Metal Bulletin India Ferroalloy Conference Hyderabad 8-10 February Alloy Market: Present Situation & Trends

Transcription

1 Metal Bulletin India Ferroalloy Conference Hyderabad 8-1 February 24 Alloy Market: Present Situation & Trends

2 Introduction 1. BHP Billiton s position in the carbon steel materials and ferroalloy industry 2. Trends in world steel and ferroalloy demand 3. Possible implications for India

3 Part 1 BHP Billiton and Samancor in the Ferroalloy Industry

4 BHP Billiton - The largest company in a consolidating sector CVRD Alcan Barrick Norilsk Anglogold Amplats Gold Fields Placer Dome Impala Xstrata Inco Pechiney Phelps Dodge Freeport Alumina Newmont Alcoa Rio Tinto Anglo American BHPB Market Cap. on 22/8/3 (US$Bn) 5 Market value of minerals industry US$36 bn Value of Top Five US$141 bn Value of BHP Billiton US$ 42 bn Source: Datastream

5 A global footprint Petroleum Aluminium Base Metals Carbon Steel Materials Diamonds & Spec Prod Energy Coal Stainless Steel Materials

6 Carbon Steel Materials 27% of BHPB EBIT Customer Sector Group EBIT: Stainless Steel Materials Base Metals 4% 8% Diamonds & Spec. Prod. 1% Carbon Steel Materials 27% Aluminium 15% Energy Coal 5% Petroleum 31% Data for year ended 3 June 23

7 Carbon Steel Materials Assets WA Iron Ore (85-1%) Prod: 77Mtpa Years of Life: 35 No 3 Seaborne supplier QLD Coal (5 8%) Prod: 52Mtpa Years of Life: 5 No 1 Seaborne supplier Boodarie Iron (1%) Prod: 1.7Mtpa Samarco Iron Ore (5%) Prod: 15Mtpa Years of Life: 4 Low cost pellet producer Manganese (6%) Prod: Ore 4.1Mtpa Alloy etc.7mtpa Years of Life: Aust 25 SA 3 No 1 Supplier Illawarra Coal (1%) Prod: 7Mtpa Years of Life: 45 Niche supplier 1% nominal production capacity

8 Samancor Manganese BHP Billiton Samancor Manganese 6% 4% Samancor Anglo American Chrome Mines Alloys Mines Alloys Wessels Mamatwan Gemco Metalloys Temco South African operations

9 Samancor Managese Operations Hotazel Johannesburg Metalloys Saldanha Bay SOUTH AFRICA Port Elizabeth AUSTRALIA GEMCO Groote Eylandt TEMCO Bell Bay

10 Samancor share of world Mn Alloy production HCFeMn SiMn AMERICAS 6% OTHER 3% SAMANCOR 12% AMERICAS 9% OTHER 2% SAMANCOR 4% INDIA 6% EUROPE 14% INDIA 5% EUROPE 12% TH AFRICA 5% CIS 11% OTH AFRICA 3% JAPAN 1% CIS 29% JAPAN 9% CHINA 35% CHINA 34% World Mn Alloy Production 23 = 8.9Mt Source: IMnI

11 Part 1 Summary BHP Billiton is the world s largest supplier of steelmaking raw materials Samancor is the world s largest producer of manganese units

12 Part 2 Trends in world steel and ferroalloy demand

13 Annualised steel and pig iron production trends 68 Annualised pig iron production 14 Annualised crude steel production Totals 22 61Mt Mt Totals 22 93Mt Mt 23 (Mt) 62 (Mt) Seasonal Trends Seasonal Trends 84 8 Seasonal Trends Seasonal Trends Seasonal Trends January March May July September November January March May July September November January March May July September November January March May July September November Source: IISI

14 December Divergent trends emerged during the year Monthly YOY % Change Crude Steel January February March April May June July August September October November Global EU China Japan US India Monthly YOY % Change Pig Iron December Crude Steel 12 month running totals months running total actual monthly data 1998 de-seasonalised 1999 monthly data Pig Iron 12 month running totals December January February March April May June July August September October November December months running total actual monthly data Source: IISI -24 Global EU China Japan US India de-seasonalised monthly data

15 World Mn Alloy Demand 1 95 Crude steel (Mmt) Mn Alloy Demand (Mmt) ' '1 '2 '3 4. Crude steel Mn alloy demand Source:IISI, IMnI

16 World Mn Alloy Consumption Trends Steel industry/technological trends Manganese consumption HC,SiMn (Kg Aly/ ton steel) MC/LCFeMn(Kg Aly/ ton steel) MC/LCFeMn (3%pa) HCFeMn (-1.4%pa) SiMn (.4%pa) ? ' '1 '2 '3 '4 Source: IISI, IMnI.6

17 World Mn Alloy Capacity History 12, ' Mt Thyssen,BS closures 12,1 Huta Pokoj closure SFPO closure Moi Rana start-up 1, 8, 9,628 6, 4, 2, Source:- IMnI

18 $85 $8 $75 $7 $65 $6 $55 $5 $45 $4 Jan-2 Feb-2 Mar-2 Apr-2 May-2 Jun-2 Jul-2 Aug-2 Sep-2 Oct-2 Nov-2 Dec-2 Jan-3 Feb-3 Mar-3 Apr-3 May-3 Jun-3 Jul-3 Aug-3 Sep-3 Oct-3 Nov-3 Dec-3 Jan-4 MN Alloy Pricing trends US monthly $/t (Fob Warehouse) HCFeMn SiMn Source: CRU

19 Jan-2 Feb-2 Mar-2 Apr-2 May-2 Jun-2 Jul-2 Aug-2 Sep-2 Oct-2 Nov-2 Dec-2 Jan-3 Feb-3 Mar-3 Apr-3 May-3 Jun-3 Jul-3 Aug-3 Sep-3 Oct-3 Nov-3 Dec-3 Jan-4 MN Alloy Pricing trends Europe monthly Euro/t (Del) HCFeMn SiMn HC$ Si$ Source: CRU

20 Part 2 - Summary Global Steel production has grown dramatically over the last 2 years, driven by Asia, and in particular China and India The fall in HCFeMn consumption per ton of steel has now stopped Alloy Capacity has fallen consistently over the last few years Prices have increased as supply has failed to keep up with demand

21 Part 3 Implications for India

22 World Manganese Alloy Supply 23 Mt North America Mt Europe Mt China Mt FUSSR HCFeMn SiMn Mt Japan& Korea 5 2 South America 2 15 India Mt Mt RSA Mt MtAustralia Source:- CRU, Reuters, Interfax

23 World Manganese Alloy Demand 23 Mt 15 1 North America 15 1 Europe 15 1 China 15 1 FUSSR 5 Mt 5 Mt 5 Mt 5 HCFeMn SiMn Mt Asia excl China 15 South America India 1 1 Mt Africa Mt 5 Mt 5 5 Source:- CRU, Reuters, Interfax

24 Manganese supply:demand in China 23 Domestic alloy apparent consumption increase ±5Kt met by imported ore Mn ore ( mt) Mn alloy ( mt) 3 7,5 6,5 5,5 4,5 3,5 2,5 1, ' '1 '2 '3 Mn ore imports Domestic ore Mn alloy apparent cons Source:IISI, China trade statistics, IMnI

25 MN Alloy exports from China Mn alloy exports showing signs of slowing down from Q Mn Alloy ( mt) Kt China exports Mn alloy - 23 Q1 Q2 Q3 Q4 Crude steel (Mmt) ' '1 '2 '3 Mn alloy apparent cons Mn alloy export Crude steel Source:IISI, China trade statistics, IMnI

26 Indian Mn Alloy Industry 23 Mt CAPACITY PRODUCTION APPARENT CONSUMPTN EXPORT 6m annualised IMPORT 6m annualised HCFeMn SiMn Refined TOTAL Source:CRU, India trade statistics

27 Mn Alloy consumption in India 4 Crude steel (Mmt) Mn Alloy ( mt) ' '1 '2 '3 2 Crude steel Mn alloy apparent cons Source:IISI, IMnI

28 MN Alloy supply and demand in India 51 Mt Alloy ( ) ' '1 '2 '3 Mn alloy production Mn alloy exports Mn alloy demand Source:IMnI, India trade statistics

29 Mn Industry issues for India CRUDE STEEL Production fcst to increase to mt in mt on 23, and reach 47 mt by 27 Majority of this increase will be via BOF capacity expansions (Source: CRU) MANGANESE Power availability and cost Coke availability and cost Steady increase in Mn ore production in next few years Transport logistics for both ore and alloys Reduction of import duties on ferroalloys from 25% to 15% could in the long run induce imports into India

30 Part 3 - Summary India is in the unique position, similar to China, of being both a large user and a large producer and exporter of ferroalloys As steel production takes off, India will quickly need to make decisions about: whether to continue exporting ferroalloys whether sufficient high quality ore can be sourced in India to make HCFeMn in particular If not, whether the best option is to buy HCFeMn or high quality Mn Ore depending on factors such as power, coke and transport logistics

31 Summary 1. BHP Billiton is importantly placed to meet demand for all carbon steel materials. 2. Samancor is well placed to supply not only Mn ore and also high quality HCFeMn and SiMn 3. Demand for these products is growing sharply as the steel industry grows and makes more steel via the BOF route 4. India will soon need to make decisions about where to source Mn units in the future We look forward to discussing the options!

32 Thank You