8/13/2019 World Steel
1/26
Global economic outlook and steel demand trends
Eldar Askerov, 23-24 April 2012
8/13/2019 World Steel
2/26
worldsteel what is our role?
worldsteel provides global leadership on all major strategic
issues affecting the industry
worldsteel promotes steel and the steel industry
steel industry: a vital part of society
worldsteel assists its members
to develop the market for steel and to improve their performance managing major projects such as
FutureSteelVehicle
Living Steel
India Steel Vision 2020 and China Steel Vision 2020
worldsteel safety and health principles
2
8/13/2019 World Steel
3/26
Key facts worldsteel today
146 Members:
65 Regular (production > 1.8 Mt)
31 Associate (production < 1.8 Mt)
50 Affiliated (Regional and National Associations and Steel
Research Institutes)
17 of the worlds 20 largest companies are members
Membership HQs are located in over 50 countries
worldsteel headquarters in Brussels, second office in Beijing
Any producer with more than 2 million short tons (1.8 metric) of
crude steel production can become a regular member of
worldsteel
3
8/13/2019 World Steel
4/26
Contents
Long term steel market trends
Global demand for steel in 1950-2010
Post-crisis steel demand recovery EU, US
Emerging markets
Conclusions
4
8/13/2019 World Steel
5/26
5
Long term steel market trends
8/13/2019 World Steel
6/26
6
Steel is a cornerstone
and key driver for the
worlds economy.
8/13/2019 World Steel
7/26
7
0
400
800
1200
1600
1950 1960 1970 1980 1990 2000 2010
Global growth in steel production is linked to human
development
Years Mt
1970 595
1975 644
1980 717
1985 719
1990 770
1995 7522000 849
2005 1,144
2010 1,414
2011 1,527
Source: worldsteel
World crude steel product ion, 1950-2011
8/13/2019 World Steel
8/26
Steel a key driver of the worlds economy
World crude steel production has increased from 851
megatonnes (Mt) in 2001 to 1,527 Mt in 2011. (28.3 Mt in 1900).
The industry directly employs 2 million people worldwide, with a
further 2 million contractors and 4 million in supporting industries.
Considering steels position as the key product supplier to
industries such as automotive, construction, transport, power and
machine goods then using a multiplier of 25:1 the steel industryis at the source of employment for more than 50 million people.
World average steel use per capita has steadily increased from
150 kg in 2001 to 220 kg in 2010.
India, Brazil, Korea and Turkey have all entered the top 10 steel
producers list in the last 40 years.
8
8/13/2019 World Steel
9/26
Regional steel demand breakdown in 1950-2010
Regional structure of steel demand has been changing continuouslyalong with:
Regional economic growth trends
Evolution of global manufacturing base through creation and relocation of industries
Source: worldsteel, SSY
9
Apparent crude steel use in 1950-2010
0
200
400
600
800
1000
1200
1400
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
China
Asia and Oceania excl China
former USSR
North America
EU 15
Africa and Middle East
South America
Other Europe
Mt
8/13/2019 World Steel
10/26
10
58.4% 41.6%
28.7%
41.7% 58.3%
71.3%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Developed Economies Emerging & Developing Economies
Regional share in world steel demand
Source: worldsteel, SRO
8/13/2019 World Steel
11/26
0
5
10
15
20
25
30
3540
45
50
China
Vietnam
Indonesia
Morocco
India
SouthKorea
Algeria
Singapore
Thailand
Spain
Canada
Argentina
Iran
Russia
SaudiArabia
Philippines
Malaysia
Japan
Poland
Italy
SouthAfrica
Ukraine
Egypt
Turkey
Brazil
EU
15
Germany
UnitedStates
UnitedKingdom
2007
2010
15
20
25
30
35
40
45
50
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
China
Indonesia
Thailand
India
Vietnam
%
Forecast
11
Investments: steel demand driver in developing world
Source: Global Insight
Urbanisation and
development of
manufacturing base
boost steel demand
Fixed investments,% to GDP
Fixed investments in 1980-2015,% to GDP
8/13/2019 World Steel
12/26
Developing world: strong fundamentals for growth
Strong upward population trend with high share of working age population
Strong needs for infrastructure and industries development
12
Source: Global Insight, worldsteel*real 2005 PPP$
Population,million Urbanisation, %
GDP percapita, PPP$*
Steel useper
capita, kg
2011 2020 2011 2020 2011 2020 2010
Brazil 197 210 9,961 14,015 133
Mexico 115 126 76 77 13,224 16,911 140
Turkey 74 81 12,390 16,675 320
Indonesia 242 263 53 61 4,094 6,106 37
Thailand 70 72 34 39 7,648 10,884 202
Vietnam 89 96 30 35 2,981 4,803 141
India 1,241 1,387 30 34 3,195 5,895 52
China 1,347 1,388 51 61 7,503 14,306 427
8/13/2019 World Steel
13/26
8/13/2019 World Steel
14/26
14
Global steel demand growth in 2001-2011
Source: worldsteel
Steel demand landscape has been changed by global economic crisis
Two-speed world: emerging & developing economies vs developed
Global steel demand, ASU finished steel
5.5
0.18.9
-5.0
8.9-0.6
1.8
-6.1 -5.7
-32.9
24.4
3.7
10.4 5.6
12.09.3
14.612.512.9
8.9
12.6
17.8
-40
-30
-20
-10
0
10
20
30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
%
0
100
200
300
400
500
600
700
800900
1,000
1,100
1,200
1,300
1,400
MtWorld, mmtDeveloped Economies, y-o-y % growth
Emerging&Developing Economies, y-o-y % growth
8/13/2019 World Steel
15/26
Regional summary at a glance
Source: worldsteel, SRO
15
Apparent steel use finished steel, Index (2007=100)
40
50
60
70
80
90
100
110
120
130
140
2007 2008 2009 2010 2011
World
CIS
Africa
EU-27
NAFTA
Middle East
Other Europe
Central&South America
Asia&Oceania
8/13/2019 World Steel
16/26
16
IMF GDP Forecast Revisionsfor Advanced Economies
2.62.5
1.4
1.2
1.9
2.62.6
2.0
1.9
2.4
2.52.5
Oct-10 Jan-11 Apr-11 Jun -11 Sep-11 Jan -12 Apr-12
2012 2013
Global economic outlook
6.0
6.56.4
5.7
5.4
6.1
6.66.5
6.5
5.9
Apr-11 Ju l-11 Oct-11 Jan-12 Apr-12
2012 2013
IMF GDP Forecast Revisions forEmerging and Developing Economies
Source: IMF
8/13/2019 World Steel
17/26
In 2012 the world economy is projected to expand by
3.5% (IMF) Downside risks for the forecast:
Sovereign debt crisis in euro zone
Subdued growth as a result of austerity measures Significant slowdown in growth in emerging economies
Chinas hard landing
World GDP, y-o-y, % Industr ial production, y-o-y, %
Source: Global Insight
17
-20
-15
-10
-5
0
5
10
15
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
World
Advanced Economies
Emerging Markets
%
Forecast
-8
-6
-4
-2
0
2
4
6
8
10
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
1Q10
3Q10
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14
3Q14
World
Advanced Economies
Emerging Markets
%
Forecast
8/13/2019 World Steel
18/26
8/13/2019 World Steel
19/26
Is the US economy coming back on growth path?
US: steel using sectors growth, %
Latest data gives some hope that the US is recovering steadily
US construction: housing starts seems to rise but still has a long
way to go
Strong rebound in automotive industry
0
200
400
600
800
1000
1200
1400
1600
Jan-00
Jul-0
0
Jan-01
Jul-0
1
Jan-02
Jul-0
2
Jan-03
Jul-0
3
Jan-04
Jul-0
4
Jan-05
Jul-0
5
Jan-06
Jul-0
6
Jan-07
Jul-0
7
Jan-08
Jul-0
8
Jan-09
Jul-0
9
Jan-10
Jul-1
0
Jan-11
Jul-1
1
Jan-12
0
0.5
1
1.5
2
2.5
New 1 Family Houses Sold: sa: Annual Rate Private Housing Units Started: saar: Total
% %
US: Housing units started andhouses sold, %
Source: CEIC, Oxford economics
19
-30
-20
-10
0
10
20
30
40
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Fabricated metal productsMechanical machinery
Electrical and optical equipment
Motor vehicles
8/13/2019 World Steel
20/26
-10
-5
0
5
10
15
20
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Indonesia Thailand Vietnam Malaisia ASEAN
%
ASEAN: positive perspectives for steel demand
ASEAN: Industrial productiongrowth, %
Indonesia: steel using sectorsgrowth, %
Thailand: steel using sectors2005=100
Source: Global Insight, Oxford Economics
Indonesia: slight slowdown in
2012 after impressive growth in
2011
Thailand: after floods recovery
Region has strong fundamentals
for steel demand growth
Infrastructure improvement
20
0
20
40
60
80
100
120
140
160
180
1Q20
06
3Q20
06
1Q20
07
3Q20
07
1Q20
08
3Q20
08
1Q20
09
3Q20
09
1Q20
10
3Q20
10
1Q20
11
3Q20
11
1Q20
12
3Q20
12
Industrial production Manufacturing Motor vehicles
-30
-20
-10
0
10
20
30
40
1Q2008 3Q2008 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012
Manufacturing Mechanical machinery Fabricated Metal Goods Motor vehicles
%
8/13/2019 World Steel
21/26
21
India
Source: CEIC, Global Insight
0
50
100
150
200
250
300
350
400
450
Apr-05
Aug-05
Dec
-05
Apr-0
6
Aug-06
Dec
-06
Apr-07
Aug-07
Dec
-07
Apr-0
8
Aug-08
Dec
-08
Apr-0
9
Aug-09
Dec
-09
Apr-1
0
Aug-10
Dec
-10
Apr-1
1
Aug-11
Dec
-11
IP: Manufacturing
IP: Capital Goods
IP: Consumer Goods: Durables
India and China: Industrialproduction growth, %
India: Steel using sectors2004-05=100
Current deceleration due to
anti inflationary policy
weak external demand
Long term: economy needs modern infrastructure
0
2
4
6
8
10
12
14
16
18
20
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
China
India
%
8/13/2019 World Steel
22/26
China: deceleration of growth in 2012
Gradual slowdown because of anti inflationary policy and weaker
external demand
Cooling real estate sector
Source: worldsteel
22
YTD Growth Of Auto & Machinery Sectors
Production
-1.8%
47.7%
9.8%
47.5%
-5.7%
-40%
-20%
0%
20%
40%
60%
80%
100%
Jan-0
8
Apr
Jul
Oct
Jan-0
9
Apr
Jul
Oct
Jan-1
0
Apr
Jul
Oct
Jan-1
1
Apr
Jul
Oct
Jan-1
2
Auto mobile Civil metal vessels AC electro moto r
Household refrigerator Room air condioner Household washing machine
YTD Growth Of Construc tion Industry
33.5%
38.2%
27.8%
14.2%
26.6%
35.5%
-10%
0%
10%
20%
30%
40%
50%
Jan-08M
ar
May
Jul
Sept
Nov
Jan-09M
ar
May
Jul
Sept
Nov
Jan-10M
ar
May
Jul
Sept
Nov
Jan-11M
ar
May
Jul
Sept
Nov
Jan-12
FAI in real estate Floor space under construction Cement output
8/13/2019 World Steel
23/26
0
5000
10000
15000
20000
25000
Shanghai
Tianjin
Beijing
Jiangsu
Zhejiang
Guangdong
Shandong
InnerMongolia
Liaoning
Fujian
Jilin
Heilongjiang
Hebei
NationalTotal
Hubei
Chongqing
Henan
Xinjiang
Shaanxi
Shanxi
Hainan
Hunan
Qinghai
Ningxia
Sichuan
Guangxi
Anhui
Jiangxi
Tibet
Yunnan
Gansu
Guizhou
PPP$
Shanghai
TianjinBeijingXinjiang
Gansu
Xizang
Qinghai
Sichuan
Nei Mongol
Yunnan
Heilongjiang
Jilin
Liaoning
Ningxia
Shaanxi
ShanxiHebei
Shandong
Henan
Hubei
Guizhou
Hunan
FujianTaiwan
GuangdongGuangxi
Hainan
Jiangsu
Zhejiang
Jiangxi
Anhui
China: multi-speed growth in provinces
Lessdeveloped
Level ofdevelopmentaccording to
GDP per capita
Developed
Source: Global Insight
China: provincialGDP per capita
23
8/13/2019 World Steel
24/26
Conclusions
Regional structure of global steel demand has been changing over time
due to many different factors including competitiveness of the local
manufacturing, construction activity, population trends.
Despite the deceleration of growth in the post crisis period developing
economies have strong fundamentals for steel demand growth.
Global steel demand has maintained relatively stable recoverymomentum so far despite uncertainties and volatilities in the global
economy.
Evolution of the euro zone crisis and healthy growth of the emergingeconomies, especially of China, are critical to current trends.
24
8/13/2019 World Steel
25/26
25
Steel touches everyaspect of our lives.
No other material hasthe same unique
combination of
strength, formability
and versatility.
8/13/2019 World Steel
26/26
26April 30, 2012 26
worldsteel.org