Wind Energy 2025: Chances and Challenges for the global ......Wind Energy 2025: Chances and Challenges for the global Foundry Industry Düsseldorf, 26 June 2019 Dr. Heinz-Jürgen Büchner

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





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

7

8

9

10

11

12

13

14

15

16

4

5

6

7

8

9

10

11

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

0

20

40

60

80

100

120

140

160

2007 2009 2011 2013 2015 2017 2019

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Agenda

Forecasts

8





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

9

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

10

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

11

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

12

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

2

4

6

8

10

12

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

14

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

15

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➢ 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

16

➢ 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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Source: CapitalIQ; all in Euro

17

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

c-1

7

Feb

-18

Apr-

18

Jun-1

8

Aug-1

8

Oct-

18

De

c-1

8

Feb

-19

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

-18

Apr-

18

Jun-1

8

Aug-1

8

Oct-

18

De

c-1

8

Feb

-19

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

18

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Agenda

Trends in the Competitive Environment

19





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


➢ 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


between 25,000 and 40,000 tons


up to 50 tons (for wind cast products)

➢ Maximum mould box size:

7,000 x 4,500 x 15,000 mm

➢ Machining


➢ Heat treatment

➢ Maximum capacity estimated at

50,000 tons


estimated at 15,000 tons

➢ Maximum component weight

up to 160 tons

➢ Mainly nodular graphite iron cast and

steel cast

➢ Design

➢ Machining


➢ Heat treatment

GMH Friedrich

Wilhelms Hütte

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Overview: Castings for Wind Turbines (2/3)22


➢ 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


up to 30 tons

➢ Parts for wind energy and rolling

stocks are the core activities of the

group


➢ 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


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


➢ 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


➢ Heat treatment

➢ Engineering


http://www.silbitz-group.com/

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Overview: Castings for Wind Turbines (3/3)23


➢ Maximum capacity estimated at up to

20,000 to 30,000 tons

➢ Founded as a cooperative

organization


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


up to 50 tons

Wec 1: 2 to 15 tons

Wec 2: 12 to 50 tons

➢ Machining

➢ Design


➢ Maximum capacity in one foundry of

20,000 tons


estimated at around 10,000 tons


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


➢ Maximum capacity of 20,000 tons


estimated at less than 8,000 tons


➢ 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


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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





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


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


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

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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


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

Diese Werbemitteilung und die darin enthaltenen Informationen begründen weder einen Vertrag noch irgendeine Verpflichtung und sind von der IKB Deutsche Industriebank AG ausschließlich für (potenzielle) professionelle

Kunden und Geeignete Gegenparteien mit Sitz und Aufenthaltsort in Deutschland bestimmt, die auf Grund ihres Berufes/Aufgabenstellung mit Finanzinstrumenten vertraut sind und über ausreichende Erfahrungen,

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

können. Außerhalb Deutschlands ist eine Verbreitung untersagt und kann gesetzlich eingeschränkt oder verboten sein.

Die Inhalte dieser Werbemitteilung stellen weder eine Anlageberatung noch eine individuelle Anlageempfehlung oder eine Einladung zur Zeichnung oder ein Angebot zum Kauf oder Verkauf von Wertpapieren oder sonstigen

Finanzinstrumenten dar. Die Werbemitteilung wurde nicht mit der Absicht erarbeitet, einen rechtlichen, steuerlichen oder bilanziellen Rat zu geben. Es wird darauf hingewiesen, dass die steuerliche Behandlung einer

Transaktion von den persönlichen Verhältnissen des jeweiligen Kunden abhängt und künftigen Änderungen unterworfen sein kann. Stellungnahmen und Prognosen stellen unverbindliche Werturteile zum Zeitpunkt der

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Investoren sollten die Informationen, die in dem möglicherweise veröffentlichten Wertpapierprospekt enthalten sind, einschließlich und insbesondere des Abschnitts „Risikofaktoren“ sorgfältig prüfen und eine

Investitionsentscheidung gegebenenfalls erst nach einem ausführlichen Beratungsgespräch durch einen Anlageberater treffen.

Die vorliegende Werbemitteilung ist urheberrechtlich geschützt. Das Bearbeiten oder Umarbeiten der Werbemitteilung ist untersagt. Eine Verwendung der Werbemitteilung für gewerbliche Zwecke, auch auszugsweise, ist

nur mit vorheriger schriftlicher Zustimmung der IKB Deutsche Industriebank AG zulässig.

Ansprechpartner in der IKB Deutsche Industriebank AG

Wilhelm-Bötzkes-Straße 1

40474 Düsseldorf

Telefon +49 211 8221-0

Dr. Heinz-Jürgen Büchner

Managing Director Industrials, Automotive & Services

Tel.: +49 69 79599-9602

© 2019

Herausgeber: IKB Deutsche Industriebank AG, Wilhelm-Bötzkes-Straße 1, 40474 Düsseldorf

Vorsitzender des Vorstands: Dr. Michael H. Wiedmann

Vorstand: Claus Momburg, Dr. Jörg Oliveri del Castillo-Schulz, Dirk Volz

Vorsitzender des Aufsichtsrats: Dr. Karl-Gerhard Eick

Aufsichtsbehörde: Bundesanstalt für Finanzdienstleistungsaufsicht, Graurheindorfer Straße 108, 53117 Bonn und Marie-Curie-Straße 24-28, 60439 Frankfurt am Main, www.bafin.de

Sitz der Gesellschaft: Düsseldorf

Handelsregister des Amtsgerichts Düsseldorf B Nr. 1130

Umsatzsteueridentifikationsnummer: DE 121298843

Wind Energy 2025: Chances and Challenges for the global ......Wind Energy 2025: Chances and Challenges for the global Foundry Industry Düsseldorf, 26 June 2019 Dr. Heinz-Jürgen Büchner

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