Wind Energy 2025: Chances and Challenges for the global ......Wind Energy 2025: Chances and...
Transcript of Wind Energy 2025: Chances and Challenges for the global ......Wind Energy 2025: Chances and...
Wind Energy 2025: Chances and Challenges for the global
Foundry Industry
Düsseldorf, 26 June 2019
Dr. Heinz-Jürgen Büchner / Dennis Rheinsberg
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Agenda
einfaches/einmaliges Inhaltsverzeichnis
2
1 Macroeconomic Environment 3
2 Global Wind Energy Market: Development and Forecasts 8
3 Trends in the Competitive Environment 19
4 Forecast 2025 for the Global Foundry Industry 25
5 Appendix 34
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Agenda
Macroeconomic Environment
3
1 Macroeconomic Environment 3
2 Global Wind Energy Market: Development and Forecasts 8
3 Trends in the Competitive Environment 19
4 Forecast 2025 for the Global Foundry Industry 25
5 Appendix 34
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USA: Economy with strong Growth
GDP-Growth; qoq; in % ADP Increase in Employment in thousands new Jobs
Components of GDP Q1 2019 In Detail
Source: Bloomberg
4
Growth qoq
Q1 2019;
in % annualized
Growth ´Contribution;
in %-Points
GDP 3.2
Private Consumption 1.2 0.8
Public Consumption 2.4 0.4
Equipment Investments 3.7 0.4
Exports 3.7 0.5
Imports -3.7 0.6
Inventories x 0.7
➢ The US-GDP grew by 3.1 % (qoq) during the first quarter of
2019. In total, the economic development was very strong, if we
take into account that we had a Shut-down of public authorities
during January and a phase-out of the tax effects
➢ Therefore, IKB forecasts a growth rate of 2.6 % in 2019. But we
expect a slower economic development during the current year
➢ The Fed held the prime rate stable during the first quarter of
2019. But we expect a cut in interest rates during the second
half of the year
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China: Economy stabilizes on high Level
GDP-Growth; yoy; in % Retail Sales; yoy; in %
Industrial Production; yoy; in %
5
Source: Bloomberg
In Detail
➢ China‘s economy had a strong start into the current year. The
GDP grew by 6.4 % yoy. The consensus forecast had
expected a lower growth in relation to the last quarter
➢ The Chinese economy has stabilized during the last two
months. The retail sales and the industrial production
showed a strong improvement
➢ The industrial production has gained from the recovery after
the holiday season of the Chinese New Year, therefore we
expect an average growth of the industrial production
between 5 and 6 % in the current year
2013 2014 2015 2016 2017 2018 2019
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Euro Zone: Growth Dynamics better than Sentiment Indicators
GDP-Growth in % qoq Euro-Zone: GDP-Growth in %
6
Source: Eurostat
In Detail
➢ Eurostat confirms for the euro zone a GDP growth of 0.4 % qoq
for the first quarter of 2019: A significant improvement in relation
to the previous quarter
➢ Among the bigger countries Spain, Germany and France showed a
strong dynamic development. Italy is no longer in a recession,
but underperforming in relation to the other countries
➢ IKB forecasts for the euro zone a GDP growth of 1.2 % in 2019
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Brent Blend; US-$/Barrel1)
Active Oil Rigs USA2)
High Realibility of Supply
Sources: 1) Bloomberg 2) Baker Hughes North America Rotary Rig Count
7
➢ In 2018 a strong rise of the worldwide demand for crude oil
was seen: On average the demand rose by 1.4 mbd (million
barrel per day) to 98.75 mbd
➢ For 2019, we expect another rise in the global crude oil
demand of 1.15 mbd to nearly 100 mbd
➢ In addition to a higher oil production in Non-OPEC countries
an OPEC production of 35.4 mbd will be necessary.
Around 4.8 mbd will come from the OPEC NGL grades
➢ As a result an OPEC production of around 30.5 mbd is
necessary in the current year. This equals the OPEC monthly
production in the first quarter of 2019. But in April and May
2019 the monthly production of the OPEC was below this level
➢ We have seen a rise in geopolitical disturbances, e.g. the
war in Yemen, the war in Syria and the political instability in
Venezuela. But the highest risk in our point of view is the
conflict after the cancellation of the nuclear agreement with
Iran by President Trump
➢ The number of active oil rigs in the United States of America
equal 788, significantly below the peak
➢ Therefore, we forecast a crude oil price fluctuating between
60 and 70 US-$ per barrel Brent for the next three months of
2019. WTI will be around 8 US-Dollars per barrel below the
Brent price
Crude Oil: Geopolitical Disturbances
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2007 2009 2011 2013 2015 2017 2019
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Agenda
Forecasts
8
1 Macroeconomic Environment 3
2 Global Wind Energy Market: Development and Forecasts 8
3 Trends in the Competitive Environment 19
4 Forecast 2025 for the Global Foundry Industry 25
5 Appendix 34
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Wind Energy‘s Upward Trend continues…
Decreasing LCOE1) and… …National Targets for Wind Power Installations are…
…The Drivers for Future Growth in Installed Capacity
Decreasing LCOE due to larger turbines and rotor diametres as well as higher hub heights are the main drivers for the
increasing share of Wind Energy in global power generation capacities as Wind Energy becomes more and more
competitive to conventional and nuclear power generation
1) LCOE = Levelised Cost of Electricity 2) onshore 3) offshore
Sources: GWEC; Bloomberg; REN21; IKB Research
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40
90
140
190
240
Onshore OffshoreUSD/MWh Country Target Year Country Target Year
19.5 GW 2021 60 GW 2022
5 GW 2025 35 GW2) 750 MW3) 2020
210 GW 2020 1.8 GW 2021
2 GW2) / 4.75 GW3) 2025 20 GW 2023
39 GW2) / 3.5 GW3) 2023 39 GW3) 2030
5 GW2) / 6.5 GW3) 2020 8.8 GW 2030
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…but with shifting Intensity across Regions…
Total Installations 2015 – 2023
Stronger growth in the future in the Americas and in Asia
Sources: GWEC; IKB Research
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Europe
Africa, Middle East
Asia-Pacific
in thousands
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…and probably Changes within the Top 10 Countries
Top 10 Countries by installed capacity 2018 – Onshore Top 5 Countries by installed capacity 2018 – Offshore
Top 10 Countries by commissioning in 2018 – Onshore
45%
16%
5%
5%
4%
3%2%
2%1%
1%16% PR China
USA
Germany
India
Brazil
France
Mexico
Sweden
UK
Canada
RoW
Top 5 Countries by commissioning in 2018 – Offshore
29%
40%
22%
1%7% 1%
UK
China
Germany
Denmark
Belgium
RoW
4.5 GW
Top 4 Countries with more than two third of total installed capacity will dominate the onshore market also in the future
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36%
17%9%
6%
4%
3%
3%2%
2%2%
16%PR China
USA
Germany
India
Spain
France
Brazil
Canada
UK
Italy
RoW
568 GW
34%
28%
20%
6%
5%7%
UK
PR China
Germany
Denmark
Belgium
RoW
23.1 GW
46.8 GW
Sources: GWEC; IKB Research
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Regional Breakdown by Country – New Installations Onshore
Americas
0123456789
2016 2017 2018
➢ The USA dominate the Americas in terms
of commissionings and installed capacity
(total capacity of 96.7 GW in 2018)
➢ In Latin America, Brazil, with a share of
approx. 71 %, will continue to be the
decisive growth driver in the future (19.5
GW by 2021)
➢ Significant new installations are expected
in Chile and Argentina (commissionings in
2018 of approx. 200 MW and 500 MW
respectively)
Europe
0
1
2
3
4
5
6
2016 2017 2018
➢ Commissionings dropped from ~14 GW in
2016 / 2017 to ~9 GW in 2018 particularly
due to a sharp decline in Germany
➢ Thus, markets hinge to a high degree on
regulatory and political changes as seen
before in UK, Poland or Turkey
➢ According to GWEC an increase of around
50 % in new installations is expected for
2019 mainly driven by the execution of
major project pipelines in Spain (targets
35.8 GW by 2020) and Sweden
Asia-Pacific
0
5
10
15
20
25
China India Other
2016 2017 2018
➢ China and India will continue contributing
the largest expansion in this region
➢ Emerging markets are countries like
Pakistan, Japan, South Korea, which
installed between 100 and 400 MW p.a. in
2016-2018 as well as Mongolia, Vietnam
(6 GW by 2030), Thailand (1.8 GW by
2021) and Taiwan
➢ In the future the Pacific region will also
almost exclusively be supported by
Australia (commissioning of 549 MW in
2018 with total capacity of 5.4 GW)
The decline in global commissioning of onshore wind turbines in 2018 is partly due to a slowdown in India and Germany
However, besides others these markets will significantly contribute to future growth
Sources: GWEC; WindEurope; REN21; IKB Research
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GW GW GW
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Market Development with Effects on Wind Turbine Manufacturers Onshore…
Development of Market Share 2016-2018 (Onshore)
0%
5%
10%
15%
20%
25%
Vestas Goldwind GE Energy SGRE Envision Enercon Ming Yang Nordex Guodian UP Senvion Other
2016 2017 2018
➢ The newly installed onshore capacity declined over the last three years. Only Vestas and Chinese Envision were able to increase their market
share. Due to a strong performance in China Goldwind rose from third to second place, but only 5 % of Goldwind’s 6.7 GW were commissioned
outside China. GE became third in 2018 with almost 5 GW of new installations (share of more than 60% in the USA)
➢ Siemens Gamesa hold the fourth place after a sharp decline in new installations in 2018, but has the best regional diversification. Due to its focus
on Europe and particularly Germany Enercon’s market share decreased the third year in a row
➢ Nordex with (expected) losses in 2018, but significant order intakes; as Vestas and Nordex currently commission more capacity in the Americas
than in Europe, order intakes will support this trend. Delays in installations caused a revision of guidance for 2018 at Senvion and a loss in market
share
The market share of the Top 4 manufacturers increased from 52 % in 2016 to 57 % in 2018
Chinese manufacturers still rely almost solely on their home market
European manufacturers with increasing share in installations in Asia and particularly Americas
Sources: BloombergNEF; IKB Research
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…and Significant Changes Offshore
New Installations Offshore by Region
3,3 4,31,8
3,0
5,64,5
1,82,3
3,1
5,3
4,34,8
0
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2018 2019e 2020e 2021e 2022e 2023e
Europe Asia North America
0,8
Offshore will become a global market…
➢ Currently only 8 % of new installations are offshore, but this share is
expected to increase to 22 % by 2023
➢ Capacity will especially grow in Asia: while Europe will continue to
add 3 to 4 MW p.a. based on current targets and planned auctions,
Asia could add between 5 and 7 GW of new installations per year
➢ 2018 was already a record year for China, connecting more offshore
capacity (1.8 GW) than any other country for the first time
➢ Currently larger capacities are developed in Taiwan, further key
growing offshore wind markets in Asia are Japan and South Korea
➢ In India, the first offshore tender is expected during 2019
➢ In North America first large-scale offshore installations by 2022/23
Market Shares Wind Turbine Manufacturers Offshore
56% 60%
13%
0%
20%
40%
60%
80%
100%
2017 2018
Other
GE Wind
Guodian UP
Ming Yang
Envision
Goldwind
Senvion
SE Wind
Vestas
Siemens Gamesa
…but with only a few players…
➢ …as the trend for larger offshore turbines continues reducing LCOE
➢ GE with projects coming up in France, first orders for new 12MW
platform are expected, a cooperation with Vattenfall has just been
closed; expected to be commercially operational as of 2024/2025
➢ MHI Vestas’ 10 MW-turbine will be used for projects in the USA, UK
and Netherlands; Goldwind with its 8 MW-turbine at China’s coast
➢ Siemens Gamesa’s 10 MW turbine is expected for 2022
➢ Annual market shares highly influenced by long development
periods; Europe is dominated by Siemens Gamesa and MHI Vestas
Increasing share for Asia and first projects in the US and Europe are expected with on average stable volumes
Sources: GWEC; Bloomberg; Fraunhofer; WindEurope; IKB Research
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GW
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Snapshot on major European OEMs (1/3)
➢ Installed capacity of more than 100 GW
in 80 countries
➢ Onshore wind turbine portfolio ranges
from 2 MW up to 5.6 MW
➢ Offshore wind joint venture with
Mitsubishi Heavy Industries (MHI Vestas)
established a strong track record in
offshore wind with its V164 platform
ranging from 8 MW to 9.5 MW
➢ The first OEM also to offer a 10 MW
offshore wind turbine commercially
➢ Strong geographical spread
➢ A current order backlog of € 13.3 bn and
a revenue guidance 2019 of
€ 10.75-12.25 bn
➢ Formed in 2017 following the merger of
Siemens and Gamesa with Siemens the
market leader in offshore wind
➢ Turbine SWT-6.0-154 evolved into an
8 MW version with unveiled plans for a
10 MW turbine until a 12-15 MW
machine can be developed in the early
2020s
➢ Gamesa leading OEM in India; sizeable
market shares in Latin America and
Spain
➢ Onshore turbines ranges from 2 to 4 MW
➢ Total installations of ~90 GW worldwide
➢ Current order backlog of € 12.3 bn and
revenue guidance 2019 of € 10-11 bn
➢ GE installed over 35,000 turbines
worldwide
➢ Onshore product portfolio ranges from
1.7 to 5.3 MW turbines
➢ In 2015, acquisition of the power
business of Alstom including its 6 MW
Haliade offshore wind turbine design
(orders from China and US)
➢ Unveiling 12 MW turbine in 2018 which
is due for commercial deployment in the
early 2020s
➢ Blade manufacturer LM Wind Power and
designer Blade Dynamics also parts of
GE
Sources: Windpowermonthly; IKB Research
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Snapshot on major European OEMs (2/3)
➢ Installed nearly 30,000 turbines globally
➢ Product portfolio ranges from the
sub-1 MWs to the new E-138 4.2 MW
➢ Using permanent-magnet generator
4.5 MW platform from acquired
Lagerwey as the basis for new >5 MW
onshore turbines
➢ Focused much of activity in Europe,
particularly Germany, but also successful
in Canada and Brazil
➢ Enercon with highest value-added
among wind OEM including an own
foundry
Sources: Windpowermonthly; IKB Research
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➢ Installed more than 25 GW of turbines in
40 countries worldwide
➢ Development also boosted with the
acquisition of Acciona Wind Power in
2016 as Acciona’s lighter machines
suited well to emerging markets and the
US
➢ One of the first major OEMs to enter the
4 MW class with the N149 (Delta4000
platform)
➢ >5 MW under development, portfolio
ranges from 1.5 to 4.8 MW turbines
➢ A current order backlog of € 4.4 bn and
a revenue guidance for 2019 of
€ 3.2-3.5 bn
➢ Installed >8,000 turbines worldwide with
a combined output of approx.18 GW
➢ Portfolio ranges from 2 MW to 4 MW,
plus the 6 MW platform for offshore
➢ Developing a 10 MW+ offshore wind
turbine as part of a EU-backed research
project
➢ Current order backlog of € 2.0 bn and
revised revenue guidance for 2018 of
€ 1.45 bn
➢ Senvion had filed for self-administration
on April 2019, rumors regarding running
M&A process
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Snapshot on major European OEMs (3/3)
Source: CapitalIQ; all in Euro
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0
20
40
60
80
100
Jun-1
6
Aug-1
6
Oct-
16
De
c-1
6
Feb
-17
Apr-
17
Jun-1
7
Aug-1
7
Oct-
17
De
c-1
7
Feb
-18
Apr-
18
Jun-1
8
Aug-1
8
Oct-
18
De
c-1
8
Feb
-19
Apr-
19
Vestas Wind Systems A/S - Share Pricing
0
20
40
Jun-1
6
Aug-1
6
Oct-
16
De
c-1
6
Feb
-17
Apr-
17
Jun-1
7
Aug-1
7
Oct-
17
De
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7
Feb
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Apr-
18
Jun-1
8
Aug-1
8
Oct-
18
De
c-1
8
Feb
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Apr-
19
Siemens Gamesa Renewable Energy, S.A. - Share Pricing
0
20
40
Jun-1
6
Aug-1
6
Oct-
16
De
c-1
6
Feb
-17
Apr-
17
Jun-1
7
Aug-1
7
Oct-
17
De
c-1
7
Feb
-18
Apr-
18
Jun-1
8
Aug-1
8
Oct-
18
De
c-1
8
Feb
-19
Apr-
19
Nordex SE - Share Pricing
0
20
Jun-1
6
Aug-1
6
Oct-
16
De
c-1
6
Feb
-17
Apr-
17
Jun-1
7
Aug-1
7
Oct-
17
De
c-1
7
Feb
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Apr-
18
Jun-1
8
Aug-1
8
Oct-
18
De
c-1
8
Feb
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Apr-
19
Senvion S.A. - Share Pricing
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Summary of Global Trends in Wind Industry
Political Support for
Energy Transition
➢ National goals for power generation capacities in renewable energies support future growth of wind energy
➢ Climate change becoming more and more obvious will support political will by pressure from public
➢ Changes in national support schemes (temporarily) hamper a straight development on a country basis
Declining LCOE
➢ Technological advancements in the wind industry had been tremendous over the last years
➢ Onshore turbines with 4.x MW generators have become state-of-the-art and 5.x MW will enter the market soon;
offshore turbines with up to 12 MW (GE Haliade) are under development
➢ Together with rotor diametres > 150m and increasing hub heights (onshore) capacity factors of new modern turbine
models are permanently rising
➢ In consequence, LCOE are declining resulting in a higher competitiveness of wind energy with other power
generation assets
Increasing Investments
in Wind Energy
➢ Institutional investors as insurance companies and pension funds as well as utillities and an increasing number of
large corporates like Big Oil are investing in renewable energies
➢ This is motivated in the former case by the need for alternative investments due to the low interest rate environment
and in the latter case by the necessity for adjusting business models
Consolidation Trends
in WTM Industry
➢ Increasing competition and lower demand from former key markets pressed sales prices down in past years, but
average sales price on order intakes stabilized in 2018 and recovers currently
➢ Large order intakes currently from overseas (particularly USA and Latin America), major sales markets in Europe
with lower importance, but still on a comparatively high level and with “comeback potential” (e.g. Germany, France)
➢ Thus, WTMs relocate parts of their production closer to these markets (e.g. Senvion produces Nacelles in Baramati,
Nordex has just opened a production in Cordoba), sometimes due to politically required local value-added share
Demand for wind turbines remains high in the future with an increasing share for the Americas and Asian countries
High capital requirements due to tight innovation cycles and ongoing margin pressure might force further consolidation
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Agenda
Trends in the Competitive Environment
19
1 Macroeconomic Environment 3
2 Global Wind Energy Market: Development and Forecasts 8
3 Trends in the Competitive Environment 19
4 Forecast 2025 for the Global Foundry Industry 25
5 Appendix 34
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Trends in the Wind Cast Market since 200020
New Capacities for Wind Cast
Products since the Year 2000
Trends in the Wind Energy Market
between 2000 and 2010
Capacity Reductions during
the last decade
Development in the Wind Energy
Market since 2010
➢ A new foundry was built in Zeitz by the Silbitz Group
➢ Capacity extension at EGT Torgelow. EGT was formerly mainly active as a foundry for mechanical
engineering and marine cast products
➢ Capacity extension by Groupo Wec
➢ Extension of capacities in Turkey
➢ High growth expectations for the global wind energy market
➢ Very optimistic forecasts for the offshore market
➢ A rising demand for foundry products induces high investments in the sector resulting in a strong net-
addition of capacities
➢ These capacities came during the years between 2007 and 2010 on the market
➢ Insolvency process in Spain, but takeover by Gestamp Group (TS Fundiciones)
➢ Insolvency process in Germany with strong capacity reduction at SHW Casting Technologies
➢ Some foundries with a higher diversification after the global economic crisis in the years 2008 / 2009
➢ Several companies reserve less capacities for wind cast products in relation to former years
➢ Reduced expectations concerning the growth of the offshore wind energy market
➢ Rising importance of the repowering in the onshore wind energy market
➢ Strong growth outside of Europe
➢ Consolidation process among the wind energy OEM, e.g. merger of Siemens and Gamesa
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Overview: Castings for Wind Turbines (1/3)
Sources: Company information, IKB Research
21
Foundry Capacity Cast Specialties Other Information
➢ 3 foundries
➢ in total 140,000 tons p.a.
➢ Germany: 25,000 t (the German
foundry is close to the Nordic Sea )
➢ Sweden: 25,000 t
➢ China: 90,000 t
➢ maximum component weight:
up to 80 tons
➢ maximum mould box size:
6,000 x 10,000 x 6,000 mm
➢ Design
➢ Assembly
➢ Surface treatment
➢ Machining
➢ Stade has one of the newest wind cast
productions worldwide
➢ EGT is a singular foundry close to the
border between Poland and Germany
➢ Capacity for wind cast products
between 35,000 and 40,000 tons p.a.
➢ Maximum capacity: 90,000 tons
➢ Maximum component weight:
up to 120 tons
➢ Experience in marine machinery parts
➢ Machining
➢ Surface treatment
➢ Design
➢ Construction consulting
➢ Dihag is a group of foundries with a
total capacity of 170,000 tons
➢ Wind cast products mainly at the
Coswig and Meuselwitz plants
➢ Capacity for wind cast products
between 25,000 and 40,000 tons
➢ Maximum component weight:
up to 50 tons (for wind cast products)
➢ Maximum mould box size:
7,000 x 4,500 x 15,000 mm
➢ Machining
➢ Surface treatment
➢ Heat treatment
➢ Maximum capacity estimated at
50,000 tons
➢ Capacity for wind cast products
estimated at 15,000 tons
➢ Maximum component weight
up to 160 tons
➢ Mainly nodular graphite iron cast and
steel cast
➢ Design
➢ Machining
➢ Surface treatment
➢ Heat treatment
GMH Friedrich
Wilhelms Hütte
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Overview: Castings for Wind Turbines (2/3)22
Foundry Capacity Cast Specialties Other Information
➢ Capacity 25,000 tons
➢ One modern foundry opened in 2010
➢ Created for its own Enercon wind mill
production
➢ Therefore a captive foundry
➢ Mainly parts for onshore wind mills
➢ E.g. rotor hubs, machine bearer
➢ Integrated part of the Enercon Group
➢ Enercon has a clear focus on inhouse
production along the whole value
added chain
➢ Capacity of Heger Guss and
Heger Ferrit together estimated at
around 45,000 tons in two foundries
➢ Heger Ferrit relatively new and
modern
➢ Maximum component weight:
up to 30 tons
➢ Parts for wind energy and rolling
stocks are the core activities of the
group
➢ Surface treatment
➢ Design
➢ Machining
➢ Maximum total capacity in 3 foundries:
55,000 tons
Silbitz: 30,000 tons
Zeitz: 15,000 tons
Kosice: 10,000 tons
➢ Capacity for wind cast products:
around 18,000 tons
➢ Maximum component weight:
up to 45 tons
➢ Mainly ductile iron cast and steel cast
➢ High competence in cast products for
the mechanical engineering and rolling
stocks
➢ Machining
➢ Construction consulting
➢ Surface treatment
➢ Highly diversified product portfolio
➢ Maximum total capacity (1 foundry):
up to 68,000 tons
➢ We estimate the capacity for wind cast
products at below 10,000 tons
➢ Maximum components weight:
up to 320 tons primarily in ductile iron
cast
➢ Cast production mainly for the
mechanical engineering industry and
the nuclear energy industry
➢ Machining
➢ Surface treatment
➢ Heat treatment
➢ Engineering
Sources: Company information, IKB Research
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Overview: Castings for Wind Turbines (3/3)23
Foundry Capacity Cast Specialties Other Information
➢ Maximum capacity estimated at up to
20,000 to 30,000 tons
➢ Founded as a cooperative
organization
➢ Maximum component weight:
up to 60 tons mainly in ductile iron
cast
➢ Maximum mould box length of 22 m
➢ Received orders from
Siemens Gamesa for 6 MW windmill
turbines
➢ Maximum capacity in two foundries of
36,000 tons
Wec 1: 14,000 tons
Wec 2: 22,000 tons
➢ Maximum component weight:
up to 50 tons
Wec 1: 2 to 15 tons
Wec 2: 12 to 50 tons
➢ Machining
➢ Design
➢ Surface treatment
➢ Maximum capacity in one foundry of
20,000 tons
➢ Capacity for wind cast products
estimated at around 10,000 tons
➢ Maximum component weight:
up to 70 tons
➢ maximum mould box size:
1,200 x 1,000 x 800 mm
➢ Highly diversified in mechanical
engineering cast products
➢ Design
➢ Machining
➢ Assembly
➢ Surface treatment
➢ Maximum capacity of 20,000 tons
➢ Capacity for wind cast products
estimated at less than 8,000 tons
➢ Maximum component weight:
➢ Up to 160 tons
➢ Maximum mould box size:
11 x 8 x 3 m
➢ High diversification in mechanical
engineering products
➢ Design
➢ Machining
➢ Prototyping
➢ Heat treatment
Sources: Company information, IKB Research
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Öööööööööööööööööö,,,,,,,,,,,,,,
Strategic Challenges for Wind Energy Foundries24
Market consolidation via
mergers and
acquisitions in the
European wind energy
casting activities?
Joint Ventures of European wind
casting manufactures
for greenfield investments
outside of Europe?
In times of a lower
demand for wind energy
casting products: Is a
higher flexibility in the
work force necessary?
Cost reduction via the
outsourcing of the
finishing activities? Is
it a serious strategy?
Reduction of the
overcapacities for wind
energy casting products
in Europe?
The European energy
costs will rise in the
future. Are investments
into energy efficiency
necessary?
Extension of the non-
wind-energy activities for
a better diversification of
the product portfolio?
Is it helpful to have a
close relationship to one of
the leading wind energy
manufacturers?
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Agenda
Forecast 2025 for the Global Foundry Industry
25
1 Macroeconomic Environment 3
2 Global Wind Energy Market: Development and Forecasts 8
3 Trends in the Competitive Environment 19
4 Forecast 2025 for the Global Foundry Industry 25
5 Appendix 34
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Cast Iron: Growth only in China?
Cast Iron Production from 2000 to 2017 In Detail
Sources: CAEF, Modern Census, IKB Research
26
in mill. tons➢The global iron cast production rose from 54.5 million metric
tons in the year 2000 to over 85 million tons in 2017
➢ In 2000, China produced around 9.9 million tons of iron cast
products in total. Until 2017, the country expanded its foundry
production output to around 41 million tons
➢During the same time, the cast iron production in the rest of the
world stabilized
➢While some of the leading producers in the western world
(e.g. USA, Japan, France, Italy) as well as Russia lost market
shares, the production in some emerging markets (e.g. India,
Brazil, Turkey) expanded
➢Between 2000 and 2017 the output of grey iron cast rose by
around 40 % while the production volume of ductile iron cast
doubled worldwide to around 27 million tons. The steel cast
production grew by 65%
➢China showed a similar trend: While grey cast nearly
quadrupled, the output of ductile iron cast sextupled and the
steel cast output became three times higher
0
10
20
30
40
50
60
70
80
90
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Rest of the World China
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Aluminum Cast Production on a stable Growth Path
Cast Aluminum Production from 2000 to 2017 In Detail
27
in mill. tons➢The global aluminum foundry production rose from
8 million metric tons in the year 2000 to 19 million tons in
2017
➢China’s aluminum cast output equaled only 0.8 million
tons in 2000
➢But in the year 2017 the Chinese aluminum foundries
manufactured a new all-time record with 7.3 million tons of
casting products: Within 17 years their aluminum foundry
production increased by a factor of over nine
➢ In the rest of the world the aluminum cast output rose from
7.2 million tons to over 12 million tons in 2017
➢While the global growth of the iron cast production
mainly resulted from an increase of the Chinese
production with a stable output level in the rest of the world,
the aluminum cast production rose in all major regions
of the world
➢Between 2000 and the year 2017 the production level
stabilized in the USA, France and Russia. During the
same period Japan and Italy realized a slight growth of
around 20 per cent, while the German output grew by
around 75 per cent
➢As a result of new plants for aluminum wheel rims the
Turkish foundry production expanded tenfold, while the
Indian output sextupled
0
2
4
6
8
10
12
14
16
18
20
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Rest of the World China
Sources: CAEF, Modern Census, IKB Research
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Global Production of Iron and Ductile Iron Cast stabilizes1)
Sources: World Census, CAEF, IKB forecast; 1) Including Steel Cast
28
NAFTA
China
in mill. tons
Production in Western Europe will move sideways by 2025 with a slight decline from 2020 on
Despite the partly re-industrialization of the US economy and temporary lower energy costs the foundry production in the
NAFTA declined between 2014 and 2016. Development will level off from 2022 onwards
China will dominate the world market but India will catch up. Japan and Korea will lose cast production to these countries
2025
2022
2020
2018
2016
2014
Other Asia
Rest of world
Western Europe Eastern Europe
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Iron Cast recovers in Eastern Europe1)
Sources: World Census, CAEF, IKB forecast; 1) including steel cast
29
In Eastern Europe a large part of growth will take place in Turkey but we also expect a recovery after sharp declines
in Russia and Ukraine
Western European production shows a tendency towards declining volumes. Spain could show stronger growth
We see chances for Germany in case of a stronger recovery of mechanical engineering activities
France
Others
Spain
Germany Eastern Europe
Italy
2025
2022
2020
2018
2016
2014
in mill. tons
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Global Aluminum Cast Production will strengthen
Sources: World Census, CAEF, IKB forecast
30
The trend towards electrical vehicles and light-weight production induces a rising aluminum foundry production
In addition to the higher production volume in Western Europe some of the leading foundry groups invest in Eastern
Europe, too. We see a recovery in Russia and Ukraine and a catching-up process in Turkey
The majority of growth in the NAFTA region will be fueled by investments of foreign OEMs and global foundry groups
Korea and Japan will lose market shares to China
2025
2022
2020
2018
2016
2014
in mill. tons
NAFTA
ChinaWestern Europe Eastern Europe
Other Asia
Rest of world
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European Aluminum Cast Production shows stronger Growth
Sources: World Census, CAEF, IKB forecast
31
For Eastern Europe we see a steady recovery within the next years (e.g. Russia, Ukraine)
In the medium-term an expansion of aluminum rim production in Turkey as well as increased capacities in Slovakia, the
Czech Republic and other countries will stimulate European production
After a strong growth in the past years German aluminum foundries are expected to produce 1.2 million tons from 2018 on
France
Others
Spain
GermanyEastern Europe
Italy
in mill. tons
2025
2022
2020
2018
2016
2014
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Global Copper Casting Production with slight Increase
Sources: World Census, CAEF, IKB forecast
32
The global copper die casting production increased by 11.7 % from 2010 to 2017
By 2025 we expect global copper die casting production to rise to about 1.95 million tons
While copper die casting production will slightly recover in Western Europe and Northern America, more than half of
the global copper die casting production will take place in Asia
in thousand tons
2025
2022
2020
2018
2016
2014
NAFTA
ChinaWestern Europe Eastern Europe
Other Asia
480 437 460 489 489 489
2014 2016 2018 2020 2022 2025
200 214 226 227 227 227
2014 2016 2018 2020 2022 2025
159 197 203 193 183 183
2014 2016 2018 2020 2022 2025
739 800 800 810 810 810
2014 2016 2018 2020 2022 2025
31 29 45 47 49 492014 2016 2018 2020 2022 2025
Rest of world181 175 180 180 180 182
2014 2016 2018 2020 2022 2025
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Strategic challenges of foundries
Globalization
➢ Emerging markets will account for the majority of demand growth
➢ The automotive industry in particular demands local production outside of Europe
➢ Increased requirement of a global presence close to the customer will raise logistics costs
Technological
challenges
➢ Preservation of technology leadership is of high importance, especially for the foundry industry
➢ Pressure on weight reduction will continue (e.g. in automotive and machine construction)
➢ The E-Mobility discussion will significantly change the supply chain, especially in powertrain
Retaining
qualified
personnel
➢ Many qualified employees will retire in the upcoming years (primarily in Western Europe)
➢ Competition for qualified personnel intensifies due to changing demographics
➢ Need for new employee retention programs (e.g. balance between work and family) and training
Investment
requirements
➢ Trend towards delivery of completely processed castings will demand corresponding investment
➢ Increased complexity of metal alloy will also demand investment
➢ High costs of energy will have to be managed
Margin
pressure
➢ International competition in vehicle construction will go up
➢ This limits the possibility of cost transfer to the end customer
➢ OEMs could pass on cost pressure to suppliers
Industry
consolidation
➢ Continuation of industry consolidation is expected
➢ Main reasons are globalization pressure and increased investment requirements
➢ Many family businesses face problems in terms of company succession in our point of view
The global foundry industry is facing increased investment requirements. In combination with technological changes this
should intensify industry consolidation
33
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Agenda
Appendix
34
1 Macroeconomic Environment 3
2 Global Wind Energy Market: Development and Forecasts 8
3 Trends in the Competitive Environment 19
4 Forecast 2025 for the Global Foundry Industry 25
5 Appendix 34
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Iron Cast in Asia: India with high Growth Potential1)
Sources: World Census, CAEF, IKB forecast; including steel cast
35
The Indian foundry industry will have a high growth potential: The infrastructure has an enormous investment backlog in
relation to China and an improving car production will induce a rising demand for foundry products
The loses of car manufacturing in South Korea and Japan to Chinese car production plants result in a declining iron
cast output, which cannot be compensated by other customer segments
From 2020 on the increasing importance of electrical vehicles will reduce the casting output in China
India
China
Japan
Republic of China (Taiwan)
South Korea
Other Asia
2025
2022
2020
2018
2016
2014
in mill. tons
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Asian Aluminum Cast Production on further Growth Path
Sources: World Census, CAEF, IKB forecast
36
The Chinese aluminum cast production shows a continuously strong growth. The main driver is the demand from the car
manufacturing industry. In addition we see a substitution of iron cast by aluminum foundry parts in the mechanical
engineering industry
India will catch up, but will start from a relatively low level
The production level in Japan and South Korea will remain relatively constant
India
China
Japan
Republic of China (Taiwan)
South Korea
Other Asia
in mill. tons
2025
2022
2020
2018
2016
2014
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Your Contacts37
Dr. Heinz-Jürgen BüchnerManaging Director, Industrials & Automotive
IKB Deutsche Industriebank AG
Eschersheimer Landstraße 121
60322 Frankfurt am Main
Phone: +49 69 79599-9602
Mobile: +49 171 2249517
E-Mail: [email protected]
Dennis Rheinsberg, CFAVice President, Industrials & Automotive
IKB Deutsche Industriebank AG
Wilhelm-Bötzkes-Straße 1
40474 Düsseldorf
Phone: +49 211 8221-4305
Mobile: +49 172 5236245
E-Mail: [email protected]
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Disclaimer38
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Kenntnisse und Sachverstand verfügen, um Entscheidungen über ihre Geldanlage und die Inanspruchnahme von Wertpapier(neben)dienstleistungen zu treffen und die damit verbundenen Risiken angemessen beurteilen zu
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Managing Director Industrials, Automotive & Services
Tel.: +49 69 79599-9602
© 2019
Herausgeber: IKB Deutsche Industriebank AG, Wilhelm-Bötzkes-Straße 1, 40474 Düsseldorf
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Vorstand: Claus Momburg, Dr. Jörg Oliveri del Castillo-Schulz, Dirk Volz
Vorsitzender des Aufsichtsrats: Dr. Karl-Gerhard Eick
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