European HRC
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European HRC prices at a 5-year low – factors suppressing a recovery Marina Maliushkina June 18 th , 2015 From US to Europe: 2015 Steel Market Update
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Transcript of European HRC
European HRC prices at a 5-year low – factors suppressing a recovery
Marina Maliushkina June 18th, 2015
From US to Europe: 2015 Steel Market Update
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Disclaimer
Introduction to TSI
Impartial organisation focused on compiling prices for ferrous metal products
Founded in in 2006 as subsidiary of the Steel Business Briefing (SBB) Group, acquired by Platts in July 2011
Continues to operate under TSI brand as a separate unit within Platts, part of McGraw-Hill Financial
Data-driven methodology using transaction data to calculate volume-weighted price indices
TSI “Data Providers” submit spot transaction data to TSI under confidentiality agreement; physical market participants only (over 600 registered today)
Submission direct to TSI database through secure on-line channel
Data normalised and “cleaned” before volume-weighted averages calculated for the day or week
TSI is a specialist price information service
European HR Coil Prices
Source: TSI
HRC Prices: Downward Trend
EUR/tonne
• Persistent declining price trend
• Affected by weak raw materials prices, subdued demand, pressure from imports
360
380
400
420
440
460
480 N. Europe S. Europe
€415/t €405/t
€391/t €376/t
European HR Coil Prices
Source: TSI
Low Price Volatility
EUR/tonne
94
100
58
24
92
86
57
29
2012 2013 2014 2015 YTD360
380
400
420
440
460
480
500
520
540
560
580 S. Europe HRC N. Europe HRC
Source: Eurofer
Gradual Recovery in Demand EU Apparent Steel Consumption
Million tonnes
203
187
122
148 158
141 141 146 149 153
0
50
100
150
200
250
2007 2008 2009 2010 2011 2012 2013 2014 2015 (f) 2016 (f)
New Passenger Car Registrations in the EU Automotive Sector
Source: ACEA
‘000 units
-15%
-10%
-5%
0%
5%
10%
15%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800 y-o-y change (RHS)
• Twenty one month of consecutive expansion in passenger car registrations. YTD growth is +6.8% y-o-y
• Best performing major markets – increase in registration in Spain +22%, Italy +15%, the UK +6%
West European Car Sales and 2015 Forecast
Automotive Sector
Source: LMC Automotive
Million units
12.98 12.81
11.77
11.55
12.10
12.88
10.5
11
11.5
12
12.5
13
13.5
2010 2011 2012 2013 2014 2015 (f)
• Eurofer: total automotive output – including production of parts and components - is expected to increase by around +4.5% in 2015
EU-28 Construction Output (Index, 2010=100)
Source: Eurostat
Weak Construction Output
Source: EUROCONSTRUCT
Growth Phase
EU-19 Construction Output Growth Y-o-y % Change
2.2
-4.0
-8.8
-3.5
0.3
-5.4
-2.7
1.0
2.1 2.2 2.2
-10
-8
-6
-4
-2
0
2
4
2007 2008 2009 2010 2011 2012 2013 2014 2015 (f) 2016 (f) 2017 (f)
Source: WSA
Cuts in Steel Production
EU Crude Steel Production ‘000 tonnes
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 2014 2015
German Distributors' Steel Inventories
Source: BDS
Lower Stock Levels
‘000 tonnes
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
• Negative impact of overcapacity on the distribution sector – estimated by Eurometal to be around 30% of the total capacity
• With expectations of stable or lower prices, YTD level of inventories, held by the German distributors, is -6% lower y-o-y
EU Flat Steel Imports
Source: Eurofer
Growth in Imports
‘000 tonnes
• Imports into EU outpace growth of demand • Flat steel imports into the EU rose by +16% y-o-y in 2014. • First indications in 2015: imports rising further. Eurofer forecasts a +4% increase
in total steel imports in 2015
0
200
400
600
800
1,000
1,200
1,400
1,600
Chinese Steel Exports into the EU
Source: China Customs
Growth in Chinese Exports
Tonnes
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
• Chinese supply glut find its way to the international markets, threatening EU producers • Exports into the EU during Jan-April 2015 are up +24% y-o-y
Duties and AD Investigations in 2015
Trade Protectionism
April 2015: • The EC started an AD investigation into imports of ‘high fatigue performance’ rebar
from China. Primarily affected imports of rebar into the UK and Ireland.
May 2015: • Provisional AD measures are introduced against imports of grain-oriented electrical
steel from Russia, USA, Japan, Korea and China; duties are ranging from 21.6% to 35.9%.
• The EC opened an AD investigation into imports of CRC from China and Russia.
March 2015 • The European Commission (EC) imposed provisional
anti-dumping duties of up to 25.2 % on Stainless Steel CR imports from China and up to 12.0 % on imports from Taiwan, following the complaint which was filed by Eurofer in May 2014.
EU Flat Steel Exports into the USA
Source: AISI
Export Opportunities
Tonnes
• With weaker prices in the domestic US market, export opportunities for the EU producers decreased
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
TSI European Outlook Sentiment Survey
Outlook
Demand Sentiment* Price Sentiment*
* Net sentiment (= % of respondents expecting an increase over next 3 months minus % of respondents expecting a decrease over next 3 months)
-100
-80
-60
-40
-20
0
20
40
60
80
100
-100
-80
-60
-40
-20
0
20
40
60
80
100
North European HRC Swaps – Cumulative Volume Cleared
Steel Derivatives
Sources: LCH.Clearnet, CME Europe
Tonnes
0
50,000
100,000
150,000
200,000
250,000
300,000
• LCH.Clearnet and CME Clearing Europe offer North and South European HR coil steel contracts basis TSI’s daily indices
