oecd steel committeerussia’s steel production forecast ferrous metallurgy production index...
TRANSCRIPT
Paris, December 2010
Russia: steel market
developments
OECD STEEL COMMITTEE
DEVELOPMENTS IN WORLD STEELMAKING CAPACITY
Maria Ivanova, Novolipetsk Steel
Russia’ Steel Industry Dynamics
Average pre-crisis steel production
Average pre-crisis rolled steel production
-2-Sources: Metal-Expert, Russian Statistics Agency, Metal Courier
3,23,4
3,7
3,7
3,8
3,8
3,9
3,83,5
2,7
1,5 1,3
1,4
1,9
2,3
2,0
1,9
2,1
2,4
2,7
2,6
2,7
2,5
2,6
2,5
2,5
3,0
2,8
2,8
3,0
2,9 3,0
3,0
-4,0
-2,0
0,0
2,0
4,0
6,0
Jan-
08
Feb-
08
Mar
-08
Apr
-08
May
-08
Jun-
08
Jul-0
8
Aug
-08
Sep-
08
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep-
09
Oct
-09
Nov
-09
Dec
-09
Jan-
10
Feb-
10
Mar
-10
Apr
-10
May
-10
Jun-
10
Jul-1
0
Aug
-10
Sep-
10
Production Export Import Consumption
Peak low
Production volume, mmt Consumption, mmt
3,1 3,2
3,5 3,4 3,3 3,4 3,4 3,6
3,2
2,5
1,4 1,41,2
1,8
2,11,8 1,7
1,9
2,22,5 2,5 2,4
2,3 2,4 2,3 2,4
2,92,6 2,7 2,8 2,9
3,03 2,9
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
Jan-
08
Feb-
08
Mar
-08
Apr-
08
May
-08
Jun-
08
Jul-0
8
Aug-
08
Sep-
08
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr-
09
May
-09
Jun-
09
Jul-0
9
Aug-
09
Sep-
09
Oct
-09
Nov
-09
Dec
-09
Jan-
10
Feb-
10
Mar
-10
Apr-
10
May
-10
Jun-
10
Jul-1
0
Aug-
10
Sep-
10
Crude steel production Finished steel production Consumption
Peak low
Semi-finished & Finished steel balance, mmt
Current Economic Situation In Russia
Ind
ustrial p
rod
ucer’s p
rice ind
ex
Ind
ust
rial
pro
du
ctio
n g
row
th r
ate
Budget Income & Spending, % GDPGDP and its elements growth rates, y-o-y, %
-3-Sources: Metal-Expert, Metal Courier, Russian Statistics Agency , Ministry of Industry and Trade, Ministry of Economic Development
Industrial Production & Industrial Producer's Price index, y-o-y, %
IP & Fixed Capital Investments indices
Surplus period
Deficit period
70
75
80
85
90
95
100
105
110
Jan-
08
Mar
-08
May
-08
Jul-
08
Sep-
08
Nov
-08
Jan-
09
Mar
-09
May
-09
Jul-
09
Sep-
09
Nov
-09
Jan-
10
Mar
-10
May
-10
Jul-
10
Sep-
10
IP index Investments in fixed capital
Russia’ Steel Using Sectors Output Dynamics
Sources: Metal-Expert, Metal Courier, Russian Statistics Agency , Ministry of Industry and Trade
Construction & Metal Products Output Indices , y-o-y, % Pipes & Tubes Production Index, y-o-y, %
-140
-90
-40
10
60
110
160
Jan
-08
Ma
r-08
Ma
y-08
Jul-0
8
Se
p-0
8
No
v-08
Jan
-09
Ma
r-09
Ma
y-09
Jul-0
9
Se
p-0
9
No
v-09
Jan
-10
Ma
r-10
Ma
y-10
Jul-1
0
Se
p-1
0
Automotive Industry Production Index, y-o-y, %
-4-
-40
-30
-20
-10
0
10
20
30
Jan-0
8
Mar-0
8
May-0
8
Jul-0
8
Sep
-08
No
v-08
Jan-0
9
Mar-0
9
May-0
9
Jul-0
9
Sep
-09
No
v-09
Jan-1
0
Mar-1
0
May-1
0
Jul-1
0
Sep
-10
Construction Metal products output, y-o-y, %
-45
-25
-5
15
35
55
75
Jan-08
Mar-08
May-08
Jul-08
Sep-08
Nov-08
Jan-09
Mar-09
May-09
Jul-09
Sep-09
Nov-09
Jan-10
Mar-10
May-10
Jul-10
Sep-10
-55
-35
-15
5
25
45
Jan-0
8
Ap
r-08
Jul-0
8
Oct-0
8
Jan-0
9
Ap
r-09
Jul-0
9
Oct-0
9
Jan-1
0
Ap
r-10
Jul-1
0
Machinery & Equipment Production Index, y-o-y , %
Steel consumption in Russia
5 16 1513 7 12
8 57
-1
-20
-20
-40-39 -34
-37
-39
-30
-29 -34
-23
-19
9
13
32
18
1931 34
2725
50
36
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
0
0,5
1
1,5
2
2,5
3
3,5
4Ja
n-0
8
Ma
r-0
8
Ma
y-0
8
Jul-
08
Se
p-0
8
No
v-0
8
Jan
-09
Ma
r-0
9
Ma
y-0
9
Jul-
09
Se
p-0
9
No
v-0
9
Jan
-10
Ma
r-1
0
Ma
y-1
0
Jul-
10
Se
p-1
0
Ind
ex ave
rage, y
-o-y %
Ste
el c
on
sum
pti
on
, m
mt
13
13
6
3
2
Construction
Other
Pipes & Tubes
Automotive industry
Mecanical machinery
Steel consumption breakdown by sector, mmt 2010
Steel Consumption & Russian Steel Using Sectors Production Index Average
-5-Sources: Metal-Expert, Metal Courier, Russian Statistics Agency , Ministry of Industry and Trade; NLMK research
Peak low
Mecanical
machinery; 5%Automotive industry;
8%
Pipes & Tubes; 16%
Other; 35%
Construction; 36%
104 105 100
91
100 112 116
0
20
40
60
80
100
120
140
2006 2007 2008 2009 2010 2015 (f) 2020 (f)
Consumption Production
68 70 64 61 6778
87
0
20
40
60
80
100
2006 2007 2008 2009 2010 … 2015 (f) … 2020 (f)
Vo
lum
e, m
mt
Consumption Production
3 35 5 5
6
12
0
2
4
6
8
10
12
2006 2007 2008 2009 2010 … 2015 (f) … 2020 (f)
Vo
lum
e, m
mt
Production
20 21 21
11
22
15 16
0
10
20
30
2006 2007 2008 2009 2010 … 2015 (f) … 2020 (f)
Vo
lum
e,
mm
t
Consumption Production
Iron Ore
HBI/DRI
Coking Coal
Scrap
Sources: Strategy of Russian Steel Industry Development till 2020, Ministry of Industry and Trade; MetalCourier, Chermet, AME
Production forecast of steelmaking raw materials
-6-
+4%
+20%
+100%
+12%
-32%
+47%
+7%
+82%
-32%
+47%
-32%
+47%
Import 9Import
<1Import
<1
Export 21 Export 16.5 Export 3.3
Output
91
Output
61
Output 18
-40
-20
0
20
40
60
80
100
iron ore Coking coal concentrate Scrap
Import Export Output
Domestic
consumptio
n
78
Domestic
consumptio
n
44,7 Domestic
consumption
15,8
Sources: Metal Expert, Rasmin, NLMK research-7-
Raw Materials Market
Russian Steel Industry Self-sufficiency in Raw Materials (2009, mmt)
Raw material price dynamics
0
1000
2000
3000
4000
5000
6000
7000
0
500
1000
1500
2000
2500
3000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Coking coal Iron ore Pellets Coke
Co
keC
oki
ng
coal
;Ir
on
ore
;Pel
lets
Russian economy growth forecast
-20
-15
-10
-5
0
5
10
15
2009 2010 2011 2012 2013
Optimistic Basic Low basic Pessimistic
-10
-8
-6
-4
-2
0
2
4
6
8
10
2009 2010 2011 2012 2013
Optimistic Basic Low basic Pessimistic
-9
-7
-5
-3
-1
1
3
5
7
2009 2010 2011 2012 2013
Optimistic Basic Low basic Pessimistic
55
60
65
70
75
80
85
90
95
2009 2010 2011 2012 2013
Optimistic Low basic Pessimistic
-8-Sources: Russian Statistics Agency; Ministry of Economic Development
Oil Prices Forecast, USD/bl GDP Index Growth Rate Forecast, y-o-y, %
Industry Growth Rate, y-o-y, % Fixed assets investments (FAI), y-o-y, %
Russia’s steel production forecast
Ferrous Metallurgy Production Index Forecast, y-o-y, %
Finished steel production index forecast, y-o-y, %
31,71,7
53,44,7
15,2
-14,7-20
-15
-10
-5
0
5
10
15
20
2009 2010 E 2011 F 2012F 2013 FFerrious metallurgy conservative variant
Ferrious metallurgy optimistic variant
-14,4
1,7 0,53,5
23,3
5,73
5,5
-20
-15
-10
-5
0
5
10
15
20
25
30
2009 2010 E 2011 F 2012 F 2013 F
Steel pipes&tubes conservative variant
Steel pipes&tubes optimistic variant
-10,3
1 1,5 2,3
12,1
4,53,2
4,5
-15
-10
-5
0
5
10
15
2009 2010 E 2011 F 2012 F 2013 F
Finished steel conservative variant Finished steel optimistic variant
Steel Pipes & Tubes Production Index Forecast, y-o-y, %
-9-
Metal Products Output Index Growth rate, y-o-y, %
Source: Ministry of Economic Development, NLMK research
-33-33
46 4845
40
4650 49
44
-40
-20
0
20
40
60
2009 2010 E 2011 F 2012 F 2013 F
Metal products concervative variantMetal products optimistic variant
Russian Producer Price Indices
75,00
85,00
95,00
105,00
115,00
125,00
135,00
2007 2008 2009 2010 2011 2012 2013
Steel industry Metalware Machinery and engineering Construction (deflator index)
81,50
117,9
Producer Price Indices of Steel & Using Sectors
75,00
85,00
95,00
105,00
115,00
125,00
135,00
145,00
2007 2008 2009 2010 2011 2012 2013
Energy Energy raw materials Metal ores Oil
81,1
145,7
Correlation between metal ore price and steel industry price
Raw Materials Producer Price Indices
-10-Sources: Ministry of Economic Development, NLMK research
Steel Consumption in Russia Long Product Consumption Forecast, mmt Flat Product Consumption Forecast, mmt
Metal Product Consumption Forecast, mmt Pipes & Tubes Consumption Forecast, mmt
-11-Sources: Ministry of Economic Development, NLMK research
Steel Using Sector Output Forecast
-12-Sources: Ministry of Economic Development, NLMK research; AEB; Avtostat
41
156
111 116 11441
156
117123
119
0
200
400
600
800
1000
1200
1400
1600
1800
2009 2010 E 2011 F 2012 F 2013 F
0
20
40
60
80
100
120
140
160
180
Passenger car production optimistic variantPassenger car production conservative variantCar production index pess imisticCar production index optimistic
Trucks p
rod
uctio
n in
dex gro
wth
rate
-64,2
22,413,5 14,6 16,2
-64
22
15 17 20
-70
-60
-50
-40
-30
-20
-10
0
10
20
30
0
20
40
60
80
100
120
140
160
180
200
2009 2010 E 2011 F 2012 F 2013 F
Trucks production concervative Trucks production optimistic
Trucks index conservative Trucks index optimistic
Tru
cks
pro
du
ctio
n 0
00
Trucks productionPassenger car production
1,82
2,42,8
3,13,3 3,4 3,5 3,6 3,6 3,6
0
1
2
3
4
5
6
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Imported Foreign brands in Russia Domestic OEMs Forecast
Economic crisis
Economic crisis
0.7 0.81.0
0.80.9 0.9 1.0 1.0 1.1 1.3 1.4
1.8
2.42.8
1.4
Forecast ran
ge
Initial growth Stagnation Market growth Post-crisis development Market stabilization
Vehicle market forecast
New
car
sal
es m
ln. u
nit
s
-34,2
8,4 8,5 10,6
20,2
9,9 1114,3
-40
-30
-20
-10
0
10
20
30
2009 2010 E 2011 F 2012 F 2013 F
Machinery production conservative variant
Machinery production optimistic variant
Steel Using Sector Output Forecast
Sources: Ministry of Economic Development, NLMK research
Machinery Production Index Forecast, y-o-y, %
1,7 0,53,5
-14,4
23,3
5,73
5,5
-20
-15
-10
-5
0
5
10
15
20
25
30
2009 2010 E 2011 F 2012 F 2013 F
Pipes & tubes 2b Pipes & tubes 2b
Pipes & Tubes index forecast, y-o-y, %
-13-
-44,6
82,6
2,2 3 3,8
-44,6
82,6
3,8 4,4 6,9
-60
-40
-20
0
20
40
60
80
100
2009 2010 E 2011 F 2012 F 2013 F
freight car concervative variant freight car optimistic variant
-34,1
7
11,9 13,115,1
-34,1
7
13,315,9
18,3
-40
-30
-20
-10
0
10
20
30
2009 2010 E 2011 F 2012 F 2013 F
passenger car conservative variant passenger car optimistic variant
Freight Railcar Production Index Forecast, y-o-y, % Passenger Railcar Production Index Forecast, y-o-y, %
RUSSIA WILL REMAIN ATTRACTIVE FOR FOREIGN DIRECT
INVESTMENTS
The Government pays attention to special economic areas with
favorable taxation regime
The Government develops strategies for development of key national
sectors which have a multiple effect on upstream industries
Currently most attractive for FDI are following steel-using sectors:
Energy
Shipbuilding
Machinery
Construction
Automotive industry
Railcar production
Steel Consumption Sector Investments for Modernization
-14-
23,4 31 28,9 36,2
81100,8
122,3 128
199
159 160
200
-30
20
70
120
170
220
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (e) … 2015 (f)
66% 63%85% 92%
74% 77%97%
59%
35% 37%15% 8%
26% 23%3%
41%
0%
20%
40%
60%
80%
100%
2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 4Q 2009 1H 2010E
Brownfield Greenfield
Company Investments (% of Total in Steel Sector)
Steel Sector Investments for Modernization
Steel industry investment structure
Investments bln.RUR
+ 580 %
Sources: Ministry for Industry and Trade, Strategy for Development of Metallurgy to 2020
Novolipetsk Steel; 14,86 %
Severstal; 25,16 %
MMK; 14,87 %Metalloinvest;
19,2 %
Evrazholding;11,52 %
Mechel; 14,4 %
-15-
Paris, December 2010
THANK YOU
OECD STEEL COMMITTEE
DEVELOPMENTS IN WORLD STEELMAKING CAPACITY
Maria Ivanova, Novolipetsk Steel