vdm metals a high-performance...

VDM Metals A High-Performance Enterprise

Uwe Schneider / Sorrento, Italy / May 20, 2014

International Titanium Association, ITA Europe 2014 - World Industry Demand Trends A Regional Perspective of the European Economy and Titanium Market

Uwe Schneider, VP Business Development & Conversion Sales, VDM Metals GmbH May 19-21, 2014 • Hilton Sorrento Palace, Sorrento, Italy

A Regional Perspective of the European Economy and Titanium Market

Market Definition & Economics Comparison to other Regional Markets Structural Changes - Titanium Mill Products Outlook

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Source: http://europa.eu/about-eu/countries/index_en.htm; 2014-05-07

Currently, 471),2) countries in European region:

− 28 EU Member States − 5 EU Candidate Countries − 3 EU Potential Candidates

18 of 28 Member States

have introduced the Euro currency

Currently Non EU-members/candidates: 1. Andorra 2. Belarus 3. Kasachstan 4. Liechtenstein 5. Moldova 6. Monaco 7. Norway 8. Russia 9. San Marino 10. Switzerland 11. Ukraine 12. Vatican City 1) Based on conventions considering Europe as a geographic

continent (including Russia, Kasachstan, Belarus, Moldova) 2) Cyprus is an EU member state, but geographically located on

Asian continent (thus total of 48 counting Cyprus) 3) EuroStat Newsrelease (Nov 20th, 2013); North America: 557

million

3

Population in millions3)

EU28: 506 8 Candidates: 98

http://europa.eu/about-eu/countries/index_en.htm






Source: European Economic Forecast, Spring 2014, EU DGECFIN

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Source: European Economic Forecast, Spring 2014, EU DGECFIN

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General Economic Situation1)

“Advanced European countries” • Expected to resume growth in 2014 • Inflation expected to remain low • Domestic demand stabilized and turned towards positive trend • Net exports contributing to end of recession • High unemployment and debt, low investment, output gabs & tight credit • Downside risks from incomplete reforms, external factors & lower inflation

“Emerging and Developing Europe”* • Growth decelerated in second half of 2013 with large capital outflows • Recovery expected to weaken slightly in 2014 • Downside risks from financial market volatility, geographical risks and fragilities in

the euro area

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1) World Economic Outlook, IMF, (April 2014)

Turkey Poland Romania Hungary Bulgaria Serbia Croatia Lithunia

*



Note: Japan, South Korea within Asia Eastern Japan 2008 2.904.141 South Korea 2008: 948.906

European Share of Aggregated Global GDP has been declining since early 1990s Source: Wikimedia Commons based on Worldbank

Data (GDP per capita in ppp 2011)

diverse GDP per capita

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Comparison to other Regional Markets What makes Europe different from other markets

• European stability as advantage • Demography – effect on industrial consumption • Cultural habits (effects on labor supply stability) • Diversity & Bordering Countries (Turkey, Russia, Ukraine)

Growth figures % compared to absolute/nominal values! • EU 2013: 17,371,6181) Millions of US$ 2.0%2) Forecast 2015 = 347,432 Mill.US$ • India 2013: 1,892,6511) Millions of US$ 6.2%2) Forecast 2015 = 117,344 Mill US$

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1) IFM Data (2013); 2) European Economic Forecast – Spring 2013 (Statistical Annex); World Bank



Comparison to other Regional Markets Diverse Structure of Distribution Markets – Why?

• many small privately owned distribution companies for titanium products

• many specialized in certain regional and/or application markets • more than 47 different languages, not including severe dialects • many regional industrial clusters (i.e. medical, equipment fabrication,

aerospace, automotive, etc.) • Small to medium sizes companies appear to maintain the local selling

advantage, which presents a challenge for larger sized companies

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Structural Challenges in the Titanium Market – Dilemma regarding high-volume/investment equipment such as cold

rolling strip mills, hot rolling bar mills, rotary forges, hot plate mills, etc. (ref.1957 Timet VAR being used/shared by other industry players) – dependence on partners in the stainless steel industry

– Industrial concentration both in supply and demand markets, leading to continued vertical integration

– Being a net importer of titanium, demand for full service providers will continue to increase to secure on-time delivery and supply stability

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Source: Rogich, D.; Matos, G., USGS The Global Flows of Minerals and Metals (2008)

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Titanium demand increase compared to other metals



Source: bls.gov, U.S. Bureau of Labor Statistics (2011)

Source: International Comparisons of Hourly Compensation Costs by Manufacturing Industries, by Industry 2008-2012, bls.gov/fls/dashboards.htm

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Source: gov.uk, Statistical Data Set, DECC-Dept of Energy&Climate Change QEP 5.3.1 (2012)

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Structural Changes – Titanium Mill Products1)

Major mill players with melting capacity

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1) not included: casting operations such as Tital, Doncasters, Akrapovic, Castings Technology Intl, etc. 1) not included JV UKAD (UKTMP/Aubert&Duval), as no melting operations in Europe

VDM Metals, Germany (formerly Krupp ,

Deutsche Titan/DTG & ThyssenKrupp Titanium) Timet UK (Timet, USA)

(formerly IMI)

Timet Savoie, France (Timet, USA)

(Areva Cezus/Ugine) Demand Europe

20-25 kt/a

Supply Europe

8-12 kt/a

TiFast, Italy



Titanium Demand Outlook Europe (1) – The supply gap will continue to require import of titanium mill products – Production is shifting from raw materials to high-technology processing

& equipment production and new technologies (e.g. Ti-Aluminides, Surface Technologies, PM, AM, etc.)

– Keeping raw materials in the regional supply cycle will gain importance as costs of logistics increase (ratio value of scrap/transport cost)

– Growth of regional technology clusters: exhaust systems, biomedical products, heat exchanging technologies, fabrication, etc.

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Titanium Demand Outlook Europe (2) – Growing cost of maintenance will positively impact choice for titanium – Europe offers many advantages for high technology processing, based

on an excellent high-density logistical structure, demand and supply stability based on cultural habits, education base and emerging areas

– Consumers of titanium must prepare themselves for potential shortages of supply, based on demand peaks in other global regions or strategic political decisions (i.e. strategic stockpiles)

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Outlook – Titanium Volume, Applications & Trends

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Demand Europe

20-25 kt/a CP Alloy

Ø

Ø

Flat

Sheet/Strip

Plate

Billet

Bar Tren

d Trend

Downstream Demand generated mainly outside of Europe

Downstream Demand generated inside & outside of Europe

• Heavy Equipment/Fabrication • Heat Exchangers (T&S, PFHE) • Anode/Electrolysis

• Aerospace Structural & Engine • Biomedical • Oil & Gas

+ Rerollers/ + Conversion

Flat

Trend


Thank you for your aTTenTion

& Buon aPPeTiTo!


Literature Reference List (1)

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Marsh, E. 1996. A Technological and Market Study of the Future Prospects for Titanium to the Year 2000. European Commission Joint Research Centre. Institute For Prospective Technological Studies. EUR 17343 EN. November 1996. Elyon, .D and S.R. Seagle. 2001. Titanium Technology in the USA – An Overview. Journal of Material Science Technology. Vol.17 No.4, 2001. pp. 439-443. Geyer, A., F. Scapalo, M. Boden, T. Döry and K. Ducatel. March 2003. The Future of Manufacturing in Europe 2015-2020 – The Challenge for Sustainability. EUR 20705 EN. European Commission – Joint Research Centre. Rogich, D. and Matos, G. 2008. The Global Flows of Metals and Minerals. U.S. Geological Survey, USA. U.S. Geological Survey. February 2014. Mineral Commodity Summaries. pp.171-172. Hogan, L., McGinn, E. and Kendall, R. 2008, Research and development in titanium:implications for a titanium metal industry in Australia, abare research report 08.2prepared for the Australian Government Department of Resources, Energy and Tourism, Canberra, March. Seong, S., Younossi, B., Goldsmith, W. 2009. Titanium – Industrial Base, Price Trends, and Technology Initiatives. Project Air Force. RAND Corporation.



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PR Newswire. October 19, 2010. Roskill Information Services: Global Supply of Titanium is Forecast to Increase. http://www.prnewswire.com/news-releases/roskill-information-services-global-supply, May 2014 Case No COMP/M.6765 Precision Castparts/Titanium Metals. 19.12.2012. Public Version. Regulation (EC) No 139/2004 Merger Procedure. Office for Publications of the European Union. NUS Consulting Group. 2012. 2011-2012 International Electricity & Natural Gas Report & Price Survey. USA. Clearwater Corporate Finance llp. 2013. Medical Equipment and Supplies Report 2013. UK. Competition between Airbus and Boeing. http://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing. May 2014 Eurostat newsrelease. 2013. European demography EU28 population 505.7 million at 1 January 2013. 173/2013 – 20 November 2013. Figures published by Eurostat. World Economic Outlook: A Survey by the Staff of the International Monetrary Fund. Recovery Strenghens, Remains Uneven. April 2014. International Monetary Fund. European Commission. March 2014. Directorate-General for Economic and Financial Affairs. European Econonomic Forecast Spring 2014.

http://www.prnewswire.com/news-releases/roskill-information-services-global-supply

http://en.wikipedia.org/wiki/Competition_between_Airbus_and_Boeing



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Databases: Airbus S.A. http://www.airbus.com/company/market/orders-deliveries/. May 2014. The Boeing Company. http://active.boeing.com/commercial/orders/index.cfm?content=userdefinedselection.cfm&pageid=m15527. User Defined Reports. May 2014. DECC, UK. 2012. Chart 5.3.1. Average IEA Industrial Electricity Prices in 2012. https://www.gov.uk/government/uploads/system/.../qep531.xls. Maddison, A. (2008). Historical Statistics of the World Economy: 1-2008 AD. http://www.ggdc.net/maddison/oriindex.htm . Statistics on World Population, GDP and Per Capita GDP, 1-2008 AD (Horizontal File, University of Groningen). Groningen Growth & Development Centre. U.S. Bureau of Labor Statistics (BLS). International Comparisons of Hourly Compensation Costs in Manufacturing Industries, by Industry, 2008-2012. August 9, 2013. USA.

http://www.airbus.com/company/market/orders-deliveries/



http://active.boeing.com/commercial/orders/index.cfm?content=userdefinedselection.cfm&pageid=m15527

https://www.gov.uk/government/uploads/system/.../qep531.xls













http://www.ggdc.net/maddison/oriindex.htm

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