world steel

8/13/2019 World Steel

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Global economic outlook and steel demand trends

Eldar Askerov, 23-24 April 2012


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worldsteel what is our role?

worldsteel provides global leadership on all major strategic

issues affecting the industry

worldsteel promotes steel and the steel industry

steel industry: a vital part of society

worldsteel assists its members

to develop the market for steel and to improve their performance managing major projects such as

FutureSteelVehicle

Living Steel

India Steel Vision 2020 and China Steel Vision 2020

worldsteel safety and health principles

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Key facts worldsteel today

146 Members:

65 Regular (production > 1.8 Mt)

31 Associate (production < 1.8 Mt)

50 Affiliated (Regional and National Associations and Steel

Research Institutes)

17 of the worlds 20 largest companies are members

Membership HQs are located in over 50 countries

worldsteel headquarters in Brussels, second office in Beijing

Any producer with more than 2 million short tons (1.8 metric) of

crude steel production can become a regular member of

worldsteel

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Contents

Long term steel market trends

Global demand for steel in 1950-2010

Post-crisis steel demand recovery EU, US

Emerging markets

Conclusions

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5

Long term steel market trends


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6

Steel is a cornerstone

and key driver for the

worlds economy.


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7

0

400

800

1200

1600

1950 1960 1970 1980 1990 2000 2010

Global growth in steel production is linked to human

development

Years Mt

1970 595

1975 644

1980 717

1985 719

1990 770

1995 7522000 849

2005 1,144

2010 1,414

2011 1,527

Source: worldsteel

World crude steel product ion, 1950-2011


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Steel a key driver of the worlds economy

World crude steel production has increased from 851

megatonnes (Mt) in 2001 to 1,527 Mt in 2011. (28.3 Mt in 1900).

The industry directly employs 2 million people worldwide, with a

further 2 million contractors and 4 million in supporting industries.

Considering steels position as the key product supplier to

industries such as automotive, construction, transport, power and

machine goods then using a multiplier of 25:1 the steel industryis at the source of employment for more than 50 million people.

World average steel use per capita has steadily increased from

150 kg in 2001 to 220 kg in 2010.

India, Brazil, Korea and Turkey have all entered the top 10 steel

producers list in the last 40 years.

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Regional steel demand breakdown in 1950-2010

Regional structure of steel demand has been changing continuouslyalong with:

Regional economic growth trends

Evolution of global manufacturing base through creation and relocation of industries

Source: worldsteel, SSY

9

Apparent crude steel use in 1950-2010

0

200

400

600

800

1000

1200

1400

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

2010

China

Asia and Oceania excl China

former USSR

North America

EU 15

Africa and Middle East

South America

Other Europe

Mt


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10

58.4% 41.6%

28.7%

41.7% 58.3%

71.3%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Developed Economies Emerging & Developing Economies

Regional share in world steel demand

Source: worldsteel, SRO


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0

5

10

15

20

25

30

3540

45

50

China

Vietnam

Indonesia

Morocco

India

SouthKorea

Algeria

Singapore

Thailand

Spain

Canada

Argentina

Iran

Russia

SaudiArabia

Philippines

Malaysia

Japan

Poland

Italy

SouthAfrica

Ukraine

Egypt

Turkey

Brazil

EU

15

Germany

UnitedStates

UnitedKingdom

2007

2010

15

20

25

30

35

40

45

50

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

China

Indonesia

Thailand

India

Vietnam

%

Forecast

11

Investments: steel demand driver in developing world

Source: Global Insight

Urbanisation and

development of

manufacturing base

boost steel demand

Fixed investments,% to GDP

Fixed investments in 1980-2015,% to GDP


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Developing world: strong fundamentals for growth

Strong upward population trend with high share of working age population

Strong needs for infrastructure and industries development

12

Source: Global Insight, worldsteel*real 2005 PPP$

Population,million Urbanisation, %

GDP percapita, PPP$*

Steel useper

capita, kg

2011 2020 2011 2020 2011 2020 2010

Brazil 197 210 9,961 14,015 133

Mexico 115 126 76 77 13,224 16,911 140

Turkey 74 81 12,390 16,675 320

Indonesia 242 263 53 61 4,094 6,106 37

Thailand 70 72 34 39 7,648 10,884 202

Vietnam 89 96 30 35 2,981 4,803 141

India 1,241 1,387 30 34 3,195 5,895 52

China 1,347 1,388 51 61 7,503 14,306 427


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14

Global steel demand growth in 2001-2011

Source: worldsteel

Steel demand landscape has been changed by global economic crisis

Two-speed world: emerging & developing economies vs developed

Global steel demand, ASU finished steel

5.5

0.18.9

-5.0

8.9-0.6

1.8

-6.1 -5.7

-32.9

24.4

3.7

10.4 5.6

12.09.3

14.612.512.9

8.9

12.6

17.8

-40

-30

-20

-10

0

10

20

30

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

%

0

100

200

300

400

500

600

700

800900

1,000

1,100

1,200

1,300

1,400

MtWorld, mmtDeveloped Economies, y-o-y % growth

Emerging&Developing Economies, y-o-y % growth


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Regional summary at a glance

Source: worldsteel, SRO

15

Apparent steel use finished steel, Index (2007=100)

40

50

60

70

80

90

100

110

120

130

140

2007 2008 2009 2010 2011

World

CIS

Africa

EU-27

NAFTA

Middle East

Other Europe

Central&South America

Asia&Oceania


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16

IMF GDP Forecast Revisionsfor Advanced Economies

2.62.5

1.4

1.2

1.9

2.62.6

2.0

1.9

2.4

2.52.5

Oct-10 Jan-11 Apr-11 Jun -11 Sep-11 Jan -12 Apr-12

2012 2013

Global economic outlook

6.0

6.56.4

5.7

5.4

6.1

6.66.5

6.5

5.9

Apr-11 Ju l-11 Oct-11 Jan-12 Apr-12

2012 2013

IMF GDP Forecast Revisions forEmerging and Developing Economies

Source: IMF


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In 2012 the world economy is projected to expand by

3.5% (IMF) Downside risks for the forecast:

Sovereign debt crisis in euro zone

Subdued growth as a result of austerity measures Significant slowdown in growth in emerging economies

Chinas hard landing

World GDP, y-o-y, % Industr ial production, y-o-y, %


17

-20

-15

-10

-5

0

5

10

15

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

3Q12

1Q13

3Q13

1Q14

3Q14

World

Advanced Economies

Emerging Markets

%

Forecast

-8

-6

-4

-2

0

2

4

6

8

10

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

3Q09

1Q10

3Q10

1Q11

3Q11

1Q12

3Q12

1Q13

3Q13

1Q14

3Q14

World

Advanced Economies

Emerging Markets

%

Forecast


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Is the US economy coming back on growth path?

US: steel using sectors growth, %

Latest data gives some hope that the US is recovering steadily

US construction: housing starts seems to rise but still has a long

way to go

Strong rebound in automotive industry

0

200

400

600

800

1000

1200

1400

1600

Jan-00

Jul-0

0

Jan-01

Jul-0

1

Jan-02

Jul-0

2

Jan-03

Jul-0

3

Jan-04

Jul-0

4

Jan-05

Jul-0

5

Jan-06

Jul-0

6

Jan-07

Jul-0

7

Jan-08

Jul-0

8

Jan-09

Jul-0

9

Jan-10

Jul-1

0

Jan-11

Jul-1

1

Jan-12

0

0.5

1

1.5

2

2.5

New 1 Family Houses Sold: sa: Annual Rate Private Housing Units Started: saar: Total

% %

US: Housing units started andhouses sold, %

Source: CEIC, Oxford economics

19

-30

-20

-10

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Fabricated metal productsMechanical machinery

Electrical and optical equipment

Motor vehicles


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-10

-5

0

5

10

15

20

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Indonesia Thailand Vietnam Malaisia ASEAN

%

ASEAN: positive perspectives for steel demand

ASEAN: Industrial productiongrowth, %

Indonesia: steel using sectorsgrowth, %

Thailand: steel using sectors2005=100

Source: Global Insight, Oxford Economics

Indonesia: slight slowdown in

2012 after impressive growth in

2011

Thailand: after floods recovery

Region has strong fundamentals

for steel demand growth

Infrastructure improvement

20

0

20

40

60

80

100

120

140

160

180

1Q20

06

3Q20

06

1Q20

07

3Q20

07

1Q20

08

3Q20

08

1Q20

09

3Q20

09

1Q20

10

3Q20

10

1Q20

11

3Q20

11

1Q20

12

3Q20

12

Industrial production Manufacturing Motor vehicles

-30

-20

-10

0

10

20

30

40

1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012

Manufacturing Mechanical machinery Fabricated Metal Goods Motor vehicles

%


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21

India

Source: CEIC, Global Insight

0

50

100

150

200

250

300

350

400

450

Apr-05

Aug-05

Dec

-05

Apr-0

6

Aug-06

Dec

-06

Apr-07

Aug-07

Dec

-07

Apr-0

8

Aug-08

Dec

-08

Apr-0

9

Aug-09

Dec

-09

Apr-1

0

Aug-10

Dec

-10

Apr-1

1

Aug-11

Dec

-11

IP: Manufacturing

IP: Capital Goods

IP: Consumer Goods: Durables

India and China: Industrialproduction growth, %

India: Steel using sectors2004-05=100

Current deceleration due to

anti inflationary policy

weak external demand

Long term: economy needs modern infrastructure

0

2

4

6

8

10

12

14

16

18

20

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

China

India

%


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China: deceleration of growth in 2012

Gradual slowdown because of anti inflationary policy and weaker

external demand

Cooling real estate sector

Source: worldsteel

22

YTD Growth Of Auto & Machinery Sectors

Production

-1.8%

47.7%

9.8%

47.5%

-5.7%

-40%

-20%

0%

20%

40%

60%

80%

100%

Jan-0

8

Apr

Jul

Oct

Jan-0

9

Apr

Jul

Oct

Jan-1

0

Apr

Jul

Oct

Jan-1

1

Apr

Jul

Oct

Jan-1

2

Auto mobile Civil metal vessels AC electro moto r

Household refrigerator Room air condioner Household washing machine

YTD Growth Of Construc tion Industry

33.5%

38.2%

27.8%

14.2%

26.6%

35.5%

-10%

0%

10%

20%

30%

40%

50%

Jan-08M

ar

May

Jul

Sept

Nov

Jan-09M

ar

May

Jul

Sept

Nov

Jan-10M

ar

May

Jul

Sept

Nov

Jan-11M

ar

May

Jul

Sept

Nov

Jan-12

FAI in real estate Floor space under construction Cement output


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0

5000

10000

15000

20000

25000

Shanghai

Tianjin

Beijing

Jiangsu

Zhejiang

Guangdong

Shandong

InnerMongolia

Liaoning

Fujian

Jilin

Heilongjiang

Hebei

NationalTotal

Hubei

Chongqing

Henan

Xinjiang

Shaanxi

Shanxi

Hainan

Hunan

Qinghai

Ningxia

Sichuan

Guangxi

Anhui

Jiangxi

Tibet

Yunnan

Gansu

Guizhou

PPP$

Shanghai

TianjinBeijingXinjiang

Gansu

Xizang

Qinghai

Sichuan

Nei Mongol

Yunnan

Heilongjiang

Jilin

Liaoning

Ningxia

Shaanxi

ShanxiHebei

Shandong

Henan

Hubei

Guizhou

Hunan

FujianTaiwan

GuangdongGuangxi

Hainan

Jiangsu

Zhejiang

Jiangxi

Anhui

China: multi-speed growth in provinces

Lessdeveloped

Level ofdevelopmentaccording to

GDP per capita

Developed


China: provincialGDP per capita

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Conclusions

Regional structure of global steel demand has been changing over time

due to many different factors including competitiveness of the local

manufacturing, construction activity, population trends.

Despite the deceleration of growth in the post crisis period developing

economies have strong fundamentals for steel demand growth.

Global steel demand has maintained relatively stable recoverymomentum so far despite uncertainties and volatilities in the global

economy.

Evolution of the euro zone crisis and healthy growth of the emergingeconomies, especially of China, are critical to current trends.

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Steel touches everyaspect of our lives.

No other material hasthe same unique

combination of

strength, formability

and versatility.


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26April 30, 2012 26

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