Stainless Steel Market Outlook STI/SPFA Winter 2010 meeting www.outokumpu.com
Where Stainless fits
Stainless steel as a material
Market Outlook
Key Data & Raw Materials Outokumpu in brief
2 | January 26, 2010
Not all steel is stainless – but it is growing the fastest of all metals STAINLESS STEEL PRODUCTION ~27 MTPA ABOUT 2% OF ALL STEEL
INDEX 400 350 300 250 200 150 100 50 0 80
CARBON STEEL PRODUCTION ~1 347 MTPA
3 | January 26, 2010
85
90
95
00
Stainless
Aluminium
Copper
Carbon Steel
OECD IP
Nickel
05
Where Stainless fits
Stainless steel as a material
Market Outlook
Key Data & Raw Materials Outokumpu in brief
4 | January 26, 2010
Stainless steel – unique properties • • • • • •
Corrosion-resistant High-strength Hygienic Aesthetic Fully recyclable and the most recycled material in the world Maintenance free: low life-cycle costs
5 | January 26, 2010
Stainless steel is one of the key building blocks of sustainable future •
Sustainability
•
•
Less resources needed
•
•
Stainless steel is durable and recyclable High strength requires less material
Excellent enabler for
• • • • •
Clean technologies Better hygiene and health Development of renewable energy sources Supply of water for a growing population Improved safety
6 | January 26, 2010
Stainless steel for various industries • •
• •
Architectural, building and construction Chemical and petrochemical industries such as oil and gas, pharmaceuticals and energy sector Process industries and resources such as water treatment and desalination, pulp and paper and engineering Transportation Catering and appliances
•
Future applications
•
• • • •
Safe and clean transports Green energy Clean water Clean air
7 | January 26, 2010
TOTAL STAINLESS STEEL USE 2007
Variety of stainless steels • • •
Stainless steel is made of iron by adding chromium; also nickel and other alloying elements can be used All grades of stainless steel contain a minimum of 10.5% of chromium Stainless steel grades have different chemical compositions and properties
• • • •
•
Corrosion resistance Strength Weldability Formability
Desired look and characteristics by different surface finishes
8 | January 26, 2010
Austenitic Austenitic (Nickel-containing)
Duplex (Low-nickel)
Ferritic (Non-nickel)
Where Stainless fits
Stainless steel as a material
Market Outlook
Key Data & Raw Materials Outokumpu in brief
9 | January 26, 2010
US Stainless market update; February 2010
• • • • • •
Projects are slowly being released Special Grades demand still weak A significant portion of the US manufacturing sector has been stagnant or in a recession for twenty eight months. A small bounce has begun. Distributors are only buying what they need to sell this month – few orders / small item quantities MSCI order activity; December ytd down 25% MCSI Inventory Reports; 2.5 months supply; tons are very low
US Stainless market update; February 2010
• •
•
•
Stainless Apparent Domestic Consumption – Oct YTD Sheet & Strip • down 33%; Forecast ’09 below 1 mil tons; lowest since 1991 • Imports at 22% (from 35% in ’08 and high 20’s in ’06 & ’07) • Forecast 2010 +20% Plate • down 29%; Forecast ’09 below 200kt; lowest since 1992 • Imports at 25% (from mid 30’s last 4 years) • Forecast 2010 +30% Bar • down 39%; Forecast ’09 below 150kt; lowest since 1990 • Imports at 50% (typical level) • Forecast 2010 + 5%
Market Outlook 2010 • • • • • • • •
US 2010F GDP +2.6% Business Fixed Investment +1.2% Industrial Production +4.1% Capacity Utilization up to 69% Consumer Price Index + 1.4% Farm sector weakening Power Gen – continued delays Chem-Petro Chem and Oil & Gas will be M&R driven
Where Stainless fits
Stainless steel as a material
Market Outlook
Key Data & Raw Materials Outokumpu in brief
13 | January 26, 2010
Global manufacturing PMI: Decrease to 53.6 Index
• The global manufacturing PMI declined to 53.6 in November, down from 54.4 in October.
65 60
• Despite the headline PMI falling back slightly in November, the global new orders and production indexes remained at elevated levels.
55 50 45 40 35
Output
Source: JP Morgan. Index above 50 indicates that global manufacturing sector is expanding; below 50 indicates that it is contracting
30
New Orders Global PMI
25 98
99
00
01
14 BI FLASH update
02
03
04
05
06
07
08
09
• Manufacturing employment declined for the twentieth month in a row in November. Moreover, the rate of job losses accelerated slightly for the first time since hitting a survey record in February. Lower employment was recorded across the majority of the Western manufacturing sectors, whereas staffing levels rose in emerging markets.
Text source: JPMorgan
US Manufacturing PMI Decline in November to 53.6 65
12.0
60
8.0
55
4.0
50
0.0
45
-4.0
40
-8.0
35
-12.0 Note PMI lagged by 4 months
30 90
92
94
96
98
00
Percent
Index
United States Manfacturing sector PMI and Production
-16.0 02
04
06
08
10
United States, ISM Manufacturing, PMI [lag 4] United States, Production, Manufacturing [c.o.p 12 months] Source: Reuters EcoWin
15 BI FLASH update
• After popping 3.1 points in October, the US manufacturing PMI gave back part of its gains in November, moving down 2.1 points to 53.6. The production index fell 3.4 points to a still very healthy 59.9 and employment decreased 2.3 points to 50.8. • Focusing on the forward looking components of the survey, the internal dynamics were positive, with the new orders index rising from 58.5 to 60.3 and inventories dropping 5.6 points to 41.3, a 3-month low.
Text source: JPMorgan
LME nickel prices and stocks
Prices range $7.00 – 8.50/#, stocks up to 143kt USD/t
Tonnes
LME Nickel Daily Cash Prices and Stocks 2001- 2009
60,000
140,000 50,000 120,000
LME-stocks (RHS) Nickel LME cash (LHS) 40,000
100,000 Data up to Dec 08 Source: LME
80,000
30,000 60,000 20,000 40,000 10,000 20,000
0 2001
16 BI FLASH update
0 2002
2003
2004
2005
2006
2007
2008
2009
Alloying material prices
(up to Dec 8, 2009)
Nickel declined in December then rose in January
Ferrochrome
Nickel 55,000 50,000
2
LME cash, daily
Quarterly Contract price, Metal Bulletin
45,000 40,000
1.5 US D/lb
USD/t
35,000 30,000 25,000
1
20,000 15,000
0.5
10,000 5,000 0 2005
42
0 2006
2007
2008
2005
2009
Molybdenum
2007
2008
2009
Steel scrap 700
38
600
34
500
30 26
U SD/t
USD/lb
2006
22 18
HMS 1&2 fob Rotterdam, Metal Bulletin, daily
400 300 200
14 10
Mo oxideEurope, Metal Bulletin, daily
100 0
6 2005
2006
17 BI FLASH update
2007
2008
2009
2005
2006
2007
2008
2009
Global CR304 prices
European price premium remains wide US D/t
C R 304 tan sactio n p r ice s
7000
G e rm a ny US A
6000
Da ta u p to De c 0 9 ( No v a c tu a l, De c f o r e c a s t)
H o ng K o ng C hina 2 5000
4000 Ch in a = US $ p r ic e s ( s h e e t b a s is ) e x c lu d in g V A T ( 1 7 % ) a n d imp o r t d u ty ( 1 0 % ) . 3000
Source: CRU 2000
1000
1999
2000
18 BI FLASH update
2001
2002
2003
2004
2005
2006
2007
2008
2009
SS 304 & 430 Stainless steel transaction prices vs competing materials
CR copper sheet up, CR carbon sheet down in November EUR/t 9,000 8,000 7,000
SS 304 Sources: SS & carbon = CRU German prices CR Al sheet: CRU CR Cu sheet: MB
SS 430
6,000 CR Copper sheet
5,000 4,000
CR Aluminium sheet Carbon/CR sheet
3,000 2,000 1,000 0 2002 2003 Prices up to Nov 2009
19 BI FLASH update
2004 2005 2006 2007
2008 2009
Carbon/galv sheet
Available Stainless inventories in Service Centers Inventory 850
Months supply
USA Service Centre Stock Development
Service Centre Inventory Stainless - all shapes & sizes
5
Source: MSCI 775 4.5 700 4 625
3.5
550
475 3 400
Inventory (EOM) Months supply (SA)
2.5
325
Volumes are in thousand short ton's 250 2001
2 2002
2003
2004
2005
2006
2007
2008
2009
Where Stainless fits
Stainless steel as a material
Market Outlook
Key Data & Raw Materials Outokumpu in brief
21 | January 26, 2010
Outokumpu is one of the leaders in stainless •
Outokumpu’s melting capacity totals 2.55 million tons and the finished product’s capacity 1.9 million tons
TOP 6 GLOBAL STAINLESS STEEL PRODUCERS IN 2008 SLAB CAPACITY, MILLION TONS
ArcelorMittal
•
Outokumpu market shares
• Stainless steel coil • 18% in Europe • 6% worldwide
• Quarto plate over 20% globally • Duplex grades over 50% globally • 7% in North America – all products
•
Outokumpu’s main markets are
• Europe 78% • North and South America 11% • Asia 8% 22 | January 26, 2010
Acerinox ThyssenThyssen Krupp TISCO
POSCO
Outokumpu 0
1
2
3
4
Outokumpu – full stainless steel offering All products • Coil, sheet and plate • Quarto plate • Thin strip • Tubular products • Long products All grades • Austenites (Nickel containing), incl. High alloyed specials • Duplex (Low nickel) • Ferritics (No nickel) All end use industries • Industry specific offerings • Tailored solutions 23 | January 26, 2010 | SVP – Long Products, Tommy Grahn
Business operations •
North American Production
• • •
•
Import from Europe
• •
•
PMP Round Bar Welded Pipe Cold Rolled Sheet & Coil CMP
What’s our ‘sweet spot’?
• • • •
Special Grades Projects Taylor made solutions Market Development
Outokumpu’s key strengths • • • • •
Fully integrated and globally cost competitive production site in Tornio Leading position in specialty products Strong customer orientation Highly recognized product and process development Focus on continuous improvement and excellence
25 | January 26, 2010
Corporate History & Ownership Consolidation of Swedish Special Steels industry 1980’s
Avesta AB
Merger 1992, BS plc own 40%, gradually increased to 51%
Nationalisation (1960’s)
Merger 2001, initial exchange ratio ASAB shareholders 45%, Outokumpu 55%.
British Steel Stainless
Finnish mining/base metals company, green-field investment in stainless steel production 1975 (Kemi chrome mine).
Outokumpu group acquire 100% in 2002.
