Steel demand in sub-Saharan AfricaAfrican Union and the United Nations Statistics Division

Regional Seminar on International Trade Statistics, 13 May 2014

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3

Content

� Role of steel industry in a modern economy

� Overview of sub-Saharan Africa

� Steel demand of sub-Saharan Africa’s countries

� Summary

Role of steel industry in a modern economy

Steel is everywhere in your life

Steel: A key driver of the world’s economy

Sustainable steel: steel at the heart of the green economy

8

Role of World Steel Association

� worldsteel members produce around 85% of the world’s steel

� More than 160 Members, with HQs are located in over 50 countries

� 17 of the world’s 20 largest companies are members

� The World Steel Association acts as the focal point for the steel industry.

� worldsteel provides global leadership on all major strategic issues affecting the industry, particularly focusing on economic, environmental and social sustainability.

� worldsteel promotes steel and the steel industry to customers, the industry, media, financial markets and the general public.

� worldsteel assists its members to develop the market for steel, managing major projects in a range of industry sectors.

Overview of sub-Saharan Africa

Strong growth of population

10

2-3%

< 2%

> 3%

Population growth in 2000’sCAGR 2000-2012, %

� Sub-Saharan Africa1 was inhabited by 810 million people in 2012, which represents 11.5% of World total

� Strong population growth in recent years

� Low urbanisation rate and slower urbanisation growth in recent years than world average

1) World Bank sub-Saharan Africa All Income Levels definition excluding South Africa, Sudan and South Sudan, 2012Source: World Bank

40-60%

< 40%

> 60%

Urbanisation rate in 2012Urban population as % of total population

4-6 pp

< 4 pp

> 6 pp

Change of urbanisation ratein 2000’sChange of urbanisation rate in 2000-2012, ∆ %

Low income levels but with strong growths

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GDP per capita in 2013Real 2010 PPP USD, thousand USD per capita

� Low income level in sub-Saharan Africa

� Countries with lowest urbanisation rate have lowest GDP per capita

� Strong GDP growth

� Strong investments growth

GDP growth in 2000’sReal 2010 USD, CAGR 2000-2013, %

GFCF growth in 2000’sCurrent USD, CAGR 2000-2012, %

2-5 k USD

< 2 k USD

> 5 k USD

4-8%

< 4%

> 8%

10-20%

< 10%

> 20%

Source: World Bank, Global Insight

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Angola

Benin

Botswana

Burkina Faso

Burundi

Cameroon

Cent. African Rep.

Chad

Dem. Rep. of the Congo

Equatorial Guinea

Eritrea

Ethiopia

Gabon

Gambia Ghana

Guinea

Ivory Coast

Kenya

Lesotho

Liberia

Malawi

Mali

Mauritania

Mauritius

Mozambique

Namibia

Niger

Nigeria

Rep. of the Congo

Rwanda

Senegal

Swaziland

TanzaniaTogo

Uganda

Zambia

Zimbabwe

-5

0

5

10

15

0 5 10 15 20 25 30 35 40 45

Urb

anis

atio

n ra

te c

hang

es

Investments growth%

∆ %

pre-industrial migration growing markets

bright spotsstagnant markets

Investments and urbanisation relations Investments growth: current USD, World Bank, CAGR 2000-2012, %Urbanisation rate change: World Bank, change of urbanisation rate in 2000-2012, ∆ %Size of bubbles: investments current USD, World Bank, yearly average 2000-2012, bn USD

Source: World Bank, worldsteel

Steel demand of sub-Saharan Africa’s countries

Regional breakdown of steel demand

� Regional structure of steel demand has changed dramatically since 2000

• Expansion of steel demand in developing world leading by growth of China

• Development of MENA and ASEAN countries

14 14

41.5%

48.5%

58.3%

63.4%73.7%

71.3%

73.9%

58.5%

51.5%

41.7%

36.6%26.3%28.7%

26.1%

16.4%

23.3%

33.3%

36.6%48.3%

45.1%

47.3%

Emerging & Developing Economies Developed Economies China

Regional share in World steel demandApparent steel use, finished steel, %

Steel demand development in 1950-2012Apparent steel use, crude steel equivalent, million tonnes (Mt)

0

200

400

600

800

1,000

1,200

1,400

1,600

1950 1960 1970 1980 1990 2000 2010

China

Asia and Oceania (excl. China)

Middle East and Africa

Other Europe

South America

North America

former USSR

EU 15

Mt

Source: worldsteel

Estimation of steel demand, data requirements

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� Volume data required expressed in tonnes

� Production

• It is assumed that sub-Saharan Africa’s counties production is very small compared to steel demand

• Accessibility issue; estimated for many countries

• Steel demand depends largely on net imports of steel products

� Steel trade data

• Steel imports and exports data are very often not available in UN Comtrade

• Mirror statistics

� Steel containing goods trade data

• As in case of steel trade data

Increasing imports to sub-Saharan Africa’s

� All sub-Saharan Africa’s countries are ne importers of steel products

� Net import of steel products doubled in period from 2006 to 2012

� Top 5 net importers had 58% share in the total net imports

16 16

Share in sub-Saharan Africa’s net importsMirror statistics, finished steel products, 2012, %

Net imports of sub-Saharan AfricaMirror statistics, finished steel products, 2006-2012, million tonnes (Mt)

0

2

4

6

8

10

0.0

0.5

1.0

1.5

2.0

2006 2007 2008 2009 2010 2011 2012

MtMt

Angola EthiopiaKenya NigeriaSub-Saharan Africa, rhs

Angola12%

Cameroon3%

Ethiopia8%

Ghana8%

Ivory Coast2%

Kenya10%

Mozambique3%

Nigeria20%

Senegal4%

Tanzania 5%

Other25%

Source: ISSB, worldsteel

Different sources, different results, alike trend

� Comparison of ISSB mirror statistics with UN Comtrade and UN Comtrade mirror statistics gives different data, but similar trend

� UN Comtrade mirror statistics seems to cover bigger share of the market

� Samples shows good fit to price trend

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Prices of steel productsRebars (SBB, imports, cfr Gulf States) and HS-6 721200 (UN Comtrade, imports), 2006-2012, USD/tonne

Net imports of sub-Saharan Africa, different source sFinished steel products, 2006-2012, million tonnes (Mt)

0.0

2.0

4.0

6.0

8.0

10.0

2006 2007 2008 2009 2010 2011 2012

Mt

UN Comtrade, reported

UN Comtrade, mirror

ISSB, mirror

Source: ISSB, UN Comtrade, SBB, worldsteel

0.0

0.2

0.4

0.6

0.8

1.0

2006 2007 2008 2009 2010 2011 2012

USD/t

UN Comtrade, regular

UN Comtrade, mirror

SBB average

Estimation of steel demand, limitations

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� Mirror statistics used for many of sub-Saharan Africa’s countries • trade statistics is not always precisely declared by countries for which steel

demand is estimated

• trade between sub-Saharan Africa’s countries is not available

� Steel demand figure for the whole region is more precise than for individual countries

� Missing production estimation, rather small facilities

� Desirable to improve quality of reporting countries trade data to avoid necessity of using mirror statistics

Very low level of steel demand per capita

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Steel demand per capitaApparent steel use, finished steel per capita, kilogrammes, 2012

10-30 kg

< 10 kg

> 30 kg

� Only 11 kg of steel products were used per person in 2012 • World average: 220 kg, Developing Economies excl. China: 92 kg

� Urbanisation is not contributing to steel demand yet

Source: World Bank, United Nations, worldsteel

Urbanisation vs steel demandUrban population as % of total population, 2010Apparent steel use, crude steel equivalent per capita, kilogrammes, 2010

France

Germany

Greece

Italy

Spain

Sweden

United Kingdom

Hungary

Norway

Poland

Romania

TurkeyRussia

Ukraine

Uzbekistan

Canada

Mexico

United States

Argentina

Bolivia

Brazil

ColombiaVenezuela

Algeria

Cameroon

Egypt

Ghana

Ivory Coast

Kenya Morocco

Nigeria

Senegal

South Africa

Sudan

Tanzania

Tunisia

Dem. Rep. Congo

Iran

Kuwait

Qatar

China

India Indonesia

Japan

Singapore

Thailand

Vietnam

0

100

200

300

400

500

600

700

0 20 40 60 80 100

kg

%

selected sub-Saharan countries

Low steel intensity of GDP, lagging logistics

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Steel intensitySteel intensity of GDP, tonnes / million real 2010 USD, 2012

10-20 t

< 10 t

> 20 t

� Steel intensity in sub-Saharan Africa is much lower than in Wold’s average, especially taking into account high dynamics of GDP

� Steel intensity in sub-Saharan Africa is increasing fast only in a few countries

• Possibility of steel demand being underestimated

• Other factors, e.g. inefficient logistics not supportive for steel demand

Source: World Bank, worldsteel

Logistics Performance Index2014

2.3-2.7

< 2.3

> 2.7

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Data range used for presented analysis

� Set of macroeconomic variables which set a background for steel industry analysis

• different sources

� Volume data, steel demand calculation: steel production, steel trade, indirect steel trade

• worldsteel sources

• UN Comtrade, trade data

- country coverage, frequency, data quality

• other providers, e.g. trade data, raw materials production

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Summary

� Volume data are fundamental for steel market analysis

• production, trade, demand, raw materials, capacity

� Frequency of data

• monthly preferable

• provided on regular basis

• as close to reported period

� Data quality is essential

� Tight cooperation between providers and end-users of trade data for better understanding of needs and limitations

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