Competition in the pipe industry. The case of Middle East & Africa February 2012

Transcription

1 Competition in the pipe industry. The case of Middle East & Africa February 2012 Viktor Bisovetskyi Head of Market Research Interpipe Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 1

2 Competition on ME&A market Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 2

3 World pipe consumption is backed by high oil prices Strong demand for OCTG World pipe consumption w/o China, LatAm wld smls OCTG E 2012F 6.0% 4.0% 2.0% 0.0% -2.0% World GDP growth Source: Preston, ISSB, IMF, Interpipe analysis 4.0% 3.3% 4.5% 3.9% E 2012F 2013F World GDP, real change yoy, % (Sept 2011) World GDP, real change yoy, % (Jan 2012) 10.0% 5.0% 0.0% -5.0% -10.0% World investments growth 6.7% 6.9% E 2012F 2013F Crude oil forecasts* E2012F2013F Crude oil, dollars per barrel (Sept 2011) Crude oil, dollars per barrel (Jan 2012) * Simple average of three spot prices (APSP); Dated Brent, West Texas Intermediate, and the Dubai Fateh Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 3

4 Pipe consumption is expected to grow in all regions except Europe ME&A NAFTA wld smls OCTG wld smls OCTG E 2012F E 2012F Europe CIS wld smls OCTG wld smls OCTG E 2012F E 2012F Source: Preston, ISSB, Interpipe analysis Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 4

5 Political instability is a limitation for growth in MENA High global demand for oil will supports OCTG consumption ME&A wld smls OCTG Consumption of OCTG increased slightly in 2011 compared to 2009, from 1.5 mln tones to 1.8 mln tones. It is expected, that the market will grow by 6% in 2012, to 1.9 mln tones The demand for other pipes has been stable over : mln tones for welded, mln tones for seamless pipes. Political instability is an important growth limitation in the Middle East. The market could expand by 7-8% in 2012, although possible conflicts in the region (Syria, Iran) can question any increase in demand E 2012F 6.0% MENA GDP growth 20.0% MENA investments growth 300 MENA rig count 3.0% 3.6% 3.2% 4.3% 3.6% 15.0% 10.0% 5.0% 8.1% 6.7% % E 2012F 2013F MENA GDP, real change yoy, % (Sept 2011) MENA GDP, real change yoy, % (Jan 2012) 0.0% -5.0% E 2012F 2013F 50 J A J O J A J O J A J O J A J O J A J O Oil Gas Source: ISSB, IMF, Baker Hughes, Interpipe analysis Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 5

6 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Strong demand for OCTG Key consumers are Saudi Arabia, UAE, Oman, Iran, Kuwait Middle East E 2012F wld smls OCTG 33% OCTG production and import structure, % 2% 1% 1% 3% 4% 19% 35% Middle East production China TVS Singapore VoestAlpine Russia Indonesia Ukraine Other ME oil production, thsd bbl/d 300 ME rig count Source: ISSB, Baker Hughes, Interpipe analysis Oil Gas Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 6

7 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Political turbulence is the main limiting factor Key consumers are Algeria, Egypt, Libya, Nigeria Africa wld smls OCTG 40% OCTG production and import structure, % 2% 1% 1% 2% 7% 43% Africa production TVS China Ukraine VoestAlpine Russia Singapore Other E 2012F Africa oil production, thsd bbl/d 100 Africa rig count Source: ISSB, Baker Hughes, Interpipe analysis Oil Gas Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 7

8 Volatile and increasing costs for nonintegrated pipe producers Billet price, USD/t Source: Metal Bulletin Billet, import ME Billet, Russia FOB Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 8

9 Interpipe global steel pipe producer Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 9

10 Interpipe at a glance o o o o o o Major global producer of steel pipes expected production ,000 tons*. Third largest producer of forged railway wheels in the world expected production ,000 tons*. Expected revenues 2011 USD 1,6 billion* Vertically integrated company Four production assets in Ukraine and sales offices in the key markets CIS, NAFTA, Middle East/North Africa and Europe Comprehensive strategy of maintaining strong cost position, growth in attractive markets and upgrading product portfolio * Preliminary assessment Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 10

11 In 2011, pipes were sold in 64 countries, wheels in 25 NAFTA 11 % 100 ths. tons <1% Europe 8% 68 ths tons 10% 16 ths.tons Russia Ukraine 31% 282 ths. tons 5% 9 ths. tons 21% 191 ths tons. 78% 130 ths. Other CIS 20% 188 ths. tons 6% 11 ths. tons MENA 9% 86 ths. tons <1% Main Interpipe sales directions: pipes wheels Pipe sales, tons Region Wheel sales, tons Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 11

12 Vertically integrated business model Scrap processing Steel production Pipe & wheel production Selling to customers globally Dneprovtormet Scrap collection and processing Interpipe NTRP Interpipe NTRP, Dnipropetrovsk Ukraine Russia Open Hearth Furnace Interpipe Niko Tube, Nikopol Dniprosteel Kazakhstan Switzerland State of the art electric steel smelting complex (EAF) Interpipe NMPP Novomoskovsk UAE USA Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 12

13 Major investment: steel-making plant Dniprosteel o Interpipe is constructing an electric arc furnace steel plant in Dnipropetrovsk with total annual capacity of 1.32 million tons. o The new facility represents an investment in excess of $700 million. When completed, it will be the largest facility of its kind in Ukraine and one of the largest in Europe. o Dniprosteel employs state of the art technologies provided by Daniele, Italy, to provide consistent steel production with different steel grades, from carbon to lowalloyed. Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 13

14 Dniprosteel reinforces vertical integration and increases efficiency Reinforcement of vertical integration as a part of Interpipe strategy Increase of self sufficiency in steel billets for production of: Seamless pipes 30% 90% Railway wheels 100% 100% High quality billets to feed Interpipe mills: Interpipe NTRP Interpipe Niko Tube 45% 55% Electric arc furnace advantages versus open hearth furnace production 4 times Increase in labor productivity 2,2 times Reduction of energy consumption per ton 8 times Reduction of natural gas consumption Environmentally friendly technology 2,5 times Reducing of atmosphere pollution Shutdown of existing open hearth production January 1, 2013 Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 14

15 Main Dniprosteel phases in 2012 January 17 th, 2012 The mill hot testing started. 1 st heat melted and casted April 2012 Completion of the industrial gases plant by Messer March 2012 Completion of performance tests. Start of operations June 2012 Completion of scrap collecting facilities expansion Target for 2012: to produce thd. tons Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 15

16 Thank you! Competition in the pipe industry. The case of Middle East & Africa 22 February 2012 Стр. 16