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The Quarterly Global Steel Cost Service
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The Quarterly Global Steel Cost Service The world’s leading provider of independent market analysis, research and forecasting services for the metals/mining industry www.metalbulletinresearch.com
Transcript of The Quarterly Global Steel Cost Service
The Quarterly Global Steel Cost Service
The world’s leading provider of independent market analysis, research and forecasting services for the metals/mining industry
www.metalbulletinresearch.com
Presentation Structureese tat o St uctu e
• Introducing Metal Bulletin Research• Introducing Metal Bulletin Research
• Introducing the Metal Bulletin Cost Services (Ferrous)
• Global Steel Cost Service – Quarterly
• Global Iron Ore Cost Service ‐ Quarterly
• Key Benefits
• Additional support you will receive from Metal Bulletin Research
Introducing Metal Bulletin Researcht oduc g eta u et esea c
• Metal Bulletin Research (MBR) is the independent consultancy and research division of Metal Bulletin Ltd with dedicated consultants based in London Torontoof Metal Bulletin Ltd with dedicated consultants based in London, Toronto, Washington, New York, Shanghai, and Singapore
• MBR provides regular analysis and forecasts of global ferrous and non‐ferrous markets. Research is available to clients through various publications, services, and consulting arrangements.
• www.metalbulletinresearch.com provides you:
On‐line 24/7 access to market and forecasting metals researchOn line 24/7 access to market and forecasting metals research
Direct access to our analyst team
Access to MBR Breaking Views
l d h l d f l d hDownload the latest data for your own MS Excel spreadsheets.
Access the fully searchable archive of past issues
The Global Cost ServiceThe Global Cost Service
Independent production cost database on the global steel industry
– The cost information covers over 350 iron and steel plants with over 1 billion tonnes of crudesteel capacity
The service covers flat products and long products. The information provided for each plant is:
– The exchange rate used in the analysisi f h d i US d ll f h d f h i– inputs per tonne of the product cost in US dollars per tonne of the product for each input
– The products for which separate cost information is provided are:
Level of coverage ‐
– coke; iron ore sinter; blast furnace iron; direct‐reduced iron by gas or coal processes (incl.Fastmet); Corex‐type iron; HIsmelt iron; basic oxygen steel; open hearth steel; electric furnaceFastmet); Corex type iron; HIsmelt iron; basic oxygen steel; open hearth steel; electric furnacesteel; continuous cast slab/bloom; ingot cast and rolled slab/bloom; continuous cast billet;billet rolled from bloom; hot rolled bar; hot rolled wire rod; hot rolled medium/heavy sections;hot rolled plate; hot rolled coil; cold rolled coil; continuous hot‐dip galvanised coil; electrolyticgalvanised coil; electrolytic tinplate
The Global Iron Ore Cost ServiceThe Global Iron Ore Cost Service
Independent production cost database on the global iron ore industry
Iron Ore Costs: Coverage of Cost Analysis(million tonnes)
Item Covered World CapacityTotal Export Total Export Seaborne
Total finished products 2008 1031 2071 1067 1010Lump 280 213 319Sinter and other fines 1259 1031 1320Pellet fines for sale 87 62 43Pellets 382 171 389
Crude ore mined 4670Material moved 11661
Separate cost information by mine, for each iron ore product: LUMP, FINES, PELLETS
A l i f b i k t d it h i i t d li d iAnalysis of seaborne iron ore market and its changing impact on delivered prices
Detailed and unbiased market forecasts for both spot and contract transactions
The Global Cost Service in DetailThe Global Cost Service in Detail
For each of these steel products the cost structure is the cumulative cost of production up to that stage and includes the costs of all previous stages of productionstage and includes the costs of all previous stages of production.
For example, for HR coil or bar costs include all the costs of iron ore, coal, scrap, energy, labour, etc. required to produce the product.
Production costs are calculated FOB at the steel plant (ex works).
The cost items shown separately are:
iron ore – fines; iron ore – lump; iron ore – pellets; DRI – purchased; pig iron – purchased; semis –purchased; scrap; ferro‐alloys + aluminium; zinc; tin + chrome; electrodes; limestone + dolomite flux; lime + desulphurising agent; inert gases; lubricants; acid/alkali cleaners; water; other materials net oflime + desulphurising agent; inert gases; lubricants; acid/alkali cleaners; water; other materials net of by‐product credits; coking coal; BF coke ‐ purchased; BF charcoal – purchased; thermal energy; oxygen; power; direct labour; S.& G.A. cost; refractories; mill rolls; other maintenance supplies; internal transport; tax + insurance; Total Operating Costs; depreciation; interest; Total Costs
The Global Cost ServiceThe Global Cost Service
– How do you receive the cost database?: Quarterly via MS Excel Spreadsheet Datapack and Cost Study
– What is source of information?: For each plant we utilise available informationabout equipment, technology, sources and qualities of raw materials, input prices,
i i l l d di i l i i h loperating practices, etc. to calculate costs under conditions applying in the latestquarter.
This is supplemented often where possible by actual data direct from steel plantThis is supplemented, often where possible, by actual data direct from steel plantmanagers and executives, where the Metal Bulletin Group is able leverage off ourstrong relationships with producers.
Benefits of Global Cost ServiceBenefits of Global Cost Service
– Access complete Operating/Cost Cost Curves for the industry e.g.
Pig Iron: Total Cost Curve, 2009 Q4
Production Costs, $/tonn
500
550
600
500
550
600
400
450
400
450
total cost curve
300
350
300
350
total cost curve
operating costs
pig iron price
pig iron price
150
200
250
150
200
250
100
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
Cumulative Capacity, percent
100
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– Detailed costs by production stage – raw materials up to finished steel producte.g.
Cost of Steel HD Galvanised Production ($ per tonne , FOB plant,)
Item 2009 Q4
Raw Materials 306.70iron ore 106.09purchased semis + coil 78.21pscrap -0.95other materials 123.35
Energy + reductants 160.04coking coal 58.56purchased coke 35.61power 61.19other energy 4.69
Labour & overheads 128.61labour + administration 84.58other operating costs 44.03
O ti t 595 34Operating costs 595.34Capital charges 132.49Total costs 727.84
zinc (in other material) 58.74
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– Analysis of steel cost trends/forecasts e.g.
Steel: Forecast Costs(total costs, $/tonne FOB mill, world average)
Product 2009 Q4 2010 Q1 2010 Q2
HR coil 485 497 539HR coil 485 497 539 % change 2.4% 11.1%
Bar 414 428 467 % change 3.5% 12.9%
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– Quarterly Cost/Price/Margin Analysis e.g.
Production Costs and International Prices, 2009 Q4(costs in $/tonne FOB mill, international prices $/tonne FOB )
Product Operating Total Price Margin MarginProduct Operating Total Price Margin MarginCosts Costs $/t %
Intermediate productsCoke 103 121 360 239 197.5%DRI 183 207 210 3 1.6%Pig iron 201 232 305 73 31.5%C d t l 311 345Crude steel 311 345Scrap 248Flat products Slab 349 398 410 12 3.0% Plate 450 509 555 46 9.1% HR coil 418 485 500 15 3.0% CR coil 486 587 600 13 2.2% HD galvanised coil 595 728 790 62 8.5% Tinplate 669 785 990 205 26.2%Long products Billet 363 402 415 13 3.3% Bar 414 459 505 46 10.0% Wire rod 459 509 505 -4 -0.8% Sections 467 527 700 173 33.0%
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– Cost Analysis of EAF v’s Integrated steel plants e.g.
Structure of HR Coil Costs - Integrated
total costs, c/dmtu
800
900
1000
600
700
800
capital charges
other operating
300
400
500
other operating
coal
scrap
iron ore
100
200
300
0
2007 2008 2009
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– Sensitivity of HR Coil Costs – Analysis e.g.
The breakdown of production costs by individual items indicates how much some items affect thet f d ticosts of production.
For HR coil the largest single cost item is iron ore, at $96 per tonne ($92 in 2009 Q3, $125 in 2009Q1), with coking coal at $56 ($57 in 2009 Q3, $97 in 2009 Q1).Q ), g $ ($ Q , $ Q )
These items, with scrap and other materials, are much more significant than labour or capitalcharges in the average cost of production. Because of the mix of processes used in the industry,i ifi t titi f HR il d d i d h d isignificant quantities of HR coil are produced using scrap and purchased semis.
A 10% change in the delivered price of iron ore changes the average cost of HR coil by $9.59 pertonne directly, plus an impact on the price of purchased semis for a total of $10.37 (2.1% of they, p p p p $ (average total cost of HR coil).
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– HR coil costs by company – Analysis e.g.
HR Coil: Capacity and Costs of Largest Producers( it i illi t )(capacity in million tonnes)
Rank Company Base Country Capacity Capacity Operating TotalTotal Costed Costs Costs
1 A l Mitt l G UK 91 94 88 75 445 5091 ArcelorMittal Group UK 91.94 88.75 445 5092 US Steel Group USA 27.36 27.36 436 4933 JFE Steel Group Japan 24.56 24.56 392 4774 Nippon Steel Group Japan 23.84 23.82 398 4875 Posco Group Korea Republic 23.08 22.41 355 4456 A B G Chi 21 97 19 01 375 4356 AnBen Group China 21.97 19.01 375 4357 Shanghai Baosteel China 20.56 14.06 403 4628 Thyssen Krupp Group Germany 18.04 10.00 471 5409 Severstal Group Russia 17.22 15.84 420 47910 Tata Corus Group India 15.72 13.82 399 468
World 597.04 532.21 418 485
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– HR Coil Costs and Prices by Region e.g.
Costs of Steel HR Coil by Regiony g ($ per tonne, FOB plant)
Type of Plant Operating Total Price
USA - integrated 396 450 550USA i i ill 4 6 06USA - mini-mill 456 506Brazil - integrated 351 448Western Europe - integrated 404 516 570CIS - integrated 282 344Middle East - DRI + EAF 325 391China integrated 321 391 450China - integrated 321 391 450India - integrated 331 441Japan - integrated 369 496
World 418 485 500
Key Benefits of Global Cost ServiceKey Benefits of Global Cost Service
– HR coil costs by company – Analysis e.g.
HR Coil: Capacity and Costs of Largest Producers( it i illi t )(capacity in million tonnes)
Rank Company Base Country Capacity Capacity Operating TotalTotal Costed Costs Costs
1 A l Mitt l G UK 91 94 88 75 445 5091 ArcelorMittal Group UK 91.94 88.75 445 5092 US Steel Group USA 27.36 27.36 436 4933 JFE Steel Group Japan 24.56 24.56 392 4774 Nippon Steel Group Japan 23.84 23.82 398 4875 Posco Group Korea Republic 23.08 22.41 355 4456 A B G Chi 21 97 19 01 375 4356 AnBen Group China 21.97 19.01 375 4357 Shanghai Baosteel China 20.56 14.06 403 4628 Thyssen Krupp Group Germany 18.04 10.00 471 5409 Severstal Group Russia 17.22 15.84 420 47910 Tata Corus Group India 15.72 13.82 399 468
World 597.04 532.21 418 485
Global Cost Service – Data SampleGlobal Cost Service – Data SampleTable 3 SUMMARY OF STEEL PRODUCTION COSTS - PRODUCERS OF FLAT PRODUCTS, 2009 Q4Site 3731 5 1268 1281 13 17 18Country Canada Canada Canada Canada USA USA USACompany Algoma AM Hamilton Lake Erie Steel Stelco AM Acme AK Steel AK SteelLocation Sault-S-Marie Hamilton Nanticoke Hamilton Riverdale Ashland Middletown
Local currency C$ C$ C$ C$ US$ US$ US$Exchange rate per US$ 1.054 1.054 1.054 1.054 1.000 1.000 1.000
COST SUMMARY - OPERATING COST BY PRODUCT
Coke $/t 145.07 137.85 139.14 126.56 0.00 134.78 148.94DRI $/t 0.00 0.00 0.00 0.00 0.00 0.00 0.00Pig iron $/t 215.14 214.97 164.10 159.92 0.00 239.09 341.98Crude steel $/t 306.62 336.21 250.66 252.26 367.69 330.73 429.89
BOF $/t 306 62 301 09 250 66 252 26 367 69 330 73 429 89BOF $/t 306.62 301.09 250.66 252.26 367.69 330.73 429.89OHF $/t 0.00 0.00 0.00 0.00 0.00 0.00 0.00EAF $/t 0.00 402.00 0.00 0.00 0.00 0.00 0.00
Slab/bloom $/t 354.56 381.23 297.92 297.54 0.00 377.60 484.65Plate $/t 623.78 0.00 0.00 445.78 0.00 0.00 0.00Hot rolled coil $/t 395.39 457.87 374.04 0.00 450.39 465.63 567.88Cold rolled coil $/t 496.56 524.37 0.00 519.58 541.44 549.52 636.57Hot dip galvanised $/t 0 00 614 33 0 00 621 50 0 00 662 81 740 86Hot-dip galvanised $/t 0.00 614.33 0.00 621.50 0.00 662.81 740.86Tinplate $/t 0.00 710.38 0.00 0.00 0.00 0.00 0.00Billet $/t 0.00 0.00 0.00 381.70 0.00 0.00 0.00Bar $/t 0.00 0.00 0.00 486.80 0.00 0.00 0.00Wire rod $/t 0.00 0.00 0.00 488.05 0.00 0.00 0.00Section $/t 0.00 0.00 0.00 0.00 0.00 0.00 0.00
COST SUMMARY - TOTAL COST BY PRODUCT
Coke $/t 160.62 153.37 154.94 142.17 0.00 150.25 173.39DRI $/t 0.00 0.00 0.00 0.00 0.00 0.00 0.00Pig iron $/t 236.61 233.93 183.15 205.39 0.00 260.00 360.28Crude steel $/t 331.66 359.65 281.48 308.63 374.65 357.40 453.44
BOF $/t 331.66 327.45 281.48 308.63 374.65 357.40 453.44OHF $/t 0.00 0.00 0.00 0.00 0.00 0.00 0.00EAF $/t 0.00 419.96 0.00 0.00 0.00 0.00 0.00
Slab/bloom $/t 394.47 415.69 337.99 374.13 0.00 415.25 517.91Plate $/t 654.37 0.00 0.00 546.54 0.00 0.00 0.00
Global Cost Service ClienteleGlobal Cost Service ‐ Clientele
• UniCredit Markets & Invest Bkg• Sumitomo Mitsui Banking Corp• Mechel Management OOO
C ill I t’l T di• Cargill Int’l Trading• Reckitt Benckiser Group plc• GE Energy• Deutsche Bank AG• Deutsche Bank AG• Morgan Stanley• Valeo• Mitsubishi Corporation p• Ezz steel
• ………among others
Other Benefits to the ServiceOther Benefits to the Service
• Direct access to cost information via MS Excel – create your on cost curves and manipulate data at will to suit your specific needs.
• Easy‐to‐set‐up multi‐user licenses to MBR’s cost service services – access cost• Easy‐to‐set‐up multi‐user licenses to MBR s cost service services access cost information anytime, anywhere, by anyone across your divisions
• Analyst support – contact Japanese Representative/Head of Research for bespoke scenario analysis and analytical support
• Access to MBR’s Iron Ore Index (www.MBironoreindex.com)
• Access to commodity market economic and survey reports (WEM and MTI)
• Preferential rates on other product and services e g regular iron ore market coverage in• Preferential rates on other product and services e.g. regular iron ore market coverage in Weekly Market Tracker: Steel Raw Materials
Contact usContact us
For any more information, please contact:
Bejal PattniAccount ManagerAccount Manager
Metal Bulletin Research
+44 207 779 [email protected] @
