Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access ©2013 Metal Bulletin Research .

Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access

©2013 Metal Bulletin Research www.metalbulletinresearch.com 1

SEAISI

2013 ASEAN Iron and Steel Sustainability Forum

Global Steel Market Outlook

25-57 November 2013, Jakarta, Indonesia

Atilla Widnell Senior Metals Analyst



Disclaimer:

Prices and other information contained in this presentation have been obtained by us from various sources believed to be

reliable. This information has not been independently verified by us. Those prices and price indices that are evaluated

or calculated by us represent an approximate evaluation of current levels based upon dealings (if any) that may have been

disclosed prior to publication to us. Such prices are collated through regular contact with producers, traders, dealers,

brokers and purchasers although not all market segments may be contacted prior to the evaluation, calculation, or

publication of any specific price or index. Actual transaction prices will reflect quantities, grades and qualities,

credit terms, and many other parameters. The prices are in no sense comparable to the quoted prices of commodities in

which a formal futures market exists.

Evaluations or calculations of prices and price indices by us are based upon certain market assumptions and evaluation

methodologies, and may not conform to prices or information available from third parties. There may be errors or defects

in such assumptions or methodologies that cause resultant evaluations to be inappropriate for use. Your use or reliance

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suitably qualified independent advisor before making any such decision.



Introduction

Latest Developments

Forecasts

Conclusions



Steel news, prices &

analysis

Market Analysis and

forecasts

Company data for metal

and mining industries

Metal news, prices & analysis

Prices for the physical

spot iron ore market



Global news, prices & analysis• Full market coverage

• Editorial locations worldwide

• Over 250 steel prices tracked

• Indices

• Trade logs

• Interviews

• News alerts

• Mobile site

• App coming soon!



• Introduction

• Latest Developments:

• What have been the factors impacting steel consumption in key producing regions?

• How have steel producers responded in adjusting their levels of output?

• Forecasts:

• How will finished steel demand drive crude steel output in 2013/14?

• How will steel raw materials prices shape the outlook for the steel industry?

• Conclusions

• New MBR products:

• MBR Steel Scrap & Metallics Forecaster



Introduction

Latest Developments

Forecasts

Conclusions



-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

European Area GDP Year-on-Year (%)

Source: CEIC, Eurostat

• Economic data highlights that EU European economies have continued to

contract through much of 2013 year-on-year…

• …owing largely to the dour performance of manufacturing industry and the even

poorer health of the construction sectors…

• …as a result of contraction in key steel-intensive sectors, finished steel demand

has continued to suffer from 2012 and into 2013.



Source: World Steel Association, MBR

• Total European crude steel output declined 4.5% year-on-year in 2012…

• …and was almost 20% lower compared to pre-Global Financial Crisis levels

witnessed in 2007…

• …as most mills in this key producing region scaled back output in response to

falling consumption.

• Finished steel demand has continued to suffer through much of 2013 and this has

prompted European steel producers to make further cut backs in output.

• As a result, MBR believe EU crude steel output will decline by almost 2% year-on-

year in 2013.

Jan-

13

Feb-

13

Mar

-13

Apr-1

3

May

-13

Jun-

13

Jul-1

3

Aug-1

3

Sep-

13

Oct-1

3-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

EU 27 Crude Steel Output (M tonnes)



Source: Bloomberg, ISM, CEIC

• At the same time, a similar situation has been witnessed in North America, typified

by key benchmarks in the USA.

• Manufacturing and, particularly, construction and housing sectors have witnessed

waning demand over the same period…

• …and only recently have economic benchmarks begun to turn more positive,

providing support to sentiment in the US steel industry.

• That said, housing and non-residential indicators still lag in their recovery.

Jan-

10

Apr-1

0

Jul-1

0

Oct-1

0

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13

Apr-1

3

Jul-1

3

Oct-1

340

45

50

55

60

65

US Manufacturing PMI



Source: MBR, WSA, AISI

• Meanwhile, US crude steel output has been climbing from a low base at the end of

2012.

• In fact, MBR estimate US crude steel output will fall to 87 million tonnes this year,

from 89 million tonnes in 2012...

• ...owing largely to lower levels of finished steel production in the first half of the

year.

• US crude steel output between January and October 2013 was almost 4% lower

year-on-year...

• ...as steelmakers, particularly EAFs, responded to lower consumption and finished

steel prices by scaling back output.

6,000.0

6,500.0

7,000.0

7,500.0

8,000.0

8,500.0

6500%

7000%

7500%

8000%

8500%

9000%

US Crude Steel Output (M tonnes) vs. Capacity Utilisation

(%)



Source: MBR, WSA

• In Japan, however, increased government spending, economic stimulus packages

and the access to cheaper capital have spurred on construction programmes…

• …and, as a result, Japan’s construction orders for the biggest 50 companies and

total domestic housing starts have enjoyed a jubilant 2013.

-20%

0%

20%

40%

60%

80%

100%

Japan Construction Orders Year-on-Year (%)



Source: MBR, World Steel Association

• Consequently, Japanese crude steel production has climbed in tandem with

improved domestic finished steel demand.

• At the same time, a sharp depreciation in the Japanese Yen has also made

finished steel exports more cost competitive to consumers in South East Asia.

• Therefore, MBR estimate that domestic crude steel output will climb by almost 3%

year-on-year in 2013.

7,500.0

8,000.0

8,500.0

9,000.0

9,500.0

10,000.0

Japan Crude Steel Output (M tonnes)



Introduction

Latest Developments

Forecasts

Conclusions




• Total European crude steel output declined 4.5% year-on-year in 2012…

• …and was almost 20% lower compared to pre-Global Financial Crisis levels

witnessed in 2007.

• Finished steel demand has continued to suffer in 2013 and this has prompted

European steel producers to maintain cut backs in output in early 2013.

• Looking forward, however, manufacturing and industrial production benchmarks

have continued to improve through 2013...

• …and we look to be ending this year on a more stable footing, driving our

forecasts for stronger steel consumption and production in 2014.

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

50

100

150

200

250

EU 27 Crude Steel Output (M tonnes)



Source: MBR, OEF

• In 2014, MBR expects that improving growth in US industrial production and

housing starts ...

• ...will prompt domestic steel producers to raise output to meet strong end-user

consumption in key steel-intensive sectors.

• This in turn is expected to lead to a 3% increase in US crude steel production next

year, compared to the previous year.

2010

2011

2012

2013

2014

2015

0%

100%

200%

300%

400%

500%

600%

0%

5%

10%

15%

20%

25%

30%

35%

US Industrial Production vs. Housing Starts Growth Year-on-

Year (%)

Industrial Production LHS

Housing Starts RHS




• MBR forecast total US crude steel production will climb to 90 million tonnes in

2014, from an estimated 87 million tonnes in 2013…

• ...owing partly to higher capacity utilisation rates at scrap-intensive electric arc

furnace steel mills producing both flat and, in particular, long products…

• as mills raise output to meet improving demand from the automotive and

construction sectors next year.

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

20

40

60

80

100

120

US Crude Steel Output (M tonnes)




• Japanese steel output is expected to climb almost 3% in 2013 year-on-year, driven

largely the improved demand from the construction sector which has benefited from

government spending programmes.

• MBR believe domestic demand for finished steel will continue to climb in 1H 2014,

as consumption is brought forward before the tax hike in April 2014.

• Thereafter, MBR anticipate steel consumption growth will slow in 2H 2014.

Looking forward, we forecast that steel production will continue to struggle to reach

pre-global financial crisis levels in the next 5 years.

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

0

20

40

60

80

100

120

140

Japan Crude Steel Output (M tonnes)



Introduction

Latest Developments

Forecasts

Conclusions



• Conclusions:

• What have been the factors impacting steel consumption in key producing regions?

• Poor industrial production, manufacturing and even dour construction activity

• How have steel producers responded in adjusting their levels of output?

• Lower overall steel output in the USA and Europe in 2013 vs. 2012

• How will finished steel demand drive crude steel output in 2013/14?

• 2013 finishing strongly and expect to witness firm year-on-year growth in 2014

• How will steel raw materials prices shape the outlook for the steel industry?

• New DRI/HBI output will make some US steel producers more cost competitive





Thank you for your attention

Questions & Answers



Contact details for further information:

Metal Bulletin Research

Nestor House, Playhouse Yard, London EC4V 5EX

+44 (0)20 7779 7999

Atilla Widnell

Senior Metals Analyst

+44 (0)20 7827 6480

[email protected]

mailto:[email protected]

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