eu steel market in 2016
TRANSCRIPT
THE STEEL INDEX (TSI)
European steel market – current dynamics and expectations for 2016
www.thesteelindex.com
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Introduction to TSI
TSI is a specialist price information service
• Impartial organisation focused on compiling prices for ferrous metal products
• Founded in in 2006 as subsidiary of the Steel Business Briefing (SBB) Group, acquired by Platts in July 2011
• Continues to operate under TSI brand as a separate unit within Platts, part of S&P Global
• Data-driven methodology using transaction data to calculate volume-weighted price indices
• TSI “Data Providers” submit spot transaction data to TSI under confidentiality agreement; physical market participants only (over 600 registered today)
• Submission direct to TSI database through secure on-line channel
• Data normalised and “cleaned”, minimising opportunities for manipulation/data bias
• Volume-weighted averages calculated for the day or week based on actual spot market transaction data
Slow Economic Growth
EU GPD Growth ( % change y-o-y)
44.0
46.0
48.0
50.0
52.0
54.0
56.0
58.0
Ja
n-1
4
Ma
r-14
Ma
y-14
Ju
l-14
Se
p-1
4
No
v-14
Ja
n-1
5
Ma
r-15
Ma
y-15
Ju
l-15
Se
p-1
5
No
v-15
Ja
n-1
6
Ma
r-16
Eurozone Germany Italy France
Eurozone Manufacturing PMI
Source: Markit Source: EC Spring 2016 forecast
European Commission: ‘Economic growth in Europe is expected to remain modest as key trading partners' performance has slowed and some of the so far supportive factors start to wane. As a result, GDP in the euro area is forecast to continue growing at modest rates over the 2015-2017 period.’
Eurozone Manufacturing PMI April 2016, Markit: ‘The PMI has now edged higher for two successive months, but has improved only marginally from what was a worryingly low base earlier in the year.’
0.47
-4.37
2.07 1.76
-0.48
0.22
1.36 2.0
1.8
1.9
-5
-4
-3
-2
-1
0
1
2
3
2008 2009 2010 2011 2012 2013 2014 2015 2016 (f)2017 (f)
European Steel Demand
12.81
11.77 11.55 12.10
13.19
13.98
8
9
10
11
12
13
14
15
2011 2012 2013 2014 2015 2016 (f)
Passenger Car Sales, Western Europe (million units)
Source: LMC Automotive
• The automotive sector is the strongest performing steel-using sector in Europe, and demand is expected to remain strong in 2016
• Construction activity during January-March 2016 is higher than last year, although production is trending down. Better performance of the residential construction sector compared to a more steel-intensive civil engineering sector
European Construction Production, Index, 2010=100
Source: Eurostat
80
85
90
95
100
105
110
115
Ja
n-1
5
Fe
b-1
5
Ma
r-15
Ap
r-15
Ma
y-15
Ju
n-1
5
Ju
l-15
Au
g-1
5
Se
p-1
5
Oc
t-15
No
v-15
De
c-1
5
Ja
n-1
6
Fe
b-1
6
Ma
r-16
EU-28 Germany France
European Steel Demand
Source: BDS
German Association of Steel Distribution (BDS): in December 2015 flat steel inventories held by German distributors fell to 1.24 million tonnes, the lowest level since December 2003. Stock levels recovered in 2016, growing by 11% by April 2016 German Steel Federation: order intake for rolled steel by German mills increased by +3.2% y-o-y in Q1 2016, and by 18% q-o-q
0
2
4
6
8
10
12
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Domestic EU-28 Other Foreign
Source: WV Stahl
German Distributors’ Flat Steel Inventories (million tonnes)
German Producers’ Order Intake (million tonnes)
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Ja
n-1
3
Ma
r-13
Ma
y-13
Ju
l-13
Se
p-1
3
No
v-13
Ja
n-1
4
Ma
r-14
Ma
y-14
Ju
l-14
Se
p-1
4
No
v-14
Ja
n-1
5
Ma
r-15
Ma
y-15
Ju
l-15
Se
p-1
5
No
v-15
Ja
n-1
6
Ma
r-16
European Steel Production
Source: WSA
EU Crude Steel Production (‘000 tonnes)
• In response to lower prices in the second half of 2015, European steel mills reduced their output
• YTD 2016 – EU crude steel production is 54 million tonnes, down 7% y-o-y
• German Steel Federation – hot rolled production in the country in January-March 2016 is down 6.2% y-o-y, while flat products output is down by 5.4% y-o-y
9,000
10,000
11,000
12,000
13,000
14,000
15,000
16,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2015 2016
EU Steel Imports
China’s Steel Exports to the EU (million tonnes)
Source: China Customs
0
0.2
0.4
0.6
0.8
1
1.2
Ap
r-14
Ju
n-1
4
Au
g-1
4
Oc
t-14
De
c-1
4
Fe
b-1
5
Ap
r-15
Ju
n-1
5
Au
g-1
5
Oc
t-15
De
c-1
5
Fe
b-1
6
Italy Rest of EU
EU Flat Steel Imports vs. Exports (million tonnes)
Source: Eurofer
• Eurofer: Flat steel imports into the EU in 2015 totalled 18.67 million tonnes (up 29% y-o-y), Jan-Mar 2016 – 5.2 million tonnes (up 23% y-o-y)
• Main exporters of HRC into the EU in 2016 are China, Russia, Iran, Ukraine and Turkey
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Ja
n-1
2
Ap
r-12
Ju
l-12
Oc
t-12
Ja
n-1
3
Ap
r-13
Ju
l-13
Oc
t-13
Ja
n-1
4
Ap
r-14
Ju
l-14
Oc
t-14
Ja
n-1
5
Ap
r-15
Ju
l-15
Oc
t -1
5
Ja
n -
16
Imports Exports
Return of Price Volatility
Source: TSI
220
260
300
340
380
420
460
500
540
Ja
n 1
3
Ap
r 13
Ju
l 13
Oc
t 13
Ja
n 1
4
Ap
r 14
Ju
l 14
Oc
t 14
Ja
n 1
5
Ap
r 15
Ju
l 15
Oc
t 15
Ja
n 1
6
Ap
r 16
N. Europe S. Europe
€314/t €276/t
€423/t €426/t
European HR Coil Prices (€/tonne)
HRC prices recovered from lows reached at the end of 2015 High volatility prevails, creating uncertainty for all involved in the steel supply chain
100
58
100 109
86
57
129 145
2013 2014 2015 2016 YTD260
300
340
380
420
460
500
540N. Europe S. Europe
World View
200
300
400
500
600
700
800
Ja
n-1
4
Ap
r-14
Ju
l-14
Oc
t-14
Ja
n-1
5
Ap
r-15
Ju
l-15
Oc
t-15
Ja
n-1
6
Ap
r-16
USA N.Europe Turkey Asean Imports
Regional HR Coil Prices (US$/tonne)
Source: TSI
• European HRC prices followed an uptrend, started at the beginning of the year in Asia
• Despite of the recent reversal of price direction in China, the European steel market remains firm
Reduction of Price Competition from Imports
250
300
350
400
450
500
550
600
650
Ja
n 1
1
Ap
r 11
Ju
l 11
Oc
t 11
Ja
n 1
2
Ap
r 12
Ju
l 12
Oc
t 12
Ja
n 1
3
Ap
r 13
Ju
l 13
Oc
t 13
Ja
n 1
4
Ap
r 14
Ju
l 14
Oc
t 14
Ja
n 1
5
Ap
r 15
Ju
l 15
Oc
t 15
Ja
n 1
6
Ap
r 16
Platts HRC European Import, CIF Antwerp TSI North European HRC
Sources: Platts, TSI
Domestic European vs. Import Prices (€/tonne)
• August 2015 – the spread between European domestic and import HRC prices climbed close to €50/tonne, the highest value since May 2011
• Rising steel prices around the world made domestic European material more price competitive than imports
Changing Price Advantage of Chinese HRC
HRC Spreads - Chinese Exports (FOB Port) vs EU Domestic (Ex-works) (US$/tonne)
Source: TSI
-20
0
20
40
60
80
100
120
140
Ma
y-15
Ju
n-1
5
Ju
l-15
Au
g-1
5
Se
p-1
5
Oc
t-15
No
v-15
De
c-1
5
Ja
n-1
6
Fe
b-1
6
Ma
r-16
Ap
r-16
Ma
y-16
N. Europe S. Europe
Trade Protection Measures
CRC:
• The European Commission (EC) imposed provisional Anti-dumping (AD) duties of 13.8-16% for Chinese producers and 19.8-26.2% for Russian producers with duties retroactive to mid-December 2015
HRC:
• December 2015 – AD complaint against Chinese-origin HRC (together with plate and seamless tubes), with investigation opened in February 2016
• May 2016 – EC also stared an anti-subsidy investigation against Chinese HRC. The investigation to be finalised by June 2017, provisional duties to be established by February 2017
Rebar:
• Preliminary duties of 9.3%-13% on Chinese rebar. The EC started an investigation into imports from Belarus
TSI European Sentiment Survey (3 Months Outlook)
Price Sentiment Demand Sentiment
* Net sentiment (= % of respondents expecting an increase over next 3 months minus % of respondents expecting a decrease over next 3 months)
Source: TSI
-100
-80
-60
-40
-20
0
20
40
60
80
100
Ja
n-1
2
Ap
r-12
Ju
l-12
Oc
t-12
Ja
n-1
3
Ap
r-13
Ju
l-13
Oc
t-13
Ja
n-1
4
Ap
r-14
Ju
l-14
Oc
t-14
Ja
n-1
5
Ap
r-15
Ju
l-15
Oc
t-15
Ja
n-1
6
Ap
r-16
-100
-80
-60
-40
-20
0
20
40
60
80
100
Jan
-12
Ap
r-1
2
Jul-
12
Oct
-12
Jan
-13
Ap
r-1
3
Jul-
13
Oct
-13
Jan
-14
Ap
r-1
4
Jul-
14
Oct
-14
Jan
-15
Ap
r-1
5
Jul-
15
Oct
-15
Jan
-16
Ap
r-1
6
Ferrous Derivatives
Scrap:
• LME
• LCH.Clearnet
• CME Clearing Europe
• Borsa Istanbul
• NASDAQ OMX
TSI’s benchmark indices are widely used for the settlement of futures and derivatives contracts
Steel (Europe): • LCH.Clearnet • CME Clearing Europe Steel (Asia): • Singapore Exchange
(SGX)
Iron ore: • Singapore Exchange
(SGX) • CME Group • LCH.Clearnet • NASDAQ OMX Coking Coal: • Singapore Exchange
(SGX)
CONTACT US
Thank you for your attention!
Marina Maliushkina
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