Russian metallics market. Export...

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Russian metallics market. Export outlook

Nick FilkevichHead of ResearchMetal Expert Consulting

X International Conference Steel and Raw Materials Export from Russia and Ukraine

April 20-21st, Kiev, Ukraine, InterContinental Hotel

http://www.metalexpertresearch.com/�

mailto:[email protected]�

Metallics – what is it?Metallics is an aggregate of typical sources of iron used

for steelmaking.

Scrap

Pig iron

DRI

HBI


Contents

STEEL MARKET OUTLOOK

METALLICS MARKET OUTLOOK

EXPORT OUTLOOK

ABOUT METAL EXPERT CONSULTING


Correlation of finished steel consumption with economic growth in Russia

Russian finished steel consumption will decrease in 2015-2016

Year ∆ GDP ∆ Cons.2014 0.6% 0.2%2015 -2.9% -5.8%2016 0.1% -0.1%2017 1.1% 1.8%

Source: Metal Expert Consulting2009

2008

2010

R² = 0.946

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

-10% -5% 0% 5% 10%

Con

sum

ptio

n ch

ange

, %

GDP growth, %

Source: Rosstat, Metal Expert Consulting


Forecasting of crude steel production

Consumption forecast

Net-export forecast

New capacities for

steel

Steel production

forecast


New steel projectsRegion Company Capacity, ‘000 t FP Year Status

North Caucasian StavStal 500 Long 2015 Underway Volga Bolgotsemmash 500 Long 2015 Underway Volga Kamsky SW 500 Long 2016 Underway

Southern Donelektrostal 285 Long 2016 Plan Central Volzhsky SW 120 Long 2016 Plan Central Tulachermet-Steel 2000 Long 2017 Plan Siberian Bratsky SW 500 Long 2017 Plan Central Revyakino MRP 450 Long 2017 Plan

Northwestern Metal & Innovation 350 Long 2017 Plan Northwestern MERA-steel 350 Long 2017 Plan

Volga OMK-Steel 1200 Flat, tube n.a. On hold Volga Tatsteel 1200 Long n.a. On hold

Southern Armavir SW 450 Long n.a. On hold Southern Tikhoretsk SW 700 Long n.a. On hold

Ural EVRAZ NTMK 3500 Long, flat n.a. On hold Central Voronezhsky SW 240 Long n.a. On hold Siberian IrkutskEnergo 260 Long n.a. On hold

Source: Metal Expert Consulting

Total "on hold" – 7,55 mt

Total “plan & underway” – 5,55 mt... but just 1-2 projects with a high probability of

realization!


Russian crude steel forecast

In the next 3 years, steel production in Russia will not be able to reach the 2014 level

7360

70 69 71 71 70 71

92%

73%

84%79% 82%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Steel production, mt Capacity utilization, %





EXPORT OUTLOOK



Metallics consumption typical structure

Crude steel

Pig iron

Steel scrap

DRI/HBI

Integrated steel mill:BOF• scrap ~20-25%• pig iron ~75-80%• DRI/HBI <1%EAF• scrap ~70-75%• pig iron ~20-25%• DRI <1%

Mini-mill:• scrap ~95-100%• pig iron+HBI <5%


Russian metallics market outlook (1)

In hard times share of merchant segment decreases

Demand structure

53 50 47 54 54

22 2822

25 27

30%

36%32% 32% 33%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Non-merchant metallics production, mtMerchant segment, mtShare of metallics purchase, %



11421139

1132 11321135

1152

1145

1137 11351133

1125

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


-27 kg

Russian metallics market outlook (2)

Metallics consumption per ton of steel reduced in recent

Consumption per ton of steel, kg


Metallics: merchant segment

In 2014 Russian merchant metallics volume is estimated at 26.7 mt, incl. 25.5 mt of scrap

Purchase volume by TOP-10, mt (2014)

3.8

2.7

1.8

1.7

1.7

1.2

1.1

1.0

1.0

0.9

MMK

Severstal

EVRAZ ZSMK

NSMMZ

NLMK

OMK

OEMK

NLMK-Kaluga

Pervouralsk NTW

Abinsky SW

scrap

pig iron / DRI



Russian metallics demand forecast

Decrease in Russian steel production in 2015-2016 will reduce metallics consumption.Decline in merchant segment ~1.5-2.0 mt.

2822

26 25 27 25

34%32%

34%32% 33%

31%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Merchant metallics demand, mtshare in total volume, %





EXPORT OUTLOOK



Method of export potential forecasting

Domestic consumption Supply


Scrap generation outlook

Lack of investment in scrap processing will lead to reduction of the formation and collection of obsolete scrap.

Russian obsolete scrap collection/generation, mt

0

5

10

15

20

25

30

35

1993 1996 1999 2002 2005 2008 2011 2014

Collection Generation



Scrap collection and prices

The potential for increasing of obsolete scrap collection in Russia is limited, even with a further increase in

consumers' purchase prices

2009

2010

2011

2012

2013

2014

0

5

10

15

20

25

30

4500 6500 8500 10500

Obs

olet

e sc

rap

colle

ctio

n, m

t

Purchasing price (CPT), RUR per ton



Metallics supply outlook

Reduction of scrap generation in Russia will be offset by increasing production of DRI / HBI

Production change in the next 3 years, mt

35.6

51.4

6.5

36.8

51.4

4.8

Scrap generation

Pig iron production

DRI/HBI production

2014 2017


+1.7

0.0

-1.3


Russian metallics export forecast

Total exports of scrap, pig iron and DRI will grow by ~1 mt

16

912 12 12 13

36%

29%32% 32% 31%

35%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Metallics export, mtExport's share in merchant production, %





EXPORT OUTLOOK



Forecast of Russian steel scrap, pig iron and DRI/HBI markets till 2025

• Methodology• Chapter I. Russian regional steel consumption/production outlook and forecast• Chapter II. Metallics supply/demand balance: current situation and forecast. Export potential• Chapter III. Factors of pricing and price forecast


Why our report is unique?A) All estimations are based on well-founded models, which have

been tested repeatedly for analysis of raw material and steel product markets

• only trustworthy source data on prices and volumes• understanding of actual steel scrap, pig iron and DRI/HBI

consumption outlook

B) A comprehensive review of metallics segment in Russia as all the materials are treated as substitutes where possible

• How the structure of Russian metallics consumption and production in short-, mid- and long-term period will change?

• Will Russian mills manage to replace scrap in charge with other metallics?

• How the changes in global metallics prices will affect for Russian scrap, pig iron and DRI/HBI and how it will affect exports?


Metal Expert Consulting –research in ferrous metallurgy,chemical and coal industries

• Customized market analysis • Product-mix, sales and procurement optimization• Strategy and business planning• Conceptual, pre-feasibility and feasibility studies

[email protected]

Among our clients:


http://www.riotinto.com/�

Thanks for your attention!Are there any questions, please?

Nick FilkevichHead of ResearchMetal Expert Consulting

Tel. +7 499 346 09 35 (ext. 181)E-mail: [email protected],

[email protected]: www.metalexpertresearch.com

www.metalexpertresearch.ru




http://www.metalexpertresearch.ru/�

http://www.metalexpertresearch.ru/�

Russian metallics market. Export...

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