Outlook for Nickelalloys

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Alaina Hensley
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1 Outlook for Nickelalloys Only the Sky is the Limit` International Nickel Study Group Lisbon 22 nd April 2008 Lisbon, Portugal presented by Markus A. Moll Senior Market Analyst Steel & Metals Market Research

2 MARKET RESEARCH PRODUCTS LOCATION TEAM Enduse Focused Single-Client Research M.A. Moll P.A. Moll W.D. Bentley W. Lipp O. Spaltmann T. Feichtner B. Blitz J. Normandeau R-P. Hammerle E. Pfeifer Type of Research Single Client 90 % Multi Client 10 % Market Intelligence for the Specialty Steel Industry since 1994 Multi-Client Projects & Stainless Steel Seminars '000 metric tonnes Long Products 50 % e 0 Products -2- Executive Search Know How Know Who Flat Products 50 % Steel Grades Stainless Steel 70 % Conferences in cooperation with Shanghai - June 08 Marbella - Nov. 08 Tool Steels, Eng. Steels, Nickelalloys & Carbon Steels 30 % executive.com Barry Hunter Assoc. Scrap Cons.

3 AGENDA 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -3-

Definition: > 30 % Nickel with some exceptions* ALLOY TYPE MAIN ALLOYS MAIN APPLICATIONS HPA: A286* Inconel 718 Nimonic 80A Inconel 725 Hastelloy X manifold studs jet engines, gas turbines, oil & gas

4 Definition: > 30 % Nickel with some exceptions* ALLOY TYPE MAIN ALLOYS MAIN APPLICATIONS HPA: A286* Inconel 718 Nimonic 80A Inconel 725 Hastelloy X manifold studs jet engines, gas turbines, oil & gas diesel engine valves oil & gas jet engines, structural components Heat Resistant: 330* 600, , 800H, 800HT, 825 Calrod* various furnace components welding wire, heat shields oil & gas industry tubular heating elements Corrosion Res.: Alloy 200 Monel 400: K500 Incoloy 925 Alloy 28* L 605* battery casings shafts pins, structural parts oil & gas industry OCTG Surgical Implants Electronic Alloys: Ni 205 NiFe 36 NiFe 42 NiCr spark plugs, welding wire shadow masks, glass seals lead frames heating elements -4- * < 30% Ni or Co-based

5 Global Production Volume e (finished products) Long Term Growth is Limited Global Production Volume e G.R.: 2,8 % p.a. 200 in 000 tonnes e -5-

108,2 Semis Bars Wire Seamless Tube Sheet / Plate Strip Total 52,6 Total 43,3 Total 36,7 Total 32,0 Total 60,4

6 Production by Product Form 2006 & split into 4 Alloy Groups all in 000 tonnes (metric) All Products Total World: 272,9 Europe: 84,4 America: 90,9 Asia: 67,5 Others: 30,0 Long Products Flat Products World 164,7 World 108,2 Semis Bars Wire Seamless Tube Sheet / Plate Strip Total 52,6 Total 43,3 Total 36,7 Total 32,0 Total 60,4 Total 47,7 Heat Resistant Alloys 10% High Performance Alloys 33% Corrosion Resistant Alloys 35% -6- Electronic Alloy 26%

7 Market Volumes 2006 Net Importers & Net Exporters of Nickel Alloy Products America Europe Net Exports Demand Net Imports Production metric tonnes Other Asia Other World China - -7-

8 AGENDA 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -8-

9 SMC is again the No.1 Producer Worldwide Top-10 Producers control 75% of the Market Top Producers of Nickel Alloy Flat & Long Products** (2007 estimated) Flat Long SMC VDM Imphy Alloys * ATI Carpenter Sumitomo Nippon Yakin Hitachi Haynes Daido Sandvik Foroni DN Valbruna Electrostal Mitsubishi Aubert & Duval BUAG Firth Rixon Electralloy * incl. Industeel ** Final shipments (plate, sheet, strip, bar, wire, seamless tube), excluding castings -9-

10 Focus on Aerospace 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -10-

11 Material Requirements Source: Rolls-Royce -11-

12 Rotating Parts Premium Segment Alloys are double Vacuum (VIM / VAR) melted or even Triplex (VIM / VAR / ESR) melted Discs Christmas Trees Blades -12-

13 Non Rotating Parts Duplex Melting and sometimes even Air Melting is sufficient Rings Bolts & Fasteners Engine Mount -13-

Grades used by main Engine Producers General

IN 901, RR 1000, C263, Others Pratt & Whitney Inconel

14 Grades used by main Engine Producers General Electrics Rolls Royce Inconel % Inconel % Waspaloy 11% Others* 20% Waspaloy 15% Others* 28% Inconel % *incl. CO based, Fe based & PM *incl. IN 901, RR 1000, C263, Others Pratt & Whitney Inconel % Others* 7% Waspaloy 15% *incl. CO based, Fe based & PM -14-

15 Buy to Fly The alloy producer has to melt up to 10 times the component weight Source: Rolls-Royce -15-

16 Accident Rates: Only 2 % of all fatal accidents are due to Engine failures -16-

The Aerospace Roller Coaster Airbus beat Boeing 453 to 441. Total in 2007 => +7% vs. 2006 1.

000 planes Annual Roll-Out: max. 1.200 units => Industry is busy for 6 Years but. Problem: There is no Cancellation Fee!

17 The Aerospace Roller Coaster Airbus beat Boeing 453 to 441. Total in 2007 => +7% vs Boeing* & Airbus Deliveries Number of Aircraft Deliveries Boeing Airbus Order Backlog: planes Annual Roll-Out: max units => Industry is busy for 6 Years but. Problem: There is no Cancellation Fee! e -17- * & other U.S. producers

18 AGENDA 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -18-

19 Trends Few New Grades: Alloy 718+ (Teledyne Allvac) Is Nickel Substitution an Issue? o Carpenter 30% Ni grade vs Nimonic 80A for Valves o Clad Plate (var. Producers) & Bubi Pipe (Butting) are booming o Ti has re-gained applications (heat exchangers, sea-water desalination) Market transfer to China: Supply follows Demand Industry Consolidation is Overdue -19-

Electronics / Electric Appliances 20% 2% 1% Other Energy* 7% Nuclear 1% Automotive 7% 1%

20 Market Structure 2007 and Outlook Growth Trends to 2012 for Ni used in Nickelalloys 12% of Prime Ni 3% CAGR > 6% > 3% < 3% Industrial Machinery 7% 1% Others** 7% Aerospace 21% Electronics / Electric Appliances 20% 2% 1% Other Energy* 7% Nuclear 1% Automotive 7% 1% Oil & Gas 15% Chemical / Process Industry 15% 2% * LGBGT, FGB ** Marine, Thermal Process, etc. 1% -20-

Nickel Demand in Nickelalloys will continue to grow substantially until 2010 thereafter a phase of stagnation can be expected 210 180 Ni

21 Nickel Demand in Nickelalloys will continue to grow substantially until 2010 thereafter a phase of stagnation can be expected Ni Use In Nickelalloys in `000 tonnes CAGR + 5% + 40,000 t or + 25% by

22 Hear more Details at these events in 2008 June 08 September 08 Our events in 2009: February: Mumbai, India September: Düsseldorf, Germany -22-

Victim of its own success?

China Victim of its own success? Wolfgang Lipp Managing Director SMI - Steel Market Intelligence GmbH Copyright SMI Steel SMI Market Steel Market Intelligence GmbH. 2015 This data may not be copied, published