

The Netherlands

Denmark

Sweden

Norway

Slovenia

Finland


8.8%

-6.0%

9.6%

-0.3%

2.9%

2.9%

0.6%

-8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12%

Finland

Slovenia

Norway

Sweden

Denmark

The Netherlands

Germany

Stainless Steel Flat Product Imports 2016 vs. 2015

Source: SMR - Steel & Metals Market Research Analysis

Norway and Finland show a significant growth at Flat Product* importsPeriod: January – October (Germany, the Netherlands, Denmark, Sweden, Slovenia, Finland)Period: January – December (Norway)

* Hot rolled sheet & plate, Cold rolled sheet, Welded tubes (round), Welded tubes (square)


42.3%

8.1%

18.1%

-5.2%

-0.3%

3.2%

-4.6%

-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Finland

Slovenia

Norway

Sweden

Denmark

The Netherlands

Germany

Stainless Steel Long Product Imports 2016 vs. 2015

Source: SMR - Steel & Metals Market Research Analysis

Also at imports of Long Products* Finland and Norway show the highest increasesPeriod: January – October (Germany, the Netherlands, Denmark, Sweden, Slovenia, Finland)Period: January – December (Norway)

* Round bars, Non circular bars, Forged bars, Profiles, Seamless tubes (incl. Hollow bars)



Germany:

• The German stainless steel industry in early 2017 enjoys improved demand amid increasing prices. Activity from end users became more lively in almost every industry with only the chemical segment lagging somewhat behind. Distributors are trying to increase their stocks in order to meet the newly found momentum.

• Owner of the German pump manufacturer KSB, the KSB AG, announced plans to change its legal form from an AG (German stock corporation) to a KG (limited partnership). The step will be taken to enable KSB to eye new strategic possibilities like shareholdings or mergers. A general meeting will be held in mid-May 2017 to decide on the change.

• With its acquisition of the seamless pipes stock from Kube-Stahl GmbH & Co. KG. Damstahl now offers nearly 2,000 different article numbers alone in this product group. A unique program with both standard and special dimensions in different tolerances and numerous materials and surfaces. Thus the 5,000 m2 former Kube warehouse location in Leverkusen is still in operation, now by Damstahl.


Imports by Product

Source: SMR – Steel & Metals Market Research Analysis

Imports of Stainless Steel Products into Germany

Overall stainless steel imports to Germany stagnateCRR = Coils for re-rolling are not counted in total

Products

2015 2016

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct

[tonnes]

HR Sheet & Plate 38,878 34,562 42,013 41,127 26,315 48,252 43,629 38,775 38,657 29,527 52,869 38,743

therefrom CRR (Finland-Sweden) 20,001 17,739 18,703 20,013 10,113 26,406 21,602 17,604 18,236 11,682 29,471 18,816

HR Sheet & Plate real 18,877 16,823 23,310 21,114 16,202 21,846 22,027 21,171 20,421 17,845 23,398 19,927

CR Sheet 66,234 45,457 68,527 69,816 64,024 61,871 55,117 89,155 62,532 60,628 73,797 73,290

Round Bars 13,779 9,429 12,628 14,230 11,335 12,964 12,920 14,054 14,536 8,709 12,953 13,028

Non-circular Bars 5,100 2,826 3,683 3,801 4,335 4,401 3,917 4,293 4,333 2,664 3,903 4,363

Forged Bars 1,751 999 1,494 1,319 1,277 1,252 1,155 1,378 1,619 976 1,193 1,596

Profiles 471 405 693 658 632 573 690 640 540 485 622 654

Seamless Tubes* 2,515 1,750 2,892 2,735 2,350 3,161 2,697 2,665 3,736 1,763 2,122 2,612

Welded Tubes (round) 9,750 6,852 8,040 9,618 8,105 9,705 8,997 10,841 9,539 7,386 10,914 10,170

Welded Tubes (square) 3,904 3,609 3,004 4,633 3,634 2,955 3,218 6,156 4,438 3,842 3,926 5,290

All Products 122,381 88,150 124,271 127,924 111,894 118,728 110,738 150,353 121,694 104,298 132,828 130,930

Products

2015 2015 2016 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 470,602 397,162 399,907 1%

therefrom CRR (Finland-Sweden) 223,353 185,612 192,646 4%

HR Sheet & Plate real 247,249 211,550 207,261 -2%

CR Sheet 781,349 669,658 678,757 1%

Round Bars 156,839 133,631 127,357 -5%

Non-circular Bars 52,888 44,962 39,693 -12%

Forged Bars 16,464 13,714 13,259 -3%

Profiles 7,543 6,667 6,187 -7%

Seamless Tubes* 28,839 24,574 26,733 9%

Welded Tubes (round) 108,883 92,281 93,315 1%

Welded Tubes (square) 47,953 40,440 41,096 2%

All Products 1,448,007 1,237,477 1,233,658 0%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Germany

Italy, Finland and France increase their deliveries to Germany while imports from Spain and India strongly decline

* HR Sheet/Plate, CR Sheet, Round Bars, Profiles, Welded and Seamless Tubes

** Excl. CRR

Country of Origin

2015 2016 Change

Q1 Q2 Q3 October Q4 TOTAL ytd Q1 Q2 Q3 October ytd 2015-2016

[ tonnes ] [ % ]

ITALY 66,214 69,144 64,189 23,997 65,065 264,612 223,544 66,237 79,067 72,212 28,971 246,487 10%

FINLAND** 58,478 70,158 67,549 26,473 68,258 264,443 222,658 67,700 66,247 75,359 21,411 230,717 4%

FRANCE 56,047 60,299 54,518 19,329 54,593 225,457 190,193 63,464 62,602 51,843 20,285 198,194 4%

BELGIUM 50,735 45,587 39,306 15,708 40,283 175,911 151,336 46,257 46,198 44,190 15,991 152,636 1%

SPAIN 47,555 38,753 35,430 12,218 33,737 155,475 133,956 33,681 33,869 27,534 8,689 103,773 -23%

SWEDEN** 13,353 15,280 17,450 6,993 14,456 60,538 53,076 15,377 20,132 13,105 6,773 55,388 4%

NETHERLANDS 13,066 12,319 14,643 2,972 8,451 48,479 43,000 10,268 9,371 12,969 5,540 38,148 -11%

INDIA 9,625 10,473 13,404 4,515 9,300 42,802 38,017 8,980 6,722 7,568 2,587 25,857 -32%

SLOVENIA 6,483 11,081 9,258 3,586 7,848 34,670 30,408 9,422 10,252 8,758 2,569 31,001 2%

CZECH REPUBLIC 3,270 8,992 8,146 2,269 6,085 26,493 22,677 5,610 9,358 5,983 3,718 24,669 9%

AUSTRIA 5,912 5,971 5,146 2,121 5,548 22,577 19,150 4,938 5,587 5,492 1,757 17,774 -7%

SOUTH AFRICA 3,775 4,035 7,564 1,621 4,321 19,695 16,995 3,594 1,632 3,980 541 9,747 -43%

U S A 4,113 3,852 3,779 572 1,972 13,716 12,316 1,732 2,267 1,886 846 6,731 -45%

UKRAINE 3,612 3,550 2,906 1,060 2,705 12,773 11,128 2,727 2,993 4,949 1,356 12,025 8%

SWITZERLAND 3,180 3,447 2,968 953 2,833 12,428 10,548 2,862 3,212 2,801 1,095 9,970 -5%

POLAND 2,678 2,646 3,646 1,123 2,954 11,924 10,093 2,558 3,602 4,523 1,167 11,850 17%

CHINA 4,098 1,616 1,525 458 1,307 8,546 7,697 1,916 1,318 1,959 1,061 6,254 -19%

SOUTH KOREA 2,013 1,582 2,766 757 1,871 8,232 7,118 3,172 3,033 1,964 1,418 9,587 35%

UNITED KINGDOM 2,044 2,250 1,729 288 1,044 7,067 6,311 1,286 1,330 1,217 567 4,400 -30%

LUXEMBOURG 1,449 1,794 1,765 734 2,000 7,008 5,742 1,494 1,821 1,984 825 6,124 7%

TURKEY 66 650 3,440 864 2,263 6,419 5,020 1,561 1,814 653 123 4,151 -17%

TAIWAN 1,496 843 1,530 1,133 1,666 5,535 5,002 4,203 2,419 4,683 1,161 12,466 149%

JAPAN 779 715 913 408 969 3,376 2,815 827 1,239 462 351 2,879 2%

PORTUGAL 597 984 801 254 640 3,022 2,636 993 1,096 945 352 3,386 28%

MALAYSIA 24 549 835 348 711 2,119 1,756 928 990 547 1,078 3,543 102%

DENMARK 425 308 249 153 235 1,217 1,135 424 438 352 140 1,354 19%

THAILAND 186 44 378 381 426 1,034 989 1,283 436 408 190 2,317 134%

OTHERS 477 567 828 289 567 2,439 2,161 595 775 493 367 2,230 3%

TOTAL 361,750 377,489 366,661 131,577 342,108 1,448,007 1,237,477 364,089 379,819 358,820 130,930 1,233,658 0%


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Ø 2011

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Flat Products

Long Products

Germany - Stainless Steel Market Volume Index*

Source: SMR - Steel & Metals Market Research Analysis*Data based on country-reported trade figures and estimated production volumes

Long Products experienced a good upward trend while Flat Products fell in early Q4/16

Trend Lines

2011 2012 2013 2014 2015 2016



The Netherlands:

• The Dutch economy is improving as more and more branches see increased activity and regain strength. Prices are positively influenced by higher chrome and nickel rates and this development is likely to sustain in HY1/17. Stock levels are on lower levels as delivery times from mills are substantially longer while demand from end users improved.

• Royal Dutch Shell (RDS) rushes forward with its divestment strategy of considered non-core businesses. The company completed the sale of its shares in Shell Refining Company in Malaysia (51.0%) to Malaysia Hengyuan International Limited (MHIL) for 66.3 mill. USD and its shareholding in Showa Shell (31.2%) to Japanese Idemitsu Kosan for 1.4 bn. USD. Royal Dutch Shell also agreed to sell its 20% stake in Vivo Energy to South African Vitol Africa for 250 mill. USD as well as its aviation business Shell Aviation Australia to Viva Energy Australia for another 250 mill. USD.

• Dutch chip-making equipment manufacturer ASML had net sales of 6,795 mill. EUR in full year 2016, corresponding to an increase of 8% set against the 2015 sales of 6,287 mill. EUR. The company‘s EAT in 2016 improved to 1,472 mill. EUR up by 6% on the 2015 EAT of 1,387 mill. EUR. For Q1/17 ASML guides net sales approximately 1,800 mill. EUR (Q4/16: 1,907 mill. EUR) and a gross margin around 47% (Q4/16: 47.2%).


Imports by Product


Imports of Stainless Steel Products into the Netherlands

Imports of welded tubes strongly improved, while seamless tube imports declined by double-digits

Products

2015 2016


[tonnes]

HR Sheet & Plate 1,969 1,751 3,269 2,486 2,280 2,055 2,198 2,622 3,003 2,030 1,578 4,266

CR Sheet 12,281 14,720 15,802 14,894 15,934 14,368 12,247 13,612 13,883 11,347 11,075 16,606

Round Bars 2,120 1,100 1,606 2,156 1,526 1,611 1,920 1,245 2,118 1,586 1,747 1,841

Non-circular Bars 380 255 489 455 371 375 303 368 401 335 491 535

Forged Bars 292 116 229 182 176 130 170 137 135 109 181 157

Profiles 212 125 168 186 235 182 173 185 219 215 429 363

Seamless Tubes* 768 635 747 660 524 634 705 615 649 337 709 600

Welded Tubes (round) 2,148 1,008 2,233 2,147 2,094 2,200 2,147 1,388 3,433 2,743 2,168 1,370

Welded Tubes (square) 1,065 360 1,209 1,551 1,110 1,091 636 1,095 756 869 669 1,004

All Products 21,235 20,070 25,752 24,717 24,250 22,646 20,499 21,267 24,597 19,571 19,047 26,742

Products

2015 2015 2016 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 28,941 25,221 25,787 2%

CR Sheet 167,864 140,863 139,768 -1%

Round Bars 19,799 16,579 17,356 5%

Non-circular Bars 4,375 3,740 4,123 10%

Forged Bars 2,003 1,595 1,606 1%

Profiles 1,967 1,630 2,355 44%

Seamless Tubes* 8,495 7,092 6,180 -13%



All Products 263,884 222,579 229,088 3%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into the Netherlands

South Africa (+28% yoy) increasingly gains importance as stainless steel supplier to the Netherlands


** TOTAL = Excl. Finland = Imports to Terneuzen (from Finland) not included in Total

Country of Origin

2015 2016 Change


[ tonnes ] [ % ]

FINLAND 138,962 161,204 126,993 53,239 134,272 561,431 480,398 147,244 150,287 144,859 47,983 490,373 2%

ITALY 10,515 9,814 10,295 3,709 11,954 42,578 34,333 12,868 12,974 9,106 3,792 38,740 13%

GERMANY 8,436 11,516 11,814 2,920 8,666 40,432 34,686 9,010 10,524 9,690 2,834 32,058 -8%

BELGIUM 5,398 14,067 12,585 3,381 7,519 39,569 35,431 8,441 7,788 9,265 3,847 29,341 -17%

SOUTH KOREA 7,986 8,459 9,549 3,020 8,202 34,196 29,014 7,927 6,734 3,983 3,366 22,010 -24%

SOUTH AFRICA 2,334 6,692 7,412 3,881 8,356 24,794 20,319 9,523 5,659 7,517 3,337 26,036 28%

INDIA 3,153 2,591 5,128 2,161 4,392 15,264 13,033 3,926 3,037 5,956 2,215 15,134 16%

FRANCE 2,402 3,063 4,441 2,039 4,716 14,622 11,945 3,313 3,801 2,490 1,413 11,017 -8%

U S A 718 1,632 5,197 1,450 1,749 9,296 8,997 1,289 113 213 40 1,655 -82%

SWEDEN 3,054 1,993 1,829 899 2,113 8,989 7,775 2,698 2,631 2,057 1,238 8,624 11%

TAIWAN 1,588 1,394 2,144 1,057 2,360 7,486 6,183 3,087 2,130 3,177 1,557 9,951 61%

VIETNAM 2,648 525 658 26 1,471 5,302 3,857 2,723 2,140 975 156 5,994 55%

JAPAN 176 1,713 2,242 115 553 4,684 4,246 1,120 1,085 873 229 3,307 -22%

SPAIN 580 948 595 230 721 2,844 2,353 514 688 373 197 1,772 -25%

CHINA 1,068 514 555 404 563 2,700 2,541 1,674 1,783 3,077 580 7,114 180%

THAILAND 595 21 525 137 1,140 2,281 1,278 1,866 200 917 290 3,273 156%

SLOVENIA 502 297 252 183 449 1,500 1,234 611 379 305 116 1,411 14%

UNITED KINGDOM 303 315 339 158 440 1,397 1,115 437 445 421 86 1,389 25%

TURKEY 359 54 237 71 732 1,382 721 1,721 921 1,109 964 4,715 554%

OTHERS 830 906 1,182 600 1,650 4,568 3,518 1,971 1,380 1,711 485 5,547 58%

TOTAL** 52,645 66,514 76,979 26,441 67,746 263,884 222,579 74,719 64,412 63,215 26,742 229,088 3%


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Ø 2011

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Flat Products

Long Products

Netherlands – Stainless Steel Market Volume Index*


In early Q4/16 Flat and Long Products weakened a bit

2011 2012 2013 2014

Trend Lines

2015 2016



Denmark:

• Stocks in the Danish stainless steel market are still sufficiently filled but facing the improved buying activity from end users the inventory levels will change quickly. The question is, if the high number of orders directly at mills and through distributors results from increasing real demand or as a reaction to the recent price increases.

• Danish dairy company Arla Foods has officially opened a new state-of-the-art facility for the storage and maturation of its cheese to centralise the process to one site in Whitchurch, Western United Kingdom, which was formally carried out in three different locations. In early 2016 Arla signed a long-term contract with Grocontinental, a British storage and distribution company, to build and manage the facilities.


Imports by Product


Imports of Stainless Steel Products into Denmark

Danish stainless imports show an overall increase of 2%

Products

2015 2016


[tonnes]

HR Sheet & Plate 1,484 666 778 1,115 981 683 1,283 1,574 1,393 1,221 1,155 1,288

CR Sheet 4,417 3,352 4,197 4,696 4,186 5,067 4,745 5,316 4,168 4,356 5,363 4,091

Round Bars 1,424 990 1,186 1,254 1,177 1,218 1,347 1,517 1,284 1,019 1,313 1,227


Forged Bars 181 153 154 148 150 249 161 358 150 184 129 220

Profiles 139 72 87 106 163 102 135 117 173 129 194 194

Seamless Tubes* 99 115 137 100 204 229 129 113 80 128 164 167

Welded Tubes (round) 1,267 902 939 1,230 1,342 1,120 1,370 1,721 1,775 1,007 1,443 1,326

Welded Tubes (square) 487 488 300 748 677 474 834 679 904 641 737 461

All Products 9,639 6,813 7,937 9,548 8,984 9,316 10,157 11,516 10,059 8,831 10,635 9,270

Products

2015 2015 2016 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 14,751 12,601 11,471 -9%

CR Sheet 50,845 43,076 46,185 7%

Round Bars 15,485 13,071 12,542 -4%


Forged Bars 2,211 1,877 1,903 1%

Profiles 1,378 1,167 1,400 20%

Seamless Tubes* 1,732 1,518 1,451 -4%


Welded Tubes (square) 8,719 7,744 6,455 -17%

All Products 110,606 94,154 96,253 2%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Denmark

Denmark more than doubled its import from Taiwan while deliveries from its main sources Italy and Germany declined


Country of Origin

2015 2016 Change


[ tonnes ] [ % ]

ITALY 7,643 7,835 6,121 2,762 6,392 27,991 24,361 6,276 7,214 6,922 1,817 22,229 -9%

GERMANY 5,105 5,398 4,739 1,144 3,491 18,733 16,386 4,724 5,302 3,951 1,330 15,307 -7%

SWEDEN 3,329 3,669 2,541 1,463 3,282 12,821 11,002 2,975 2,770 3,111 879 9,735 -12%

FINLAND 2,569 3,182 2,635 2,070 3,663 12,049 10,456 2,818 3,509 2,735 769 9,831 -6%

FRANCE 1,683 2,020 1,608 411 1,654 6,965 5,722 1,412 1,639 2,148 510 5,709 0%

TAIWAN 1,313 1,580 972 832 2,857 6,722 4,697 2,612 4,688 3,115 1,241 11,656 148%

BELGIUM 1,159 1,450 1,365 450 1,619 5,593 4,424 1,794 1,568 2,219 705 6,286 42%

SPAIN 784 844 799 342 991 3,418 2,769 1,182 1,189 914 278 3,563 29%

INDIA 664 725 709 173 742 2,840 2,271 579 714 974 564 2,831 25%

CHINA 534 451 856 428 719 2,560 2,269 140 290 561 401 1,392 -39%

MALAYSIA 192 512 961 412 447 2,112 2,077 - - 4 - 4 -100%

SOUTH AFRICA 154 562 948 144 401 2,065 1,808 - 242 1,162 246 1,650 -9%

NETHERLANDS 602 538 431 243 405 1,976 1,814 542 772 440 137 1,891 4%

U S A 235 187 243 141 204 869 806 32 10 25 - 67 -92%

NORWAY 301 233 171 20 66 771 725 33 50 220 65 368 -49%

POLAND 87 241 211 153 215 754 692 208 227 184 96 715 3%

UNITED KINGDOM 145 182 127 38 144 598 492 808 411 352 97 1,668 239%

SLOVAKIA 107 53 163 5 52 375 328 69 50 9 1 129 -61%

TURKEY 21 82 74 22 127 304 199 82 78 76 14 250 26%

VIETNAM 82 59 - - 50 191 141 - - - - - -100%

ESTONIA 36 28 39 14 45 148 117 46 41 54 16 157 34%

PORTUGAL 18 38 33 12 53 142 101 21 65 15 - 101 0%

SLOVENIA 94 11 13 - 8 126 118 10 8 50 6 74 -37%

SINGAPORE 65 - - - 40 105 65 18 - - - 18 -72%

OTHERS 72 83 112 47 111 378 314 88 152 284 98 622 98%

TOTAL 26,994 29,963 25,871 11,326 27,778 110,606 94,154 26,469 30,989 29,525 9,270 96,253 2%


Denmark – Stainless Steel Market Volume Index*


After recovering in Q3/16 both Long and Flat Products decline again in early Q4/16

20%

40%

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Ø 2011

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Flat Products

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2011 2012 2013 2014

Trend Lines

2015 2016



Sweden:

• Just a few weeks into the new year the Swedish market for stainless steel is in a rather good shape. End users are buying and activity in the industry is quite good. Prices are expected to increase further over the next months supported by strong raw material prices and therefore higher alloy surcharges. The pending anti-dumping case towards Asia is causing supply problems for some players in the marketplace. How severe these problems will be in the long run is yet to be seen.

• In early January Alfa Laval announced to have won an order to supply compact heat exchangers to a natural gas plant in the Middle East. The 150 mill. SEK order was booked in Alfa Laval’s Energy & Process segment and is scheduled for delivery in 2017 and 2018.

• According to the Swedish newspaper Dagens Industri Swedish steel maker Sandvik is eyeing a stock market listing of its specialty steels unit Materials Technology (SMT) as the company was unable to find a buyer for its stainless steel and nickel alloy producing subsidiary. Sandvik also stated that it had failed to close a planned deal to sell its loss-making Mining Systems unit but it would carry on seeking ways to exit the business with different interested parties.


Imports by Product


Imports of Stainless Steel Products into Sweden

Declines at high volume product imports lead to an overall minus of 1% at Swedish imports

Products

2015 2016


[tonnes]

HR Sheet & Plate 742 791 1,140 1,185 949 1,005 1,004 1,376 612 1,134 1,108 1,397

CR Sheet 5,904 4,260 5,682 6,669 6,252 5,963 6,734 6,238 4,300 6,279 6,691 7,529

Round Bars 1,068 783 768 1,067 1,060 1,087 1,147 1,067 909 828 965 1,108


Forged Bars 42 40 41 33 172 68 75 57 14 40 34 39

Profiles 289 104 107 129 128 70 212 159 411 206 190 268

Seamless Tubes* 167 180 236 104 264 199 230 211 48 180 207 120

Welded Tubes (round) 536 379 527 629 703 852 920 759 758 953 881 966


All Products 9,184 6,952 8,860 10,548 10,094 9,842 10,814 10,410 7,476 9,962 10,571 12,011

Products

2015 2015 2016 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 11,549 10,016 10,910 9%

CR Sheet 74,713 64,549 62,337 -3%

Round Bars 13,581 11,730 10,006 -15%


Forged Bars 554 472 573 21%

Profiles 1,719 1,326 1,880 42%

Seamless Tubes* 2,340 1,993 1,799 -10%



All Products 117,910 101,774 100,588 -1%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Sweden

Spain and Italy with lower deliveries to Sweden, Denmark moves into Top 3 suppliers


Country of Origin

2015 2016 Change


[ tonnes ] [ % ]

FINLAND 9,014 9,232 7,303 3,021 6,679 32,228 28,570 9,678 11,170 7,753 3,181 31,782 11%

SPAIN 6,179 4,970 6,394 2,094 5,741 23,284 19,637 5,172 4,486 5,568 2,404 17,630 -10%

ITALY 4,180 4,116 3,224 1,527 3,495 15,015 13,047 3,279 3,588 3,463 1,480 11,810 -9%

DENMARK 3,095 3,027 2,708 1,128 3,241 12,071 9,958 3,614 4,632 3,712 1,508 13,466 35%

GERMANY 2,777 3,000 2,762 1,109 2,871 11,410 9,648 2,760 2,888 2,396 837 8,881 -8%

FRANCE 1,997 1,766 2,069 547 1,493 7,325 6,379 1,427 952 1,042 571 3,992 -37%

SOUTH AFRICA 484 1,783 3,190 630 1,076 6,533 6,087 630 850 1,409 832 3,721 -39%

UNITED KINGDOM 346 441 541 214 569 1,897 1,542 846 623 496 106 2,071 34%

NORWAY 847 273 201 35 76 1,397 1,356 66 89 114 44 313 -77%

INDIA 280 285 233 130 351 1,149 928 392 388 221 44 1,045 13%

JAPAN 190 294 304 49 156 944 837 175 146 31 11 363 -57%

NETHERLANDS 176 186 170 59 170 702 591 194 164 173 86 617 4%

TURKEY 73 121 186 83 204 584 463 105 38 49 11 203 -56%

POLAND 49 71 119 76 226 465 315 225 222 197 105 749 138%

TAIWAN 174 75 86 25 91 426 360 419 50 49 65 583 62%

AUSTRIA 149 55 55 42 82 341 301 61 146 113 28 348 16%

LUXEMBOURG 51 97 90 27 97 335 265 119 95 82 104 400 51%

SLOVENIA 40 112 64 47 94 310 263 68 85 58 22 233 -11%

SWITZERLAND 121 78 42 24 60 301 265 76 68 55 49 248 -6%

AUSTRALIA - - 204 - - 204 204 - - - - - -100%

OTHERS 213 251 177 117 348 989 758 196 386 1,028 523 2,133 181%

TOTAL 30,435 30,233 30,122 10,984 27,120 117,910 101,774 29,502 31,066 28,009 12,011 100,588 -1%


Sweden – Stainless Steel Market Volume Index*


Both Long and Flat products start Q4/16 on a weak note

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Ø 2011

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2011 2012 2013 2014

Trend Lines

2015 2016



Norway:

• End user demand in the Norwegian stainless steel industry is fairly stable but the big problem still is the country’s important oil and gas segment. Norway is trying to restructure its economy to reduce its dependency on oil but oil prices will remain a crucial factor to the country. Nevertheless, Norwegian economists expect a better year ahead with the NOK regaining strength and unemployment to top out.

• Oilfield services company Aker Solutions confirmed plans to cut around 650 positions in Norway, the United Kingdom and India due to the continued market slowdown and as part of a global reorganization. The company also announced to have joined the International Association of Oil & Gas producers (IOGP) which serves as a global partner for industry regulators in setting standards for safety, environmental and social performance. IOGP’s globally acting members produce about 40% of the world’s oil and gas.


Imports by Product


Imports of Stainless Steel Products into Norway

Bar product imports further decline while all other product forms show increased demand

Products

2016

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

[tonnes]

HR Sheet & Plate 744 679 759 769 729 715 371 474 631 666 583 471

CR Sheet 1,490 1,596 1,095 1,337 1,231 1,598 930 1,231 942 1,403 1,232 1,161

Rolled Bars 324 425 319 290 491 298 244 390 436 375 266 316

Forged Bars 52 51 39 38 39 81 38 20 25 61 138 79

Profiles 56 86 138 151 158 126 91 253 175 196 112 88

Seamless Tubes* 151 148 97 245 244 756 661 675 352 593 834 446


All Products 3,365 3,551 2,975 3,418 3,382 4,274 2,616 3,568 3,283 3,774 3,706 3,081

Products

2015 2016 Change

FY FY FY

[tonnes] [%]

HR Sheet & Plate 6,320 7,591 20%

CR Sheet 14,360 15,246 6%

Rolled Bars 4,351 4,174 -4%

Forged Bars 1,146 661 -42%

Profiles 1,224 1,630 33%

Seamless Tubes* 3,155 5,202 65%

Welded Tubes (round) 6,086 6,489 7%

All Products 36,642 40,993 12%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Norway

Czech Republic skyrockets into the Top 5 supplier country list due strong deliveries in HY2/16


Country of Origin

2015 2016 Change

Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL 2015-2016

[ tonnes ] [ % ]

SWEDEN 3,488 2,690 2,325 2,887 11,390 3,014 3,436 2,570 2,928 11,948 5%

FINLAND 2,119 2,148 1,754 2,158 8,179 2,240 2,506 1,900 2,237 8,883 9%

TAIWAN 1,307 660 647 638 3,252 838 1,161 935 1,022 3,956 22%

GERMANY 715 705 784 653 2,857 1,056 716 741 643 3,156 10%

ITALY 404 512 521 516 1,953 597 618 506 461 2,182 12%

DENMARK 512 561 294 456 1,823 496 286 240 375 1,397 -23%

FRANCE 444 569 313 404 1,730 438 481 337 213 1,469 -15%

SPAIN 273 287 204 87 851 221 221 129 195 766 -10%

JAPAN 131 430 75 67 703 46 180 21 30 277 -61%

UNITED KINGDOM 280 120 134 156 690 128 54 107 128 417 -40%

CHINA 319 127 121 59 626 74 65 86 86 311 -50%

BELGIUM-LUXEMBOURG 103 65 108 238 514 270 131 98 287 786 53%

CZECH REPUBLIC 303 114 2 89 508 56 548 1,362 1,473 3,439 577%

INDIA 138 165 111 89 503 132 167 149 187 635 26%

NETHERLANDS 68 74 109 110 361 100 103 77 58 338 -6%

POLAND 99 18 44 32 193 44 68 38 64 214 11%

SOUTH KOREA - 6 - 95 101 - 5 1 3 9 -91%

AUSTRIA 34 26 28 12 100 38 168 65 37 308 208%

OTHERS 45 69 136 58 308 103 160 105 134 502 63%

TOTAL 10,782 9,346 7,710 8,804 36,642 9,891 11,074 9,467 10,561 40,993 12%


Norway – Stainless Steel Market Volume Index*


Flat Products decreased to the annual low while the volatile development at Long Products continues

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180%

Ø 2011

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Trend Lines

2015 2016



Slovenia:

• End user demand in the Slovenian stainless steel market further picked up in early 2017 and also general economic indicators point toward growth. According to the national statistics office Slovenia’s business sentiment was standing at the highest reading since May 2008 for the second consecutive month. For 2017 the economy is expected to expand by 2.9% up from 2.3% seen in 2016. Also for unemployment, improvement is expected with a drop in the rate from 8.1% in 2016 to 7.4% in 2017.

• The Slovenian Steel Group (SIJ) announced to have appointed two new members to the management board after the former President of the management board Mr. Anton Chernykhsubmitted his letter of resignation in mid-January 2017. The two new members are Mr. Andrey Zubitskiy, former president of the Supervisory Board of SIJ since 2007 and Dr. Denis Mancevič, Director of Corporate Communications and Member of the Supervisory Board of SIJ.


Imports by Product


Imports of Stainless Steel Products into Slovenia

Overall imports to Slovenia go down by 4% as imports of hot rolled sheet and plate halved (-59%)

Products

2015 2016


[tonnes]

HR Sheet & Plate 663 212 290 330 433 362 361 363 454 259 440 493

CR Sheet 2,044 1,717 2,298 2,562 1,776 2,706 2,908 2,028 2,084 1,342 2,151 2,856

Round Bars 439 213 523 413 387 456 422 367 548 187 424 487


Forged Bars 14 9 16 9 22 26 11 13 13 18 31 25

Profiles 34 23 24 22 25 12 33 31 33 13 26 33

Seamless Tubes* 24 26 42 27 37 52 53 29 26 45 35 32



All Products 3,633 2,618 3,544 3,812 3,185 4,172 4,365 3,307 3,850 2,139 3,630 4,329

Products

2015 2015 2016 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 10,131 9,256 3,785 -59%

CR Sheet 23,349 19,588 22,711 16%

Round Bars 4,475 3,823 4,214 10%

Non-circular Bars 552 464 498 7%

Forged Bars 142 119 184 55%

Profiles 475 418 252 -40%

Seamless Tubes* 340 290 378 30%



All Products 44,134 37,883 36,333 -4%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Slovenia

Germany, Poland and Finland strongly increase their deliveries to Slovenia but Italy still accounts for more than 50% of Slovenia’s stainless steel imports


Country of Origin

2015 2016 Change


[ tonnes ] [ % ]

ITALY 6,418 8,030 6,052 3,050 7,131 27,631 23,550 5,423 5,332 5,143 2,554 18,452 -22%

GERMANY 1,212 1,235 1,423 368 1,046 4,916 4,238 1,956 1,951 1,529 606 6,042 43%

AUSTRIA 675 629 641 204 611 2,556 2,149 645 717 714 206 2,282 6%

SOUTH KOREA 518 686 1,067 44 59 2,330 2,315 395 1,477 177 103 2,152 -7%

FRANCE 393 386 341 134 285 1,405 1,254 345 361 273 154 1,133 -10%

POLAND 188 233 247 99 266 934 767 451 622 630 232 1,935 152%

HUNGARY 262 166 285 85 160 873 798 176 144 66 163 549 -31%

FINLAND 155 163 311 119 235 864 748 365 534 408 119 1,426 91%

NETHERLANDS 127 147 163 70 137 574 507 146 194 184 50 574 13%

TURKEY 51 85 141 44 191 468 321 240 192 144 - 576 79%

INDIA 24 91 104 124 238 457 343 159 29 106 - 294 -14%

TAIWAN 127 - - - 63 190 127 69 - - - 69 -46%

SWITZERLAND 64 44 38 2 42 188 148 43 44 25 2 114 -23%

SWEDEN 42 25 86 13 24 177 166 22 78 123 72 295 78%

SOUTH AFRICA - 57 40 - - 97 97 - - - - - -100%

BULGARIA 67 23 3 - - 93 93 - 22 - - 22 -76%

OTHERS 117 62 63 20 139 381 262 106 147 97 68 418 60%

TOTAL 10,440 12,062 11,005 4,376 10,627 44,134 37,883 10,541 11,844 9,619 4,329 36,333 -4%


Slovenia – Stainless Steel Market Volume Index*


Both Long and Flat Products face sharp declines towards Q4/16

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Ø 2011

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Trend Lines

2015 2016



Finland:

• The Finnish stainless steel market started the new year just as calm as 2016 ended and was unable to regain momentum. Even though the Finnish economy in general is expected to pick up growth is still tepid and employment has not improved as expected. Rising protectionism will remain a threat to Finland’s small and open economy.

• Building and industrial service company Caverion estimates that the group’s revenue for 2016 will remain at the previous year's level (2015: 2,443 mill. EUR) and the Group’s EBITDA excluding restructuring costs for 2016 will be in the range of 40-50 mill. EUR (2015: 91.5 mill. EUR). Project write-downs during the group’s restructuring measurements totalled approximately 38 mill. EUR for Q4/16 and around 57 mill. EUR for the full year 2016. The company also reduced its workforce by around 1,000 employees last year.


Imports by Product


Imports of Stainless Steel Products into Finland

Declines at seamless tube and non-circular imports were offset by increasing imports of hot rolled sheet and plate

Products

2015 2016


[tonnes]

HR Sheet & Plate 2,412 1,242 2,672 3,423 3,939 3,344 3,493 3,433 3,141 2,043 2,506 3,088

CR Sheet 1,550 1,110 1,699 1,765 2,201 1,752 1,705 1,338 1,400 1,567 1,418 1,418

Round Bars 477 477 613 779 680 801 812 809 946 1,044 747 689


Forged Bars 29 18 32 38 38 42 30 65 41 27 49 38

Profiles 126 67 29 64 94 121 100 73 70 64 110 77

Seamless Tubes* 130 113 143 125 68 91 96 152 160 119 92 102



All Products 5,235 3,595 5,744 6,847 7,794 7,124 6,989 6,763 6,723 5,685 5,913 6,118

Products

2015 2015 2016 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 31,241 27,587 31,082 13%

CR Sheet 18,804 16,144 16,263 1%

Round Bars 5,491 4,537 7,920 75%

Non-circular Bars 1,545 1,347 1,253 -7%

Forged Bars 382 335 400 19%

Profiles 846 653 802 23%

Seamless Tubes* 1,468 1,225 1,148 -6%



All Products 66,702 57,872 65,700 14%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Finland

From the main suppliers only Sweden saw a marginal 1% decline at deliveries to Finland


Country of Origin

2015 2016 Change


[ tonnes ] [ % ]

SWEDEN 5,616 5,741 6,038 2,334 5,992 23,387 19,729 6,830 6,277 4,897 1,431 19,435 -1%

ITALY 2,187 2,580 2,255 985 2,211 9,233 8,007 2,203 2,824 2,716 763 8,506 6%

BELGIUM 1,609 1,647 1,892 580 1,372 6,520 5,728 2,518 1,410 1,432 440 5,800 1%

FRANCE 1,068 1,448 1,608 459 1,311 5,435 4,583 1,861 1,670 1,168 482 5,181 13%

GERMANY 1,022 1,209 1,222 471 1,202 4,655 3,924 1,194 1,566 1,723 730 5,213 33%

CHINA 1,921 779 1,390 346 563 4,653 4,436 1,062 2,276 1,298 723 5,359 21%

SPAIN 1,314 761 1,074 179 692 3,841 3,328 2,297 2,857 3,401 815 9,370 182%

U S A 484 1,480 1,070 226 269 3,303 3,260 720 8 1 - 729 -78%

SLOVENIA 306 334 271 43 228 1,139 954 270 229 289 69 857 -10%

NETHERLANDS 189 245 269 77 211 914 780 299 260 289 118 966 24%

SOUTH AFRICA 117 161 378 61 77 733 717 46 20 - 37 103 -86%

DENMARK 140 124 102 43 115 481 409 189 388 320 136 1,033 153%

LUXEMBOURG 82 35 143 38 68 328 298 100 145 39 25 309 4%

INDIA 52 124 49 37 101 326 262 96 72 74 52 294 12%

POLAND 67 77 116 26 61 321 286 140 157 190 52 539 88%

UNITED KINGDOM 81 65 72 53 89 307 271 156 69 31 12 268 -1%

ESTONIA 42 40 108 19 85 275 209 101 143 89 64 397 90%

PORTUGAL 23 85 43 24 55 206 175 45 73 61 17 196 12%

AUSTRIA 33 30 32 8 49 144 103 36 46 38 14 134 30%

CZECH REPUBLIC 41 39 34 10 24 138 124 30 48 15 2 95 -23%

OTHERS 38 149 90 12 86 363 289 192 338 250 136 916 217%

TOTAL 16,432 17,153 18,256 6,031 14,861 66,702 57,872 20,385 20,876 18,321 6,118 65,700 14%


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Ø 2011

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Finland – Stainless Steel Market Volume Index*


Flat and Long Products recover from an annual low but are still far away from the 2016 peak

2011 2012 2013 2014

Trend Lines

2015 2016


Raw Materials

Nickel

Chrome

Molybdenum

Scrap


Raw Materials

Nickel:

Prices struggle but remain above 10,000 USD/t – New Indonesian mining law heats debates

LME:

• After the Class I nickel price hike in mid-November 2016 to around 11,800 USD/t prices again fell to just above 10,000 USD in early 2017. Nickel stocks at the London Metal Exchange (LME) in January 2017 totalled around 372,000 t with barely any movement since December 2016at 369,000 t. At the same time stocks at the Shanghai Futures Exchange (SHFE) declined from 104,000 t in early December to 93,000 t in early January, adding up to global stocks of around 465,000 t (December 2016: 473,000 t).

• Per January 12th, 2014 Indonesia banned exports of unprocessed mineral ore in a bid to encourage the development of domestic higher value smelting facilities. The new Indonesian mining rules, which were announced in early January 2017, will relax the three-year ore export ban.

• For the next five years the government will allow exports of unprocessed nickel ore and bauxite again if mining companies are willing to change their longstanding Contracts of Work to the newer Special Mining Business Permit. According to the Indonesian Ministry of Energy and Mineral Resources the contract conversion will only take two weeks.

• The Special Mining Business Permit includes the compulsory development of local processing facilities. The construction progress will be supervised by the Energy Ministry every six months. If the development progress is not sufficient, the export permit can be revoked.

• Also all foreign miners in Indonesia will need to divest 51% of the shares in the company gradually to an Indonesian party over 10 years, which means that foreign miners need to have a minority stake.


Raw Materials

Chrome:

Benchmark prices reach long-time high – Supply base of ferrochrome shows first reaction

• The European Q1/17 charge and high-carbon ferrochrome benchmark price agreed between mills and South African ferrochrome smelters has reached another record mark at 1.65 USD/lb, rising by 0.55 USD/lb from 1.10 USD/lb in Q4/16 (+50% qoq). Discounts to the benchmarks are negotiated between producers and consumers individually.

• The sharp rise in ferrochrome prices can be attributed to inventory shortage in China as well as to the currency movement in South Africa.

• Oman’s Gulf Mining announced plans to triple its high-carbon ferrochrome production capacity of currently 50,000 tpy by 2020 amid strong demand. The expansion schedule however will depend on the launch of a new power plant in the Sohar area. Gulf Mining produces at 12 out of its 17 mines, moving away from ore imports from Turkey and South Africa.

• Indian ferrochrome producers like Indian Metals and Ferro Alloys as well as Balasore Alloys announced to increase their ferrochrome production levels this year. Also some Indian manganese alloy producers switched to ferrochrome production due to surging manganese ore prices alongside tightening supplies.


Raw Materials

Molybdenum:

Strong end in 2016 while 2017 misses momentum

• Buying interest sustained in December and demand has proved sufficient to support prices, which avoided a year-end slump from destocking. Prices for ferro-molybdenum in Europe improved to 17.70-18.40 USD/kg in early 2017 but when sellers flooded the market with their inventories in hope for a quick profit, prices were pushed back to 17.05-17.50 USD/kg again in mid-January.

• Due to delays in mine ramp-ups and announced production cutbacks at some major molybdenum mines, the molybdenum market is likely to end in a deficit in 2017.


Raw Materials

Scrap:

Improved scrap demand – Scrap as ferrochrome substitute in China

• In spite of the nickel price volatility in the last few weeks demand and supply for scrap were relatively strong. Type 304 solids climbed to around 1,130 EUR/t in late December and since then remained above the 1,100 EUR mark. Prices for type 304 turnings again showed a similar development and rose to 1,015 EUR/t at the end of the year.

• Improved demand at European mills in early 2017 as well as the Chinese chrome shortage are expected to further drive the prices up and limit the availability this year.


Chrome in 2017

Will chrome become the new nickel?

Focus of the Month

Source: www.chemistrylearner.com


Ferro Chrome Price DevelopmentQuarterly producer price settles at 1.65 USD/lb (+50% qoq!!!) and prices in China in November 2016 higher than in the rest of the world (for the first time)

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Ferr

o C

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FeCr Price Europe*

FeCr price China spot market

Quarterly Producer Prices

Q2/16

Q4/16

Q1/16 Q3/16

Q1/17

*Ferrochrome 6-8% C basis 60% Cr max. 1.5% Si major European destinations**Ferrochrome China import charge chrome 50% Cr index, CIF Shanghai, duty unpaid, ct/Ib contained chrome

Source: SMR GmbH


Top 20 Global Ferrochrome Producers>50% of the industry reported losses in 2016 Mines and smelters were closed in South Africa

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FeCr Capacity

• Out of the world’s top 20 Fe Cr companies, six are South African (capacity: 4,700 kt) and eightare Chinese (capacity 2,500 kt)

• Several companies are facing financial distress and three South African players entered ‘business rescue’ in 2016 (ASA Metals, IFML SA, Tata Steel KZN)

• Larger companies like Glencore and Samancor are already casting an acquisitive eye over smaller companies like Hernic or IFML

• Continuously high prices will speed up consolidation

Source: SMR GmbH / ICDA


The Ferrochrome StoryImplications for the ferrochrome market in 2017

• Chinese companies always assumed that their purchasing power lets them dictate prices to their commodity suppliers. But, ferrochrome prices as low as 54 ct/lb made the entire supply chain unprofitable leading to a number of closures in the main supply base of South Africa. In Q4/16 the pricing power moved from the Chinese STS mills to their FeCr suppliers.

• The South African rand has been the strongest currency against the US dollar in 2016 and will further strengthen.

• The South African industry is plagued by severe cost pressures and fell mostly into losses in 2016.

• Although the industry has ‘hit a jackpot‘ and will return to profitabillity in Q1/17, the owners are hesitant to bring back idled (or closed) mines and smelters. They simply believe that the current price bubble is not sustainable.

• But, the current situation will trigger takeovers that will consolidate the South African chrome industry into two large groups, one led by Samancor and the other by Glencore.

• This likely consolidation will prevent new players from entering the stage, either South African or overseas investors.

• As a result, the high ferrochrome price will sustain throughout 2017 as the market will be in deficit.

• The prices in Q2/17 will moderate somewhat as Chinese STS mills will be able to use more 18-8 scrap and also additional chrome ore volumes will be imported from Turkey, Oman, etc.

• Further price development: Q2/17 prices could decline, but already in June, July and August the usual South African summer energy crisis will curtail the FeCr production by 10 – 15% supporting Q3/17 prices.

Source: SMR GmbH


Reflection of the Month

Quote:

Will Trump eat as hot as he is cooking? Protectionism is nothing

new, especially in the USA, but so far all anti-dumping cases had

to follow WTO rules. If these rules are not valid anymore there will

many losers, but above all the USA itself.

Markus Moll, Managing Director of SMR GmbH

uk-damstahl report february 2017...of which around 0.6 mill. t will be transformed into cold rolled...

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