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©2013 Metal Bulletin Research www.metalbulletinresearch.com 1 1
METAL-EXPO
MBR Tube and Pipe Group
14 November 2013, Moscow
Roman Filimonov Consultant, MBR London
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 2
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 on any prices or other information published by us is at your
sole risk. Neither we nor any of our providers of information make any representations or warranties, express or implied as to the accuracy,
completeness or reliability of any advice, opinion, statement or other information forming any part of the published information or its fitness or
suitability for a particular purpose or use. Neither we, nor any of our officers, employees or representatives shall be liable to any person for any
losses or damages incurred, suffered or arising as a result of use or reliance on the prices or other information contained in this publication,
howsoever arising, including but not limited to any direct, indirect, consequential, punitive, incidental, special or similar damage, losses or
expenses.
We are not an investment advisor, a financial advisor or a securities broker. The information published has been prepared solely for
informational and educational purposes and is not intended for trading purposes or to address your particular requirements. The information
provided is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, commodity, financial product, instrument or other
investment or to participate in any particular trading strategy. Such information is intended to be available for your general information and is
not intended to be relied upon by users in making (or refraining from making) any specific investment or other decisions. Your investment
actions should be solely based upon your own decisions and research and appropriate independent advice should be obtained from a suitably
qualified independent advisor before making any such decision.
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Introduction of the new Tube & Pipe group at MBR
Market review
Our products
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 4 www.metalbulletinresearch.com/tube
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 5
• Introduction
• Latest Developments:
• What fundamentals are shaping US scrap prices?
• US obsolete (shredded) and prime (busheling) grades, are they accurately priced?
• What market dynamics are impacting the US West Coast market?
• How have European scrap price trends developed in comparison?
• Forecasts:
• What will drive US finished steel consumption in 2014/15?
• What will be the consequential impact on scrap consumption and prices?
• Conclusions
• New MBR products:
• MBR Steel Scrap & Metallics Forecaster
• Strategic Outlook to the Global Ferrous Scrap Industry out to 2021
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 6
Introduction of the new Tube & Pipe group at MBR
Market review
Our products
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 7
Market review
Global tube and pipe market overview
OCTG market
North America
Middle East and North Africa
Large diameter line pipe market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 8
Market review
Global tube and pipe market overview
OCTG market
North America
Middle East and North Africa
Large diameter line pipe market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 9
Global tube and pipe production from 2002 – 2013 (Mt)
0%
2%
4%
6%
8%
10%
12%
0
20
40
60
80
100
120
140
160
180
(LHS) Tube & pipe production Tube & pipe % of total steel
Global steel tube output reached 151 Mt in
2012, from 142kt in the previous year
Steel tube and pipe production has grown at a
faster rate than steel production, with a CAGR
of 7.2% for the last decade combined to a
CAGR of 5.52% for steel
Consequently the share of tube and pipe from
total steel production has grown in the last 2
years by 2%
Global tube and pipe market
Source: WSD, Stahlrohr, MBR
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Tube & pipe production (kt): China vs the Rest of the World (Mt)
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Rest of the World China
Tube & Pipe production growth in China has
completely changed the global market in a less
then decade
As of 2012 China’s production reached 76 Mt
accounting for a half of the global total
Production outside of China has not changed
since 2011 after recovering from the decline in
2009 due to the economic crisis
China’s tube & pipe production has grown at a
CAGR of 19% for the last decade and at
nearly 20% in 2012
Global tube and pipe market
Source: WSD, Stahlrohr, MBR
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Tube and pipe market broken down by key end-use sectors in 2012 (Mt)
OCTG smls 9%
OCTG wld 3%
LDP LSAW 6%
LDP HSAW 5%
LP smls 2%
LP ERW 5% Other industrial
70%
Oil & gas related tubular products accounted
for 30% of the total global tube & pipe
consumption in 2012
This segment also offers one of the
highest margins to producers
At the same time the segment is one of
the most difficult to penetrate as it poses
increasingly difficult technological
challenges
Oil Country Tubular Goods (OCTG) is
the largest oil and gas segment with a
12% share followed by large diameter
line pipe (LDP) at 11% and small &
medium diameter line pipe at 7%
Global tube and pipe market
Total = 151 Mt
Source: Stahlrohr, MBR
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 12
Market review
Global tube and pipe market overview
OCTG market
North America
Middle East and North Africa
Large diameter line pipe market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 13 Source: Company information, ISSB and MBR
Global OCTG consumption split by key region (Mt)
China
5Mt
CIS
2.4Mt N. America
6.6Mt
MENA
1.8 Mt
OCTG market
Welded OCTG
Seamless OCTG
Total shipments = 18.4Mt
The USA is
unique in that
it is the only
market
worldwide
where welded
ERW is
accepted to
the same level
as seamless
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 14 Total shipments ~ 12.7Mt
Estimated apparent consumption of seamless OCTG by region in 2012 (Mt)
3
1.6
MENA
China
CIS
N. America
OCTG market
Source: Company information, ISSB and MBR
2
4.9
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 15
Market review
Global tube and pipe market overview
OCTG market
North America
Middle East and North Africa
Large diameter line pipe market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 16
52%
60%
69% 52% 49% 47%
0
1000
2000
3000
4000
5000
6000
7000
8000
2007 2008 2009 2010 2011 2012
Seamless Welded
Total US OCTG shipments 2007-2012 (kt)
The US OCTG market has shown a strong
recovery since 2009 mostly driven by the shale
revolution
The market is a heavy user of ERW which
accounted for 53% of the total OCTG
consumption in 2012
Annual US Natural Gas Production and Projected Production
by Gas Type
OCTG market - USA
Source: EIA, ISSB and MBR
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 17 Source: Preston Pipe, ISSB and MBR
US Seamless OCTG consumption by origin 2007-2012 (kt)
48% 33%
36%
50% 50% 46%
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2007 2008 2009 2010 2011 2012
Local production Austria Canada Japan Mexico Germany India Argentina China Other
Mexico, Argentina, Japan, Canada and
India have all seen exports to the USA
increase by more than 100ktpy in 2012
vs 2007
500
1000
1500
2000
0 to 4" 4 to 8" 8 to 12" 12 - 16" 16" +
US seamless OCTG apparent consumption by
diameter in 2012 (kt)
The US seamless OCTG market has been
consistently dominated by imports
China exited the market in 2009 but several
other countries have increased both ERW and
seamless OCTG exports
In terms of diameter there is a shift towards
the smaller OCTG diameters vs most other
hydrocarbons producing regions
OCTG market - USA
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 18
OCTG market - USA
For detailed forecast information please contact our team at MBR
(see slide 33)
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 19
Market review
Global tube and pipe market overview
OCTG market
North America
Middle East and North Africa
Large diameter line pipe market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 20
MENA OCTG demand from 2004 – 2012 (kt)
Source: Interviews, ISSB and MBR
200
400
600
800
1000
1200
1400
1600
1800
2004 2005 2006 2007 2008 2009 2010 2011 2012
Seamless Welded
OCTG market - MENA
Total OCTG demand in the
MENA market in 2012 was
1.61Mt, the highest it has ever
been with ERW OCTG
accounting for 6%
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 21
200
400
600
800
1000
1200
1400
1600
1800
2004 2005 2006 2007 2008 2009 2010 2011 2012
Saudi Arabia UAE Oman Kuwait
Qatar Bahrain Iran Iraq
Egypt Algeria Others
MENA Seamless OCTG demand by end-use market (kt)
Source: ISSB, various and MBR
Others = Syria, Yemen, Tunisia, Morocco etc.
MENA ERW OCTG demand by end-use market (kt)
0
20
40
60
80
100
120
140
160
180
200
2004 2005 2006 2007 2008 2009 2010 2011 2012
Saudi Arabia UAE Oman Kuwait
Qatar Iran Iraq Egypt
Algeria Others
OCTG market - MENA
Seamless OCTG demand
reached a new high in 2012 as
demand noticeably picked up in
Iran, Egypt and Oman
ERW OCTG did not follow the
same trend with demand falling
in 2012 in MENA
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 22
Saudi
Arabia
Algeria
Iran
Source: MBR
There is only one established seamless OCTG pipe mill in the MENA region, JESCO –
ArcelorMittal will join in Q1 2014
Existing mills
Mills under construction
OCTG market - MENA
Esfarayen Seamless Pipe 250kt capacity (prod signf lower – not sigf
OCTG)
1.9-16” OD
JESCO
400kt capacity
5 ½ - 16” OD
ArcerlorMittal
4 ½ - 16” OD 650kt capacity - exp Q1 2014
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 23
OCTG market - MENA
For detailed forecast information please contact our team at MBR
(see slide 33)
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 24
Market review
Global tube and pipe market overview
OCTG market
North America
Middle East and North Africa
Large diameter line pipe market
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Market Analysis | Forecasting | Price Movements | Archive | Breaking Views | 24/7 Online Access
©2013 Metal Bulletin Research www.metalbulletinresearch.com 25 Source: Company data, ISSB and MBR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
North America
South America
EU Middle East
CIS China Other Asia
HSAW LSAW
Market split between LSAW and HSAW in each region in 2012 (%)
More than 95% of all large-diameter pipe
consumed in the CIS in 2011 was LSAW
Nearly 70% of large-diameter pipe
consumed in North America being SSAW
LDP market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 26
0
2000
4000
6000
8000
10000
12000
2008 2009 2010 2011 2012
North America South America Middle East
Africa CIS Europe
Asia ex China China
Global LSAW production by region 2008 – 2012 (kt)
5000
10000
15000
20000
25000
30000
2008 2009 2010 2011 2012
North America South America MENA
CIS Europe Other Asia
China
Global LSAW capacity by region 2008 – 2012 (kt)
CAGR = 6.9%
Source: Company interviews and MBR estimates
LDP market
2011 global LSAW production hit 11Mt but dropped by 20% to 8.7 Mt in 2012. Capacity for LSAW pipe making has
exceeded 24Mt – over the last five years capacity has outpaced production in its growth
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 27
2000
4000
6000
8000
10000
12000
14000
16000
18000
2008 2009 2010 2011 2012
China Other Asia CIS
EU MENA North America
South America
13M
Global HSAW capacity by region (kt)
The HSAW market has also dropped in 2012 by more than 10% while capacity has risen moderately.
North America and China are leading HSAW capacity growth
Source: Company interviews and MBR estimates
1000
2000
3000
4000
5000
6000
7000
8000
9000
2008 2009 2010 2011 2012
North America South America Middle East
Africa CIS EU
Other Asia China
Global HSAW production by region (kt)
CAGR =9.3%
LDP market
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 28
change y-o-y, %
2010/2011 2011/2012
North America -0.4 0.6
ME & Aafrica -0.2 0.5
South America 0.6 -0.1
Other Asia -0.4 -0.1
China 0.4 -0.3
CIS 0.1 -0.4
EU -0.1 -0.6
0
500
1000
1500
2000
2500
3000
3500
4000
2010
2011
2012
Source: MBR, ISSB
Global LSAW consumption 2010 – 2012 (kt)
Companies directing their marketing efforts globally
have more chances to mitigate a negative impact of
such a decline at a single (domestic) market
LDP market
The CIS market along with
the EU and Chinese market
saw a severe drop in LSAW
line pipe consumption in 2012
vs 2011 – at the same time
Middle East and North
American consumption have
increased
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 29
OCTG market - MENA
For detailed forecast information please contact our team at MBR
(see slide 33)
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 30
Introduction of the new Tube & Pipe group at MBR
Market review
Our products
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 31
Metal Bulletin Research (MBR) has published a
timely study, A Strategic Prospects for the Global
Transmission Linepipe Market by type, syze and
grade.
The study is the first of this kind and offering expert
analyses and forecasting including:
How will linepipe develop by grade, size and
application?
What is pipeline growth by region for new
build and replacement?
How will linepipe prices evolve as a result?
NEW REPORT COMING IN EARLY 2014
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 32
Available off the shelf reports:
The Five Year Outlook for the Global OCTG Industry
Strategic Prospects for the Global Tramsmission Linepipe
Market by type, size, range and grade
The Five Year Strategic Outlook for the Global Large-
diameter Linepipe Market
The Five Year Strategic Outlook for the Small-diameter
Linepipe Market (under 16" OD)
A Strategic Outlook for the OCTG Heat Treatment,
Threading, Coupling and Premium Connection Sectors out
to 2020
Monthly publications:
Welded Tube and Pipe monthly market tracker
Seamless Tube and Pipe monthly market tracker
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©2013 Metal Bulletin Research www.metalbulletinresearch.com 33
Contact details for further information:
Metal Bulletin Research
Nestor House, Playhouse Yard, London EC4V 5EX
+44 (0)20 7779 7999
Europe/
MENA/
Asia
James Ley
+44 207 779 8521
[email protected]
Kim Leppold Roman Filimonov
Americas CIS
Roman.filimnonov@metalbulletinresearc
h.com
[email protected]
+1 610 404 0801 +44 207 827 6443