uk-damstahl report march 2018 damstahl stainless steel report no. 120 – march 2018 © damstahl...

Damstahl Stainless Steel Report No. 120 – March 20181 © Damstahl 2018. Damstahl - a member of the NEUMO-Ehrenberg-Group

DamstahlStainless Steel Report #120

March 2018


Stainless Steel at a Glance 3

European Industry News / PMI Status 6

Relevant Issues in Damstahl-Land 9

Imports all Damstahl Countries 10

Germany 12

The Netherlands 16

Denmark 20

Sweden 24

Norway 28

Slovenia 32

Finland 36

Raw Materials 40

Focus of the Month 45

Reflection of the Month by Markus Moll 52

Contents


Stainless Steel at a Glance

Market: Trump ….. Oh my ….

• Economic growth prospects are good in Europe. Stainless demand is still driven by full order books of customers and prices are showing an upward trend. Problematic might be that many market participants have too high expectations of the future development and lose a realistic picture of the current market situation. This might lead to irrational order behavior and the building up of artificial ‘demand-bubbles’ here and there.

• As mentioned in earlier Damstahl report issues, political obstacles such as protectionism is now becoming reality. Section 232 import tariffs will change global trade patterns and will have direct effects on stainless steel supply in Europe. Oversupply from European mills and additional imports from Asia will flood the European market – until the European Union might be forced to react with tariffs or quotas as well. None of the European industries (other than steel and aluminium) are directly hit by Section 232. But the entire industry will be affected by retaliatory measures, which might induce a global trade war and will set an end to the current economic growth – not only in Europe.

Alloy Surcharge:

• The alloy surcharge increased by about 3% in March for 304 and even 6% (molybdenum!) for 316.

• The European market leader - Outokumpu - set the surcharge for type 304 (1.4301) to 1,353 EUR/t in March 2018, up from 1,315 EUR/t in February 2018. The surcharge for type 316 (1.4401) was set to 2,072 EUR/t in March 2018, up from 1,960 EUR/t in February 2018.

• Outokumpu’s graphite electrode surcharge for Flat Products is still set at 30 EUR/t in March 2018. Interestingly, Aperam and Acerinox do not charge their clients for the increased electrode costs.



Building & Construction:

• Eurostat reports a growth in production and construction of 0.5% for the euro area in December 2017 and a growth of 1.5% for the EU28 when compared to December 2016. The increase in the euro area is due to building construction rising by 1.4%, whereas civil engineering declined by 2.6%. The increase in the EU28 is due to building construction rising by 1.5% and civil engineering by 1.8%.

• Highest increases were seen in: Hungary + 35.0% yoySlovenia + 21.2% yoyPoland + 18.3% yoy

• Largest decreases were recorded in: Spain - 13.4% yoyBulgaria - 4.1% yoy

• Other Damstahl countries: Sweden + 7.4% yoyNetherlands + 6.2% yoyGermany + 4.5% yoyDenmark - 0.3% yoy

Consumer Goods:

• According to the German Association representing the appliance industry (ZVEI), the electronics industry reached a record high revenue of 191.2 bill. EUR in 2017, up by 12.7 bill. EUR from 2016 (+7%). Foreign revenues increased by 8.8%, while domestic revenue grew by 5.3%.

• Signs are also very promising for 2018. Capacity utilization rose further to 89% and order backlog to 3.1 months in the beginning of 2018. For 2018, the ZVEI expects revenues to improve to 196 bill. EUR, which compares to a growth of only 3%.



Automotive:

• After a successful year 2017, 2018 started very positive as well. European car sales in January 2018 grew by 7.1% yoy and totalled 1,253,877. Among the major EU car markets, car sales in Spain increased by 20.3% (yoy), in Germany by 11.6%, in Italy by 3.4% and in France by 2.5%, while they declined in the UK for the tenth consecutive month by 6.3%.

• Also sales of commercial vehicles started very positive and totalled 187,811 in January 2018, up by 7.9% yoy.

• In 2017, 852,933 alternative fuel vehicles were sold, which accounted for 5.7% of the total EU market. This is a plus of 39.7% compared to 2016 and driven by the hybrid electric segment (+54.8%), electrically-chargeable vehicles (+39.0%) and other alternative fuels (+16.4%). Electrically‐chargeable vehicles had a share 1.4% of total car sales in 2017.

Process Industry:

• The German mechanical engineering sector rose by 3.1% in 2017 compared to 2016 and exceeded the 3.0 % prediction of the VDMA. The growth was mainly driven by exports (up by 7.9%). USA and China were up by 12% (18 bill EUR) and 23% (17.4 bill EUR), respectively. Also exports to EU countries grew strongly by 5% and amounted to 78 bill EUR. Exports dropped only to a few countries, including the UK and Turkey. The drop of 2.9% to the UK can be attributed to the uncertainties resulting from the Brexit and the devaluation of the British Pound.


European Industry News / PMI Status

• European Industry News

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


European Industry News

• Outokumpu presented positive financials for 2017, but stainless steel shipments increased only slightly from 2,444 kt in 2016 to 2,448 kt in 2017. EBITDA amounted to 663 mill. EUR in 2017 and nearly doubled from 355 mill. EUR in 2016. Due to healthy underlying demand in Europe and the USA, Outokumpu expects deliveries and the adjusted EBITDA to be higher in Q1/18 compared to Q4/17.

• Also Aperam could present positive financial results, with the EBITDA rising from 329 mill. EUR in 2016 to 489 mill. EUR in 2017. Similar to Outokumpu, steel shipments remained stable and totalled 1,882 kt in 2017 compared to 1,880 kt in 2016. Therefore, the strong increase in revenues can be explained by higher average steel selling prices.

• Acerinox reached its second best year in melting production with 2,519 kt in 2017, up from 2,475 kt in 2016. Its EBITDA increased by 49% from 329 mill. EUR in 2016 to 489 mill. EUR in 2017.

• The following tables show the key financials of some of the main European stainless steel mills.

European mills reported positive financial results for 2017

FY 2017 FY 2016 Variation FY 2017 FY 2016 Variation FY 2017 FY 2016 Variation

[ % ] [ % ] [ % ]

Turnover 4.627 3.968 17% Turnover 6.363 5.690 12% Turnover 13.643 12.931 6%

EBITDA 489 329 49% EBITDA 663 355 87% EBITDA - - -

EBIT 318 157 103% EBIT 445 103 332% EBIT 284 1.115 -75%

EAT 234 80 193% EAT 392 144 172% EAT - - -

FY 2017 FY 2016 Variation FY 2017 FY 2016 Variation

[ % ] [ % ]

Turnover 4.198 3.510 20% Turnover 9.460,4 8.101,2 17%

EBITDA 518 410 26% EBITDA 1.405,5 1.061,1 32%

EBIT 366 265 38% EBIT 834,6 545,0 53%

EAT - - - EAT 556 344 62%

*EBITDA and EAT not available for Sandvik Materials Technology

Voestalpine - High Performance Metals Division

[in mill. USD]

**EAT not available for Aperam's stainless segment

Sandvik Materials Technology*

FinancialsFinancialsFinancials[in mill. EUR][in mill. EUR][in mill. EUR]

Financials[in mill. EUR]

Financials

OutokumpuAcerinox

Aperam - Stainless & Electrical Steel**


Where do we Stand in the Business Cycle?

30

35

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45

50

55

60

65

Ind

ex

of

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= ‘

Bre

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EU USA China

PMI Status January 2018The index weakened in Europe and the USA, but remains on a very high level. The index declined slightly in China, but is still in positive territory


Relevant Issues in Damstahl-Land

• Flat Product Imports 2017 vs. 2016

• Long Product Imports 2017 vs. 2016

• Relevant Issues, Imports and Market Volume Index by country

Germany

The Netherlands

Denmark

Sweden

Norway

Slovenia

Finland


21,0%

23,0%

-4,1%

2,8%

7,1%

11,0%

0,3%

-10% -5% 0% 5% 10% 15% 20% 25%

Finland

Slovenia

Norway

Sweden

Denmark

The Netherlands

Germany

Stainless Steel Flat Product* Imports 2017 vs. 2016

Source: SMR - Steel & Metals Market Research Analysis

Double-digit growth in Slovenia, Finland and the NetherlandsPeriod: January – December (Norway)Period: January – November (Germany, the Netherlands, Denmark, Sweden, Slovenia, Finland)

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


-5,4%

9,9%

-14,5%

8,6%

11,4%

28,1%

-1,9%

-20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35%

Finland

Slovenia

Norway

Sweden

Denmark

The Netherlands

Germany

Stainless Steel Long Product* Imports 2017 vs. 2016

Source: SMR - Steel & Metals Market Research Analysis

Strong import growth in the NetherlandsPeriod: January – December (Norway)Period: January – November (Germany, the Netherlands, Denmark, Sweden, Slovenia, Finland)

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



Germany:

• German economic indicators are still very positive and incoming orders in the stainless steel industry are healthy. Exports to Spain, Belgium and France have increased and are signallingpositive demand also in non-Damstahl countries.

• Prices have been stable so far in 2018, but are expected to rise due to a higher ferrochrome price in Q2/18 and increasing base prices. Demand has only been weakening for welded stainless steel tubes and in the construction sector – the latter as a result of the relative cold winter. Stainless steel mill delivery times of long products have lengthened until the second half of 2018.

• BASF, the largest chemical producer in the world, reported a revenue of 64.5 bill. EUR in 2017, up by 12% from 57.6 bill. EUR in 2016. The EBIT rose to 8.5 bill. EUR in 2017, up by 36% yoy.

• Krones, a manufacturer of filling and packaging technology, increased its revenue by 9% yoy to 3,691 mill. EUR in 2017. For 2018, Krones expects revenues to grow by 6%.


Imports by Product

Source: SMR – Steel & Metals Market Research Analysis

Imports of Stainless Steel Products into Germany

Only imports of CR sheet rose significantly in absolute volumes and ensure overall imports to be flat

CRR = Coils for re-rolling are not counted in total

Products

2016 2017

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

[tonnes]

HR Sheet & Plate 40,064 40,304 40,565 39,908 35,963 40,537 38,978 44,537 38,654 39,533 48,350 30,208

therefrom CRR (Finland-Sweden) 15,979 17,180 21,081 18,554 16,856 20,037 19,758 20,672 18,944 17,115 22,200 11,092

HR Sheet & Plate real 24,085 23,124 19,484 21,354 19,107 20,500 19,220 23,865 19,710 22,418 26,150 19,116

CR Sheet 57,861 77,033 73,330 75,797 67,720 80,393 74,655 74,310 67,387 70,652 69,645 70,354

Round Bars 11,458 11,986 12,623 14,286 11,906 13,562 14,523 13,247 9,461 12,429 14,869 15,268

Non-circular Bars 3,543 3,932 3,859 3,634 3,214 4,560 4,227 4,125 2,977 3,689 4,567 4,743

Forged Bars 1,077 1,345 995 1,056 1,172 1,082 1,397 892 1,061 1,090 1,247 1,526

Profiles 505 914 627 776 665 652 586 733 662 631 540 618

Seamless Tubes* 2,319 2,972 2,292 3,258 2,307 2,651 2,725 2,646 1,921 2,975 3,159 3,647

Welded Tubes (round) 8,155 8,435 8,240 7,797 7,943 7,802 9,212 9,215 7,590 9,234 10,531 9,907

Welded Tubes (square) 2,928 3,508 3,418 2,765 3,513 2,591 3,877 3,472 3,486 4,990 4,194 4,488

All Products 111,931 133,249 124,868 130,723 117,547 133,793 130,422 132,505 114,255 128,108 134,902 129,667

Products

2016 2016 2017 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 495,058 454,994 437,537 -4%

therefrom CRR (Finland-Sweden) 226,922 210,943 203,488 -4%

HR Sheet & Plate real 268,136 244,051 234,049 -4%

CR Sheet 823,147 765,286 801,276 5%

Round Bars 156,897 145,439 144,160 -1%

Non-circular Bars 48,878 45,335 43,527 -4%

Forged Bars 16,202 15,125 12,863 -15%

Profiles 7,842 7,337 7,404 1%

Seamless Tubes* 32,293 29,974 30,553 2%

Welded Tubes (round) 117,345 109,190 95,906 -12%

Welded Tubes (square) 52,314 49,386 40,302 -18%

All Products 1,523,054 1,411,123 1,410,040 0%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Germany

Italy’s and Spain’s exports to Germany dropped by 25 kt and 20kt, respectively

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

** Excl. CRR

Country of Origin

2016 2017 Change

Q1 Q2 Q3 Oct Nov Q4 TOTAL ytd Q1 Q2 Q3 Oct Nov ytd 2016-2017

[ tonnes ] [ % ]

ITALY 75,572 84,200 73,766 29,636 26,017 77,378 310,916 289,191 69,990 71,290 67,619 24,979 29,311 263,189 -9%

FINLAND** 68,245 66,269 75,454 21,552 25,077 62,762 272,730 256,597 75,003 74,700 75,110 20,015 18,448 263,276 3%

FRANCE 64,183 63,259 52,171 20,509 23,460 59,527 239,140 223,582 63,000 67,208 58,925 23,964 23,014 236,111 6%

BELGIUM 48,658 47,355 45,277 16,128 17,710 49,104 190,394 175,128 55,434 46,018 47,489 19,352 17,935 186,228 6%

SPAIN 35,374 34,483 27,755 8,697 10,275 27,235 124,847 116,584 28,098 26,803 25,899 8,606 6,660 96,066 -18%

SWEDEN** 15,960 20,305 13,129 6,786 6,901 19,068 68,461 63,081 17,828 15,989 15,052 7,126 4,993 60,988 -3%

NETHERLANDS 12,043 10,686 13,446 5,717 4,071 12,354 48,529 45,963 12,260 13,379 14,598 3,931 5,057 49,225 7%

SLOVENIA 12,490 10,421 8,992 2,954 3,360 8,422 40,325 38,217 7,337 7,185 11,808 4,615 3,093 34,038 -11%

INDIA 9,113 6,787 7,587 2,713 2,894 7,405 30,892 29,094 7,787 8,846 7,024 3,311 3,207 30,175 4%

CZECH REPUBLIC 5,640 9,395 6,052 3,797 2,289 7,792 28,879 27,173 7,383 6,284 7,171 2,826 2,512 26,176 -4%

AUSTRIA 5,216 5,896 5,856 1,810 2,518 6,188 23,156 21,296 5,630 5,742 4,476 1,970 2,169 19,987 -6%

CHINA 1,919 1,372 1,997 1,140 1,418 11,518 16,806 7,846 2,894 3,976 5,088 1,575 1,995 15,528 98%

TAIWAN 4,194 2,429 4,565 1,256 2,111 4,137 15,325 14,555 2,940 3,341 2,728 1,262 1,310 11,581 -20%

POLAND 2,832 3,819 4,744 1,203 1,455 3,756 15,151 14,053 4,237 3,832 3,270 1,916 1,149 14,404 2%

UKRAINE 2,724 2,992 4,949 1,356 403 3,825 14,490 12,424 4,659 4,258 4,362 1,834 1,537 16,650 34%

SOUTH AFRICA 3,594 1,631 3,983 541 1,316 2,681 11,889 11,065 3,912 2,896 3,274 677 90 10,849 -2%

SWITZERLAND 2,855 3,216 2,807 1,095 1,132 3,003 11,881 11,105 3,382 3,150 3,034 959 1,296 11,821 6%

SOUTH KOREA 3,610 3,016 1,966 1,418 1,253 3,270 11,862 11,263 3,222 2,397 3,804 904 998 11,325 1%

U S A 2,372 2,271 1,926 847 650 2,070 8,639 8,066 1,610 2,861 2,047 899 683 8,100 0%

LUXEMBOURG 1,494 1,844 1,984 825 723 2,216 7,538 6,870 1,840 1,700 1,675 784 980 6,979 2%

UNITED KINGDOM 1,419 1,472 1,229 579 753 2,454 6,574 5,452 3,283 1,961 3,239 1,460 1,000 10,943 101%

TURKEY 1,561 1,814 653 123 472 1,019 5,047 4,623 2,239 1,966 1,153 588 881 6,827 48%

MALAYSIA 938 1,014 563 1,078 524 2,261 4,776 4,117 1,628 3,410 3,038 366 345 8,787 113%

PORTUGAL 1,014 1,113 954 397 247 868 3,949 3,725 1,001 578 596 186 287 2,648 -29%

JAPAN 827 1,239 463 351 230 1,004 3,533 3,110 813 843 975 169 242 3,042 -2%

THAILAND 1,320 527 508 190 166 563 2,918 2,711 425 409 566 122 133 1,655 -39%

DENMARK 521 577 442 195 151 388 1,928 1,886 474 345 470 109 141 1,539 -18%

OTHERS 605 781 491 368 101 602 2,479 2,346 532 395 378 397 201 1,903 -19%

TOTAL 386,293 390,183 363,708 133,262 137,677 382,869 1,523,054 1,411,123 388,841 381,762 374,868 134,902 129,667 1,410,040 0%


50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

Ø 2011

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

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Aug

Oct

Dec

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[Ø 2

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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

Both Flat and Long products remain on a very good level in November

Trend Lines

2011 2012 2013 2014 2015 2016 2017

Nov



The Netherlands:

• The Dutch economy is still in a good shape. All important branches have further improved. Also the building industry is gaining more and more momentum. The Oil and Gas industry shows positive signs with some large investments, which are, however, not very regular.

• Stainless steel customers have full order books that will drive the demand also in the coming months. That positive outlook is encouraged by increasing stainless steel prices. Delivery times of European mills are still longer than the market is used to and might stimulate further price hikes.

• The companies Air Liquide, Akzo Nobel, Enerkem and the Port of Rotterdam started a joint venture and are planning a Waste-to-Chemistry plant in Rotterdam. The plant should be able to generate 220,000 t Methanol from 360,000 t of waste. The investment is estimated to amount to 200 mill. EUR. The final decision, whether the project will be realized, is expected to be announced during 2018.

• Royal FrieslandCampina N.V., a cooperative with 18,645 member dairy farmers in the Netherlands, Germany and Belgium, reported revenues of 12.1 bill. EUR in 2017, up by 10.1% yoy. For 2018, the company‘s revenue is expected to be under pressure due to lower sales prices and a strong euro.


Imports by Product


Imports of Stainless Steel Products into the Netherlands

Netherland’s good economic development is supported by a strong increase in imports

Products

2016 2017


[tonnes]

HR Sheet & Plate 2,965 4,432 2,908 4,497 2,265 3,778 2,945 2,424 3,206 2,976 3,756 4,434

CR Sheet 18,096 13,819 16,032 16,825 12,068 14,834 15,865 15,068 13,737 13,412 19,071 17,011

Round Bars 1,456 1,607 2,255 2,825 1,551 2,361 1,691 1,652 2,217 2,747 3,017 2,964

Non-circular Bars 344 473 552 474 416 506 589 382 417 505 617 691

Forged Bars 96 227 160 172 88 161 179 145 225 223 244 238

Profiles 265 248 259 445 226 339 276 231 412 387 532 586

Seamless Tubes* 680 716 909 649 632 664 728 553 841 906 911 1,052

Welded Tubes (round) 1,205 1,491 1,441 1,582 1,245 1,781 1,682 1,428 1,960 1,877 2,604 2,261

Welded Tubes (square) 814 1,080 1,662 1,560 885 1,768 831 1,478 1,926 1,822 2,097 2,625

All Products 25,921 24,093 26,178 29,029 19,376 26,192 24,786 23,361 24,941 24,855 32,849 31,862

Products

2016 2016 2017 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 31,697 28,732 37,621 31%

CR Sheet 173,262 155,166 167,742 8%

Round Bars 20,927 19,471 24,887 28%

Non-circular Bars 4,844 4,500 5,622 25%

Forged Bars 1,892 1,796 2,062 15%

Profiles 2,889 2,624 3,941 50%

Seamless Tubes* 7,479 6,799 8,561 26%


Welded Tubes (square) 11,794 10,980 17,734 62%

All Products 279,455 253,534 287,522 13%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into the Netherlands

Imports from the USA improved considerably


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

Country of Origin

2016 2017 Change


[ tonnes ] [ % ]

FINLAND 147,244 150,287 144,859 47,983 50,868 142,893 585,283 541,241 153,212 133,063 146,365 44,740 46,426 523,806 -3%

ITALY 12,868 12,974 9,106 3,792 3,722 10,476 45,424 42,462 13,047 8,311 10,005 4,541 5,604 41,508 -2%

GERMANY 9,010 10,524 9,690 2,834 2,358 8,774 37,998 34,416 10,769 9,489 11,201 5,027 5,131 41,617 21%

SOUTH AFRICA 9,523 5,659 7,517 3,337 3,625 12,496 35,195 29,661 12,634 7,030 8,347 4,298 3,240 35,549 20%

BELGIUM 8,441 7,788 9,265 3,847 2,568 9,038 34,532 31,909 12,022 12,627 14,699 6,445 6,075 51,868 63%

SOUTH KOREA 7,927 6,734 3,983 3,366 1,478 7,944 26,588 23,488 7,266 7,072 4,094 742 441 19,615 -16%

INDIA 3,926 3,037 5,956 2,215 2,586 6,409 19,328 17,720 5,667 6,595 4,370 2,405 2,677 21,714 23%

FRANCE 3,313 3,801 2,490 1,413 1,565 4,038 13,642 12,582 1,491 1,334 1,509 471 820 5,625 -55%

TAIWAN 3,087 2,130 3,177 1,557 2,006 5,206 13,600 11,957 4,320 3,826 3,578 3,096 1,574 16,394 37%

SWEDEN 2,698 2,631 2,057 1,238 1,098 3,206 10,592 9,722 3,214 2,731 3,024 1,080 1,033 11,082 14%

CHINA 1,674 1,783 3,077 580 406 1,219 7,753 7,520 1,254 1,535 1,336 559 412 5,096 -32%

TURKEY 1,721 921 1,109 964 918 2,842 6,593 5,633 569 803 1,184 351 784 3,691 -34%

VIETNAM 2,723 2,140 975 156 458 730 6,568 6,452 1,381 1,750 1,471 1,000 1,176 6,778 5%

JAPAN 1,120 1,085 873 229 410 872 3,950 3,717 1,990 1,569 1,020 107 68 4,754 28%

THAILAND 1,866 200 917 290 353 643 3,626 3,626 303 1,005 1,084 93 - 2,485 -31%

SPAIN 514 688 373 197 141 469 2,044 1,913 467 279 490 285 242 1,763 -8%

U S A 1,289 113 213 40 133 242 1,857 1,788 106 2,308 1,503 588 620 5,125 187%

UNITED KINGDOM 437 445 421 86 106 393 1,696 1,495 273 399 658 300 354 1,984 33%

SLOVENIA 611 379 305 116 34 184 1,479 1,445 658 303 463 255 119 1,798 24%

MALAYSIA 266 125 481 - 201 315 1,187 1,073 539 106 553 12 9 1,219 14%

BRAZIL 280 203 332 78 46 212 1,027 939 250 211 328 109 72 970 3%

OTHERS 1,425 1,052 898 407 234 1,401 4,776 4,016 1,080 1,071 2,240 1,085 1,411 6,887 71%

TOTAL** 74,719 64,412 63,215 26,742 24,446 77,109 279,455 253,534 79,300 70,354 73,157 32,849 31,862 287,522 13%


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Ø 2011

Feb

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Dec

Feb

Apr

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Dec

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Apr

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[Ø 2

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Flat Products

Long Products

Netherlands – Stainless Steel Market Volume Index*


Market remained quite stable in November

2011 2012 2013 2014

Trend Lines

2015 2016 2017

Nov



Denmark:

• The stainless steel market in Denmark exhibits slow activity in 2018. The demand from stainless steel users is low due to unsatisfactory filled order books.

• Arla Foods, a farmer-owned dairy cooperative, is planning to invest 527 mill. EUR in 2018. 266 mill. EUR will be invested in Denmark, 82 mill. EUR in the UK, 78 mill. in Sweden, 65 mill. EUR in Germany and 36 mill. EUR in other countries.

• Vestas, a manufacturer of wind turbines, won an auction-derived order from E.ON Italy for the 57 MW Morcone project. The order comprises the supply and installation of 19 V112-3.0 MW turbines. The delivery is expected in Q3/18.


Imports by Product


Imports of Stainless Steel Products into Denmark

Welded tube imports increased the most in absolute volume (total change round and square = 4,601 tonnes)

Products

2016 2017


[tonnes]

HR Sheet & Plate 821 1,158 972 1,171 1,247 1,136 1,189 999 1,117 1,281 1,560 1,047

CR Sheet 4,088 5,623 4,770 5,589 4,751 4,485 6,672 4,221 4,907 4,019 4,063 4,113

Round Bars 1,383 1,309 1,287 1,412 1,309 1,602 1,799 1,279 1,100 1,495 1,672 1,523


Forged Bars 55 217 204 261 103 141 227 69 144 233 70 157

Profiles 125 101 108 136 74 162 141 90 145 192 109 149

Seamless Tubes* 101 164 147 166 131 186 216 137 143 135 364 172

Welded Tubes (round) 1,079 1,365 946 1,601 1,303 1,538 1,514 1,483 1,445 1,868 1,823 1,844

Welded Tubes (square) 596 674 744 745 631 977 899 777 1,024 1,502 1,147 1,021

All Products 8,368 10,743 9,396 11,264 9,692 10,423 12,869 9,204 10,238 11,063 11,028 10,241

Products

2016 2016 2017 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 13,629 12,808 12,877 1%

CR Sheet 55,810 51,722 53,213 3%

Round Bars 15,352 13,969 15,787 13%

Non-circular Bars 1,805 1,685 2,219 32%

Forged Bars 2,113 2,058 1,826 -11%

Profiles 1,631 1,506 1,407 -7%

Seamless Tubes* 1,716 1,615 1,961 21%

Welded Tubes (round) 15,884 14,805 16,730 13%


All Products 116,001 107,633 116,161 8%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Denmark

Imports from Finland fell sharply, despite the overall increase in imports


Country of Origin

2016 2017 Change


[ tonnes ] [ % ]

ITALY 6,276 7,214 6,922 1,817 3,222 7,002 27,414 25,451 7,323 7,631 8,714 3,097 3,194 29,959 18%

GERMANY 4,724 5,302 3,951 1,330 1,518 3,862 17,839 16,825 4,576 4,544 3,778 1,348 1,242 15,488 -8%

TAIWAN 2,612 4,688 3,115 1,241 1,198 3,558 13,973 12,854 4,750 4,711 4,804 1,592 1,616 17,473 36%

FINLAND 2,818 3,509 2,735 769 1,525 2,930 11,992 11,356 2,618 2,442 1,457 594 724 7,835 -31%

SWEDEN 2,975 2,770 3,111 879 736 2,575 11,431 10,471 3,296 3,093 2,630 661 974 10,654 2%

BELGIUM 1,794 1,568 2,219 705 569 1,934 7,515 6,855 2,263 2,231 1,745 727 699 7,665 12%

FRANCE 1,412 1,639 2,148 510 777 1,806 7,005 6,486 2,160 2,171 1,514 705 584 7,134 10%

SPAIN 1,182 1,189 914 278 352 1,245 4,530 3,915 862 1,203 1,084 438 327 3,914 0%

INDIA 579 714 974 564 255 1,118 3,385 3,086 641 1,082 802 273 77 2,875 -7%

NETHERLANDS 542 772 440 137 145 427 2,181 2,036 571 1,044 1,123 233 256 3,227 58%

SOUTH AFRICA - 242 1,162 246 220 576 1,980 1,870 210 603 1,601 187 - 2,601 39%

UNITED KINGDOM 808 411 352 97 120 289 1,860 1,788 629 541 66 172 5 1,413 -21%

CHINA 140 290 561 401 520 988 1,979 1,912 429 873 416 289 207 2,214 16%

POLAND 208 227 184 96 45 232 851 760 288 358 257 42 78 1,023 35%

NORWAY 33 50 220 65 55 138 441 423 98 78 65 35 9 285 -33%

TURKEY 82 78 76 14 11 28 264 261 125 39 115 31 47 357 37%

LUXEMBOURG 14 42 65 32 47 79 200 200 80 65 72 35 20 272 36%

ESTONIA 46 41 54 16 11 40 181 168 37 31 24 10 9 111 -34%

LATVIA 17 29 53 16 14 40 139 129 14 - 3 - - 17 -87%

SLOVAKIA 69 50 9 1 1 3 131 130 20 3 2 1 - 26 -80%

PORTUGAL 21 65 15 - 1 7 108 102 22 13 45 50 40 170 67%

SLOVENIA 10 8 50 6 - 38 106 74 233 86 22 - - 341 361%

OTHERS 107 91 195 50 38 103 496 481 158 142 166 508 133 1,107 130%

TOTAL 26,469 30,989 29,525 9,270 11,380 29,018 116,001 107,633 31,403 32,984 30,505 11,028 10,241 116,161 8%


Denmark – Stainless Steel Market Volume Index*


Towards year end 2017, the market slowed down

20%

40%

60%

80%

100%

120%

140%

160%

180%

Ø 2011

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

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[Ø 2

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Flat Products

Long Products

2011 2012 2013 2014

Trend Lines

2015 2016 2017

Nov



Sweden:

• The Swedish stainless steel market had a truly promising start in 2018. High activity among the end-users is leading to good market sales. It seems to continue at least for the next few months.

• Damstahl Sweden is investing in a new warehouse next to the present one in Malmö. Another 4,300 m² for further strengthening of the customer service. The new warehouse will be ready by the end of 2018.

• As stated in the Denmark country news, Arla is investing 78 mill. EUR in Sweden in 2018, which will have a quite positive effect on stainless steel demand. 100 mill. SEK (~10 mill. EUR) will be invested in Swedish cheese factories, of which the largest share of 60 mill. SEK goes into new packaging solutions in Arla’s Götene factory. About 230 mill. SEK will be invested in higher production capacity and cost efficiency in Linköping’s dairy factory. In total, Arla has 13 dairy factories in Sweden.


Imports by Product


Imports of Stainless Steel Products into Sweden

Growth in imports is mainly driven by round bars, cold rolled sheet and round welded tubes

Products

2016 2017


[tonnes]

HR Sheet & Plate 929 1,053 1,033 1,048 1,347 1,247 866 578 1,168 1,147 1,094 1,033

CR Sheet 4,757 6,130 6,273 5,945 6,847 8,214 7,665 5,173 5,536 7,040 6,554 4,963

Round Bars 1,184 1,276 1,229 1,338 1,057 1,339 1,207 965 916 1,299 1,497 1,590


Forged Bars 45 38 60 44 19 45 37 9 37 34 26 33

Profiles 124 105 157 138 124 143 141 110 103 190 98 208

Seamless Tubes* 86 253 137 150 122 326 148 220 348 202 200 221

Welded Tubes (round) 880 890 985 927 868 1,067 1,012 619 941 952 796 914

Welded Tubes (square) 117 229 232 308 265 411 270 146 161 374 290 285

All Products 8,365 10,218 10,254 10,118 10,889 12,950 11,549 7,997 9,399 11,454 10,755 9,569

Products

2016 2016 2017 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 12,885 11,956 11,614 -3%

CR Sheet 72,946 68,189 70,340 3%

Round Bars 12,596 11,412 13,713 20%


Forged Bars 652 607 382 -37%

Profiles 2,267 2,143 1,517 -29%

Seamless Tubes* 2,107 2,021 2,327 15%

Welded Tubes (round) 9,865 8,985 9,971 11%


All Products 119,307 110,942 115,152 4%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Sweden

Imports from Denmark jumped up by 17% and is closing the gap to Spain – the 2nd largest importer to Sweden


Country of Origin

2016 2017 Change


[ tonnes ] [ % ]

FINLAND 9,678 11,170 7,753 3,181 1,816 6,309 34,910 33,598 7,105 9,639 7,255 3,121 2,372 29,492 -12%

SPAIN 5,172 4,486 5,568 2,404 2,049 5,881 21,107 19,679 4,516 6,397 4,255 2,148 1,036 18,352 -7%

DENMARK 3,614 4,632 3,712 1,508 1,880 4,572 16,530 15,346 4,531 4,438 5,472 1,637 1,918 17,996 17%

ITALY 3,279 3,588 3,463 1,480 1,594 4,295 14,625 13,404 3,588 3,672 3,018 1,249 1,617 13,144 -2%

GERMANY 2,760 2,888 2,396 837 1,001 2,617 10,661 9,882 3,384 3,493 2,851 833 904 11,465 16%

SOUTH AFRICA 630 850 1,409 832 538 2,465 5,354 4,259 2,877 2,723 1,864 316 512 8,292 95%

FRANCE 1,427 952 1,042 571 230 1,057 4,478 4,222 1,379 1,049 791 427 366 4,012 -5%

UNITED KINGDOM 846 623 496 106 103 300 2,265 2,174 336 319 246 71 63 1,035 -52%

MALAYSIA 8 - 483 278 208 833 1,324 977 429 1,364 547 13 2 2,355 141%

INDIA 392 388 221 44 129 224 1,225 1,174 279 243 490 155 92 1,259 7%

POLAND 225 222 197 105 100 283 927 849 327 392 436 92 74 1,321 56%

NETHERLANDS 194 164 173 86 52 187 718 669 184 151 118 40 52 545 -19%

TAIWAN 419 50 49 65 43 110 628 626 62 44 93 164 - 363 -42%

LUXEMBOURG 119 95 82 104 79 312 608 479 81 178 134 65 137 595 24%

CZECH REPUBLIC 16 40 179 107 122 340 575 464 248 231 180 71 140 870 88%

JAPAN 175 146 31 11 53 94 446 416 192 199 238 20 29 678 63%

AUSTRIA 61 146 113 28 58 111 431 406 79 83 87 40 63 352 -13%

NORWAY 66 89 114 44 73 144 413 386 177 119 112 80 13 501 30%

BELGIUM 37 41 171 30 31 118 367 310 365 164 194 55 48 826 166%

SLOVENIA 68 85 58 22 42 111 322 275 107 139 77 47 - 370 35%

SWITZERLAND 76 68 55 49 23 81 280 271 44 73 70 19 17 223 -18%

TURKEY 105 38 49 11 55 67 259 258 106 86 78 19 28 317 23%

OTHERS 135 305 195 108 75 219 854 818 194 192 244 73 86 789 -4%

TOTAL 29,502 31,066 28,009 12,011 10,354 30,730 119,307 110,942 30,590 35,388 28,850 10,755 9,569 115,152 4%


Sweden – Stainless Steel Market Volume Index*


The market for flat products dropped since August

20%

40%

60%

80%

100%

120%

140%

160%

180%

200%

Ø 2011

Feb

Apr

Jun

Aug

Oct

Dec

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Apr

Jun

Aug

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Dec

Feb

Apr

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Aug

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Dec

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Flat Products

Long Products

2011 2012 2013 2014

Trend Lines

2015 2016 2017

Nov



Norway:

• The market situation in Norway is improving. The fishing industry developed very well with stable high fish prices for a long time. Therefore, new companies evolve and existing companies invest in new solutions, where stainless steel is used to a large extent.

• The oil industry is performing better and better, but it still takes some time before the stainless steel industry will benefit from that to a greater extent. Large oil companies that have previously laid off people now recruit and are using consultants. That strongly reminds of the situation before the crisis.

• The competition in the distribution business is very sharp and pricing is very offensive, which keeps the revenue at a lower level than desired. But order volumes are increasing and the market is very active, which arouses high expectations for 2018.

• Wintershall, Germany‘s largest crude oil and natural gas producer and wholly owned subsidiary of BASF, invests about 190 mill. EUR in its Nova-Field in the Norwegian Sea. The company assigned contracts to Aker Solutions for the Subsea Production System and to Subsea 7 Norway for the Pipeline and Subsea Construction.


Imports by Product


Imports of Stainless Steel Products into Norway

Overall imports decreased by 7% and only imports of rolled bars increased

Products

2017

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

[tonnes]

HR Sheet & Plate 834 485 665 262 545 695 790 610 730 566 889 268

CR Sheet 1,427 1,295 1,415 1,102 1,386 1,481 759 1,078 1,224 1,150 1,327 865

Rolled Bars 285 251 430 360 463 383 270 351 373 429 520 289

Forged Bars 85 33 47 35 67 77 49 28 46 47 85 19

Profiles 130 126 123 35 130 76 57 43 114 70 84 68

Seamless Tubes* 343 174 339 131 347 163 250 749 126 306 444 521

Welded Tubes (round) 712 729 620 514 541 536 460 300 485 469 450 462

All Products 3,816 3,093 3,639 2,439 3,479 3,411 2,635 3,159 3,098 3,037 3,799 2,492

Products

2016 2017 Change

FY FY FY

[tonnes] [%]

HR Sheet & Plate 7,591 7,339 -3%

CR Sheet 15,246 14,509 -5%

Rolled Bars 4,174 4,404 6%

Forged Bars 661 618 -7%

Profiles 1,630 1,056 -35%

Seamless Tubes* 5,202 3,893 -25%

Welded Tubes (round) 6,489 6,278 -3%

All Products 40,993 38,097 -7%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Norway

Taiwan, Germany, Denmark, Austria and Japan gained significant market share


Country of Origin

2016 2017 Change

Q1 Q2 Q3 Q4 TOTAL Q1 Q2 Q3 Q4 TOTAL 2016-2017

[ tonnes ] [ % ]

SWEDEN 3,014 3,436 2,570 2,928 11,948 3,212 2,699 2,179 2,646 10,736 -10%

FINLAND 2,240 2,506 1,900 2,237 8,883 1,695 1,497 1,414 1,691 6,297 -29%

TAIWAN 838 1,161 935 1,022 3,956 1,484 1,291 1,624 658 5,057 28%

CZECH REPUBLIC 56 548 1,362 1,473 3,439 334 71 25 559 989 -71%

GERMANY 1,056 716 741 643 3,156 952 971 1,084 624 3,631 15%

ITALY 597 618 506 461 2,182 885 368 371 414 2,038 -7%

FRANCE 438 481 337 213 1,469 251 432 323 455 1,461 -1%

DENMARK 496 286 240 375 1,397 695 548 627 797 2,667 91%

BELGIUM-LUXEMBOURG 270 131 98 287 786 128 150 91 115 484 -38%

SPAIN 221 221 129 195 766 70 119 47 59 295 -61%

INDIA 132 167 149 187 635 166 178 90 48 482 -24%

UNITED KINGDOM 128 54 107 128 417 85 167 102 224 578 39%

NETHERLANDS 100 103 77 58 338 73 79 91 54 297 -12%

CHINA 74 65 85 85 309 69 53 33 62 217 -30%

AUSTRIA 38 168 65 37 308 8 200 326 577 1,111 261%

JAPAN 46 180 21 30 277 176 286 343 7 812 193%

POLAND 44 68 38 64 214 68 42 30 15 155 -28%

VIETNAM - 21 63 72 156 94 80 55 101 330 112%

OTHERS 103 144 44 66 357 103 98 37 222 460 29%

TOTAL 9,891 11,074 9,467 10,561 40,993 10,548 9,329 8,892 9,328 38,097 -7%


Norway – Stainless Steel Market Volume Index*


The market for Long- and Flat products fell sharply in November and December

20%

40%

60%

80%

100%

120%

140%

160%

180%

Ø 2011

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

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Feb

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[Ø 2

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Flat Products

Long Products

2011 2012 2013 2014

Trend Lines

2015 2016 2017



Slovenia:

• The stainless steel market had a good start into 2018. Due to a good underlying economic development, the expectations for 2018 are very promising. Slovenia’s economy is very export oriented, and thus, its economic strength will strongly depend on its trading partners.

• In 2017, Gorenje reached the highest revenue in five years. The manufacturer of household appliances estimates its revenue to amount to 1,307 mill. EUR in 2017, which is a plus of nearly 4% yoy. For 2018, a revenue of 1,328 mill. EUR is planned, which would be a growth of only 1%.


Imports by Product


Imports of Stainless Steel Products into Slovenia

Imports of all product forms grew, besides imports of welded tubes

Products

2016 2017


[tonnes]

HR Sheet & Plate 307 430 652 1,402 587 1,101 796 443 328 531 857 496

CR Sheet 1,924 1,571 2,529 2,033 2,089 2,868 2,879 3,296 2,771 3,336 3,545 3,265

Round Bars 273 545 344 458 360 475 525 490 353 366 430 544


Forged Bars 15 12 25 36 39 83 37 74 27 54 45 94

Profiles 15 27 27 19 18 26 18 33 36 19 26 48

Seamless Tubes* 29 47 32 42 31 28 28 41 26 41 40 49



All Products 3,021 2,981 3,977 4,387 3,500 5,034 4,719 4,840 3,862 4,780 5,455 5,079

Products

2016 2016 2017 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 4,465 4,158 7,623 83%

CR Sheet 26,960 25,036 30,182 21%

Round Bars 4,973 4,700 4,890 4%

Non-circular Bars 606 552 653 18%

Forged Bars 219 204 526 158%

Profiles 313 298 297 0%

Seamless Tubes* 434 405 405 0%



All Products 43,208 40,187 48,614 21%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Slovenia

Italy’ s import market share declined from about 50% in 2016 to 37% in 2017


Country of Origin

2016 2017 Change


[ tonnes ] [ % ]

ITALY 5,423 5,332 5,143 2,554 2,094 5,999 21,897 20,546 4,548 4,968 4,484 1,731 2,193 17,924 -13%

GERMANY 1,956 1,951 1,529 606 443 1,392 6,828 6,485 1,815 1,610 2,242 819 698 7,184 11%

AUSTRIA 645 717 714 206 216 606 2,682 2,498 674 610 597 197 236 2,314 -7%

POLAND 451 622 630 232 312 766 2,469 2,247 839 494 512 193 198 2,236 0%

SOUTH KOREA 395 1,477 177 103 78 187 2,236 2,230 626 1,375 1,868 745 276 4,890 119%

FINLAND 365 534 408 119 184 338 1,645 1,610 281 193 529 130 196 1,329 -17%

FRANCE 345 361 273 154 138 326 1,305 1,271 420 432 294 115 166 1,427 12%

TURKEY 240 192 144 - 61 305 881 637 175 1,165 936 126 157 2,559 302%

HUNGARY 176 144 66 163 58 285 671 607 227 46 115 46 6 440 -28%

NETHERLANDS 146 194 184 50 76 147 671 650 186 252 243 128 109 918 41%

CROATIA 9 40 11 2 4 412 472 66 115 46 8 3 4 176 167%

SWEDEN 22 78 123 72 35 153 376 330 897 1,065 87 451 14 2,514 662%

INDIA 159 29 106 - 23 24 318 317 31 185 201 44 156 617 95%

CHINA 22 25 24 24 62 86 157 157 275 429 82 90 41 917 484%

SWITZERLAND 43 44 25 2 18 31 143 132 74 38 40 3 19 174 32%

CZECH REPUBLIC 19 53 28 16 9 25 125 125 30 104 100 33 22 289 131%

UNITED KINGDOM 2 1 2 21 43 109 114 69 29 7 24 2 - 62 -10%

OTHERS 123 50 32 5 - 13 218 210 103 234 1,120 599 588 2,644 1159%

TOTAL 10,541 11,844 9,619 4,329 3,854 11,204 43,208 40,187 11,345 13,253 13,482 5,455 5,079 48,614 21%


Slovenia – Stainless Steel Market Volume Index*


While the Long products market improved in November, Flat products declined

0%

50%

100%

150%

200%

250%

300%

350%

Ø 2011

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

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Dec

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Apr

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Flat Products

Long Products

2011 2012 2013 2014

Trend Lines

2015 2016 2017

Nov



Finland:

• Busy market activity and the development of the prices are supporting the stainless steel industry in Finland. However, there are not many large projects in the pipeline. Delivery times from steel mills are longer than last year, but inventories are generally on a good level.

• Good news are coming from the paper mill industry, as there has been no investment for a long time. Kotkamills, a leading supplier of laminating papers, is planning to invest in a new paper machine in Kotka. The final decision of the possible investment will be announced until the end of 2018. The investment is estimated to amount to 20 mill. EUR.

• However, a larger project might be coming soon. According to business insiders, Boliden Kokkola, the second largest zinc producer in Europe, and the Kokkola Harbour, the third largest general port in Finland, are planning to invest ~300 mill. EUR in projects, where stainless steel will be needed. We will update on that matter, as soon as official announcements are made.


Imports by Product


Imports of Stainless Steel Products into Finland

Imports of Long products were shrinking, while Flat products increased substantially

Products

2016 2017


[tonnes]

HR Sheet & Plate 3,937 4,187 3,276 3,476 7,741 4,143 3,712 2,291 1,999 2,316 2,898 3,091

CR Sheet 1,275 2,040 2,199 2,798 1,633 3,041 2,843 1,863 1,866 1,973 2,296 2,772

Round Bars 465 943 614 639 880 811 1,320 690 631 393 710 594


Forged Bars 54 35 25 26 18 21 32 23 22 23 29 26

Profiles 29 95 73 78 51 122 87 44 37 92 59 44

Seamless Tubes* 154 100 83 89 181 79 112 63 90 141 168 110



All Products 6,618 8,121 7,159 8,046 11,151 8,794 8,613 5,611 5,451 5,578 7,013 7,697

Products

2016 2016 2017 Change

FY ytd ytd ytd

[tonnes] [%]

HR Sheet & Plate 37,608 33,671 39,130 16%

CR Sheet 19,177 17,902 25,324 41%

Round Bars 8,866 8,401 8,225 -2%


Forged Bars 480 426 280 -34%

Profiles 941 912 782 -14%

Seamless Tubes* 1,458 1,304 1,216 -7%



All Products 78,103 71,485 83,234 16%

*incl. Hollow Bars


Imports by Country


Imports of Stainless Steel Products* into Finland

Imports have been significantly higher in 2017 compared to 2016, besides in Q3/17


Country of Origin

2016 2017 Change

Q1 Q2 Q3 Oct Nov Q4 TOTAL ytd Q1 Q2 Q3 Oct Nov ytd Q4

[ tonnes ] [ % ]

SWEDEN 6,830 6,277 4,897 1,431 1,448 4,594 22,598 20,883 7,856 13,630 4,926 1,730 2,309 30,451 46%

SPAIN 2,297 2,857 3,401 815 450 2,308 10,863 9,820 2,346 2,856 1,618 595 473 7,888 -20%

ITALY 2,203 2,824 2,716 763 924 2,309 10,052 9,430 2,771 2,010 2,294 790 1,099 8,964 -5%

BELGIUM 2,518 1,410 1,432 440 492 1,796 7,156 6,292 2,674 1,918 1,374 108 45 6,119 -3%

GERMANY 1,194 1,566 1,723 730 856 2,105 6,588 6,069 2,686 2,602 2,226 1,174 1,368 10,056 66%

FRANCE 1,861 1,670 1,168 482 722 1,604 6,303 5,903 1,647 1,314 1,373 1,358 1,213 6,905 17%

CHINA 1,062 2,276 1,298 723 2 1,071 5,707 5,361 1,094 1,769 858 366 341 4,428 -17%

DENMARK 189 388 320 136 108 366 1,263 1,141 609 464 362 224 295 1,954 71%

NETHERLANDS 299 260 289 118 101 294 1,142 1,067 287 212 226 148 55 928 -13%

SLOVENIA 270 229 289 69 24 185 973 881 296 364 190 158 67 1,075 22%

TAIWAN 5 238 39 - 15 519 801 297 25 143 239 28 1 436 47%

POLAND 140 157 190 52 101 250 737 640 242 277 286 121 159 1,085 70%

U S A 720 8 1 - 1 2 731 730 - - 3 - 1 4 -99%

RUSSIA - 21 123 53 283 384 528 480 1 96 60 - 76 233 -51%

ESTONIA 101 143 89 64 45 155 488 442 89 133 43 9 8 282 -36%

LUXEMBOURG 100 145 39 25 53 78 362 362 115 42 50 - 42 249 -31%

INDIA 96 72 74 52 23 99 341 317 147 123 51 - 2 323 2%

UNITED KINGDOM 156 69 31 12 4 20 276 272 21 42 46 19 7 135 -50%

PORTUGAL 45 73 61 17 21 63 242 217 77 16 14 12 6 125 -42%

AUSTRIA 36 46 38 14 18 50 170 152 39 53 29 26 3 150 -1%

JAPAN 107 17 5 2 5 8 137 136 18 13 2 - - 33 -76%

SOUTH AFRICA 46 20 - 37 - 71 137 103 86 169 105 24 24 408 296%

NORWAY 6 33 8 61 16 87 134 124 80 32 63 19 52 246 98%

SOUTH KOREA - 19 59 - 38 38 116 116 22 29 - - - 51 -56%

OTHERS 104 58 31 22 35 65 258 250 98 251 202 104 51 706 182%

TOTAL 20,385 20,876 18,321 6,118 5,785 18,521 78,103 71,485 23,326 28,558 16,640 7,013 7,697 83,234 16%


0%

50%

100%

150%

200%

250%

Ø 2011

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

Jun

Aug

Oct

Dec

Feb

Apr

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Aug

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Dec

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[Ø 2

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Flat Products

Long Products

Finland – Stainless Steel Market Volume Index*


Flat products market is back on a normal level

2011 2012 2013 2014

Trend Lines

2015 2016 2017

Nov


Raw Materials

Nickel

Chrome

Molybdenum

Scrap


Raw Materials

Nickel:

Nickel price above the 14,000 USD/t mark in February

LME:

• Since the LME Class I nickel price was just below the 11,000 USD/t mark at the beginning of December 2017, the price rallied to over 14,000 USD/t in mid of February 2018. Afterwards the price somewhat softened to 13,500 USD/t at the beginning of March 2018. In the meantime, LME Class I stocks continuously dropped from 380,000 t in the beginning of November 2017 to 335,000 t at the beginning of March 2018.

• Vale, a leading producer of Nickel, announced to halt new investments in nickel operations and plans to reduce costs by over 150 mill. USD across its nickel operations. Vale is also looking for an investor of its New Caledonia nickel mine, which made accumulated losses of nearly 1.3 bill. USD from 2014 to 2016.

• In 2017, Glencore‘s nickel production from own-sourced material dropped by 5% yoy to 109,000 t. For 2018, Glencore set its production guidance at 127,000 – 137,000 t, which can be attributed to the ramp-up of Koniambo. The output at Koniambo reached 17,500 t in 2017, which is a plus of 29% yoy. After rebuilding its furnace no. 2 in 2017, the ramp-up started in December and will continue the following months. Koniambo nickel is located in New Caledonia and is a joint venture owned by Société Minière du Sud Pacifique SMSP (51%) and Glencore Xstrata (49%).


Raw Materials

Chrome:

Ferrochrome prices are gaining momentum

• The European high-carbon ferrochrome spot price climbed from around 1.30 USD/lb in the beginning of December 2017 to around 1.38 USD/lb in the beginning of March 2018.

• The European Q1/18 ferrochrome benchmark price stands at 1.18 USD/lb, down from 1.39 USD/lb in Q4/17. It is expected that the price will increase again for Q2/18. One reason for the ferrochrome price hike, is the appreciation of the South African rand, especially after the presidential election of Ramaphosa in December.

• Tsingshan raised its high-carbon ferrochrome tender price for March to 7,996 CNY/t, up by 100 CNY from February.


Raw Materials

Molybdenum:

Price increases due to strong demand

• While ferromolybdenum prices hovered around the 20.00 USD/kg mark in 2017, the prices started to rise in December 2017 and settled around the 30.00 USD/kg mark since end of January 2018.

• The increase in ferromolybdenum prices can be simply explained by strong demand, and a further price hike is expected until steel mills have settled their quarterly deliveries end of March. Ferromolybdenum prices have also been fuelled by ferrosilicon price increases, which higheredthe costs in the production of ferromolybdenum.


Raw Materials

18-8 Scrap:

Scrap prices up in March

• In line with the increasing nickel price, the price for 304 stainless steel scrap solids climbed from around 1,030 EUR/t in the beginning of December 2017 to around 1,165 EUR/t in the beginning of March 2018. Type 304 turnings were traded at roughly 90% of the solid’s price.


Focus of the MonthSection 232

Section 232

Who will be affected and what are the consequences?


Stainless Steel Flat Products*: USA Market Volume 2000 – 2017p… it is difficult to understand why imports should be a threat after falling to a 15 year low

Source: SMR – Steel & Metals Market Research Estimates

15%

17%

19%

21%

23%

25%

27%

29%

31%

33%

35%

37%

39%

-

250

500

750

1.000

1.250

1.500

1.750

2.000

2.250

2.500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Imp

ort

Pen

etr

ati

on

[´000 m

etr

ic t

on

nes]

Apparent Consumption Imports Import Penetration

* excl. coils for re-rolling

The diagram shows growth of the apparent consumption of STS Flat products during the last 17 years. The import penetration (share of imports of the apparent consumption) was increasing to 37% in 2008. After that the import penetration fell to 22% in 2017, which is even slightly less than in 2000.Such a development, is definitely not justifying tariffs (for all countries) on STS Flat products.


Stainless Steel Long Products*: USA Market Volume 2000 – 2017p The peak in 2017 was partly triggered by the announcement of Section 232


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-

50

100

150

200

250

300

350

400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017p

Imp

ort

Pen

etr

ati

on

[ ´0

00 m

etr

ic t

on

nes]

Apparent Consumption Imports Import Penetration

* incl. profiles

Imports of STS Long products have been relatively stable between 2000 and 2016. Only in 2017, the import penetration has jumped by 22 percentage points. In contrast to STS Flat products, STS Long product imports have a significant share of the apparent consumption.


Wilbur Ross (secretary of commerce) presented 3 options to President Trump

Option 1: ‘24% for all’A global tariff of at least 24% on all steel imports from all countries

Option 2: ‘53% for 12 countries’A tariff of at least 53% on all steel imports from 12 countries with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States

Option 3: ‘63% quota for all’Quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

Trump chose option 1 and to implement a 25% tariff on steel imports


Stainless Steel Flat Product Imports by Country

The diagram shows the largest exporting

countries to the USA and thus, the countries

that might be mostly hit by Section 232 tariffs

of 25% on steel imports.

Also European STS mills would be hit,

especially in France, Belgium and Italy.

According to our estimates, about 60% of the

total STS Flat product imports could

disappear, i.e. about 350 kt per year.


- 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000

Finland

Spain

Indonesia

Slovenia

Germany

Sweden

Brazil

South Africa

Japan

Italy

Canada

Belgium

Vietnam

India

Korea

France

China

Mexico

Taiwan

USA STS Flat Product Imports (yearly average 2015-17)[in metric tonnes]

Total European Imports: 158 kt


Stainless Steel Long Product Imports by Country


- 10.000 20.000 30.000 40.000

Switzerland

United Arab Em

Brazil

Czech Republic

Spain

Austria

Ukraine

Portugal

Canada

United Kingdom

Japan

Sweden

France

Germany

Korea

Taiwan

China

Italy

India

USA STS Long Product Imports (yearly average 2015-17)[in metric tonnes]

For Long products, the largest exporter to the

USA is India and no. 2 is Italy.

Besides Italy, STS Long product producers in

Germany, France and Sweden are exporting

substantial volumes.

According to our estimates, over 70% of the

total imports could disappear, i.e. about 150

kt per year.

Total European Imports: 89 kt


Key takeaways … from a European perspective

� The European mills delivered on average 247,000 t to the USA in the past 3 years.

� European mills will not be able to absorb a 25% tariff on steel imports, if prices do not increase this volume is ‘lost’.

� If prices in the USA increase by 25%, European mills will be back on the market.

� It is not yet clear, whether some exceptions for specific countries or products might be announced.

� Retaliatory measures of the EU (tariffs on Harley Davidson, Whiskey, etc.) were not taken seriously by Trump who immediately took out the ‘big stick’ and threatened duties on car imports.

� Hitting the European automotive industry is the ‘nuclear scenario’ for the EU and especially Germany.

� It can be assumed that the EU will ‘sacrifice’ its steel industry for the health of the automotive industry. This means that no significant counter measurements from Europe can be expected.

� This is different in Asia. E.g. the Koreans might react more forcefully and induce a trade war with uncertain outcome.


Reflection of the Month

Quote:

Trump ….. Oh my! Blunt protectionism helps no one. Also not the one whowants to protect himself from ‘unfairly’ traded products. See Brazil forreference. But, an old German saying goes…. ‘nothing is as hot eaten ascooked’. Thus we will have to see the final version of Section 232 – whichexemptions by country and product it will allow – to evaluate the damage it willdo. And, as Barack Obama has said the morning after the last election: ‘… andthe sun will rise tomorrow’.

Markus Moll, Managing Director of SMR GmbH

uk-damstahl report march 2018 damstahl stainless steel report no. 120 – march 2018 © damstahl...

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