global economic outlook and steel demand trends
TRANSCRIPT
Global economic outlook and steel demand trendsEldar Askerov, 23-24 April 2012
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
2
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 world’s 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
3
Contents
Long term steel market trends Global demand for steel in 1950-2010
Post-crisis steel demand recovery EU, US Emerging markets
Conclusions
4
5
Long term steel market trends
6
Steel is a cornerstone and key driver for the
world’s economy.
7
0
400
800
1200
1600
1950 1960 1970 1980 1990 2000 2010
Global growth in steel production is linked to humandevelopment
Years Mt1970 5951975 6441980 7171985 7191990 7701995 7522000 8492005 1,144 2010 1,414
2011 1,527Source: worldsteel
World crude steel production, 1950-2011
Steel a key driver of the world’s 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 steel’s 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 industry is 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.
8
Regional steel demand breakdown in 1950-2010 Regional structure of steel demand has been changing continuously
along with: Regional economic growth trends Evolution of global manufacturing base through creation and relocation of industries
Source: worldsteel, SSY9
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 USSRNorth America
EU 15
Africa and Middle East
South America
Other Europe
Mt
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
05
101520253035404550
Chi
na
Vie
tnam
Indo
nesi
a
Mor
occo
Indi
a
Sou
th K
orea
Alg
eria
Sin
gapo
re
Thai
land
Spa
in
Can
ada
Arg
entin
a
Iran
Rus
sia
Saud
i Ara
bia
Phi
lippi
nes
Mal
aysi
a
Japa
n
Pol
and
Italy
Sou
th A
frica
Ukr
aine
Egy
pt
Turk
ey
Bra
zil
EU
15
Ger
man
y
Uni
ted
Sta
tes
Uni
ted
Kin
gdom
20072010
%
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
Developing world: strong fundamentals for growthStrong upward population trend with high share of working age populationStrong needs for infrastructure and industries development
12
Source: Global Insight, worldsteel*real 2005 PPP$
Population, million Urbanisation, %
GDP per capita, PPP$*
Steel use per
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
13
Post-crisis steel demand recovery
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
5.50.18.9
-5.08.9-0.61.8
-6.1 -5.7
-32.9
24.4
3.7 10.45.6
12.09.3
14.612.512.9
8.912.6
17.8
-40
-30
-20
-10
0
10
20
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
%
01002003004005006007008009001,0001,1001,2001,3001,400
MtWorld, mmtDeveloped Economies, y-o-y % growthEmerging&Developing Economies, y-o-y % growth
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
16
IMF GDP Forecast Revisions for Advanced Economies
2.62.5
1.4
1.2
1.9
2.62.6
2.0
1.9
2.42.52.5
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 Jul-11 Oct-11 Jan-12 Apr-12
2012 2013
IMF GDP Forecast Revisions for Emerging and Developing Economies
Source: IMF
In 2012 the world economy is projected to expand by3.5% (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 China’s hard landing
World GDP, y-o-y, % Industrial production, y-o-y, %
Source: Global Insight
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
EU steel market: thorny way to recovery Two-speed euro zone: North and South Europe Germany: positive economic outlook, strong growth in construction,
automotive Spain, Italy: the second wave of crisis EU: Strong rebound in automotive sector
EU 15: steel using sectors growth, %
Source: worldsteel, Oxford Economics
EU countries: steel demand, Mt
18
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
AutomotiveMetal GoodsElectrical engineeringMechanical engineeringTransportation (less automotive)
0
5
10
15
20
25
30
35
40
45
50
2003 2004 2005 2006 2007 2008 2009 2010
GermanyItalyFranceSpainUK
mmt
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-0
0Ju
l-00
Jan-0
1Ju
l-01
Jan-0
2Ju
l-02
Jan-0
3Ju
l-03
Jan-0
4Ju
l-04
Jan-0
5Ju
l-05
Jan-0
6Ju
l-06
Jan-0
7Ju
l-07
Jan-0
8Ju
l-08
Jan-0
9Ju
l-09
Jan-1
0Ju
l-10
Jan-1
1Ju
l-11
Jan-1
2
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 and houses 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 machineryElectrical and optical equipmentMotor vehicles
-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 production growth, %
Indonesia: steel using sectors growth, %
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
063Q
2006
1Q20
073Q
2007
1Q20
083Q
2008
1Q20
093Q
2009
1Q20
103Q
2010
1Q20
113Q
2011
1Q20
123Q
2012
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
%
21
India
Source: CEIC, Global Insight
0
50
100
150
200
250
300
350
400
450
Apr-05
Aug-05
Dec-05
Apr-06
Aug-06
Dec-06
Apr-07
Aug-07
Dec-07
Apr-08
Aug-08
Dec-08
Apr-09
Aug-09
Dec-09
Apr-10
Aug-10
Dec-10
Apr-11
Aug-11
Dec-11
IP: Manufacturing
IP: Capital Goods
IP: Consumer Goods: Durables
India and China: Industrial production 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
%
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-
08 Apr Ju
l
Oct
Jan-
09 Apr Ju
l
Oct
Jan-
10 Apr Ju
l
Oct
Jan-
11 Apr Ju
l
Oct
Jan-
12
Automobile Civil metal vessels AC electromotor
Household refrigerator Room air condioner Household washing machine
YTD Growth Of Construction Industry
33.5%38.2%
27.8%
14.2%
26.6%
35.5%
-10%
0%
10%
20%
30%
40%
50%
Jan-
08 Mar
May Ju
lS
ept
Nov
Jan-
09 Mar
May Ju
lS
ept
Nov
Jan-
10 Mar
May Ju
lS
ept
Nov
Jan-
11 Mar
May Ju
lS
ept
Nov
Jan-
12
FAI in real estate Floor space under construct ion Cement output
0
5000
10000
15000
20000
25000
Shan
ghai
Tian
jin
Beijin
g
Jian
gsu
Zhej
iang
Gua
ngdo
ng
Shan
dong
Inne
r Mon
golia
Liao
ning
Fujia
n
Jilin
Hei
long
jiang
Heb
ei
Nat
iona
l Tot
al
Hub
ei
Cho
ngqi
ng
Hen
an
Xinj
iang
Shaa
nxi
Shan
xi
Hai
nan
Hun
an
Qin
ghai
Nin
gxia
Sich
uan
Gua
ngxi
Anhu
i
Jian
gxi
Tibe
t
Yunn
an
Gan
su
Gui
zhou
PPP$
Shanghai
TianjinBeijingXinjiang
Gansu
Xizang
Qinghai
Sichuan
Nei Mongol
Yunnan
Heilongjiang
Jilin
Liaoning
Ningxia
Shaanxi
ShanxiHebei
Shandong
Henan
Hubei
GuizhouHunan
FujianTaiwan
GuangdongGuangxi
Hainan
Jiangsu
ZhejiangJiangxi
Anhui
China: multi-speed growth in provinces
Less developed
Level of development according to
GDP per capita
Developed
Source: Global Insight
China: provincial GDP per capita
23
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 recovery momentum so far despite uncertainties and volatilities in the global economy.
Evolution of the euro zone crisis and healthy growth of the emerging economies, especially of China, are critical to current trends.
24
25
Steel touches every aspect of our lives.
No other material has the same unique
combination of strength, formability
and versatility.
26April 30, 2012 26
worldsteel.org