steel plate consumption in the energy sector: … can it be increased? michael setterdahl
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Steel plate consumption in the energy sector:
… can it be increased?
Michael Setterdahl
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Steel is a basic ingredient in allowing goods to be moved
How could TRADE work without movement?-cars, busses, trucks, trains, vessels, transmission towers, pipelines --- All made from steel.
Indeed we can’t even make steel without moving its ingredients around in pulverizedcoal pipe lines, ocean vessels, conveyor belts ..
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I am optimistic
• The future contains increases in movement because of world growth which means DIRECTLY increased usage of steel. - just look at the populations that are located in areas that have less than 250kg/capita steel consumption! - new investments in steel capacity look to fall
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Conveyance of energy
• Whether in pipes or in sea borne vesselsit consumes steel.
• In less than one year we in the steel industry have faced a changed scenario.
- more energy + lower prices which has radically changed the ‘economic’ picture for those in charge of long term investments
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Less investments= less conveyance = less steel
There are two ways to look at this. Positive: less investments in added steel plate capacity can mean better utilization at existing. Negative if overall investments shrink, i.e. globally
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Negative
1/ logistic costs of moving energy has decreased, but the percentage of the delivered total cost that is from logistics is increasing.2/ over-supply of in-efficient vessels has created a depressed maritime market plus less demand for new vessels.3/ the supply of money into both types of conveyance is drying up…. risky business.
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What could be “new drivers” for investments ?
• New pipelines from old sources to new markets. • New pipelines from old sources to old markets ( infrastructure renewal and fracking)
• New pipelines from new sources to new markets ( investments for future generations)
• Old vessels being scrapped in favour of new more efficient ones. pro-active environmental investments.
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other changes….
United Nations, EU, USA, etc. - all are supporting things such as MarPol, anti-beach scrapping, emission controls, etc.
These are all business opportunities and the pace of these changes will increase and will ultimately lead to new destinations for steel plate.
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Lastly: China vs R.O.U.
• China has indeed taken over the shipbuilding plate supply and even the most environmental friendly new buildings are being built in China But, the Chinese shipyards sit on prime real- estate ( maybe 800 of them!) Many of them will close over the next 10 years. The biggest shipyard is not in China, Hyundai.
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