Hilkka K. Witt, voestalpine Tubulars GmbH & Co KG. Global Trends in 2011

Transcription

1 Hilkka K. Witt, voestalpine Tubulars GmbH & Co KG Global Trends in 2011

2 Table of Contents Overview voestalpine Tubulars General global trends Market outlook - Tubular Industry Recent US anti-dumping cases and what this means for the global market Future challenges Developments in individual pipe markets Sources of information 2

3 voestalpine Tubulars 50/50 JV of NOV Grant Prideco and voestalpine group located in Kindberg (Austria) manufacturer of seamless pipe up to 7 OD production capacity: approx. 400k t/yr product split: approx. 60% OCTG and Line Pipe approx. 20% Green Pipe for Drill Pipe balance: automotive tubes, mechanical pipe, boiler & heat exchanger tubes, hollows for redraw main markets: Europe & Mediterranean, North America, Middle East, FSU approx. 1,030 employees 3

4 General global trends - Population world population 2010: thereof OECD: thereof NON-OECD: 6.9 billion 1.2 billion 5.7 billion world population 2030: thereof OECD: thereof NON-OECD: 8.3 billion 1.3 billion 7.0 billion +20%, annual growth rate approx. 1% Sources: BP Energy Outlook 2030, January 2011, United Nations, World Population Prospects, January

5 General global trends GDP in Purchasing Power Parity (PPP) Global real income has risen 87% in 20 years is expected to double in the next 20 years NON-OECD countries expected to reach OECD level by 2015 Source: BP Energy Outlook 2030, January

6 General global trends Energy Consumption A growing and more affluent global population equates to increased consumption and production of energy NON-OECD countries surpassed OECD early to 2030 average annual increase: 1.7% OECD: Non-OECD: +0.3% p.a. +2.6% p.a. Source: BP Energy Outlook 2030, January

7 Estimated GDP growth in 2011 vs. growth in 2010 GDP Growth (% change y-o-y) World Advanced USA Euro Area Japan Emerging China India MENA Source: International Monetary Fund, World Economic Outlook, October

8 Estimated GDP growth 2011 in detail Source: International Monetary Fund, World Economic Outlook, October

9 General global trends - summary Europe: Germany - the European locomotive growth driven by exports Nov. 2010: lowest Nov. unemployment rate since 1991 US: unemployment rate down from 9.8% in November to 9.4% in December GDP grew at annual rate of 2.6% during Q3 vs 1.7% Q2 PPI +1.1% (preliminary) in December 2010 expected GDP growth rates: 2011 growth rates worldwide below 2010 figures exceptions: Middle East & Africa (approx. +1% higher) Sources: US department of commerce and department of labor, December 2010 International Monetary Fund, World Economic Outlook, October

10 Current market trends oil demand and price forecast Global Oil Demand Oil price as of Dec estimate: 2011/ 2012: between USD/bbl after 2012: between USD/bbl Brent crude oil price as of Feb : USD/bbl Sources: International Energy Agency, Oil market report, December 2010 Drilling and Production Outlook, Spears & Associates, December

11 Proven oil reserves as of Jan 1,2010 (billion barrels) annual consumption: approx. 32 billion barrels > reserves for approx. 42 years world reserves: estimate as of 2010 approx. 12 billion barrels (about 1%) above 2009 estimate Source: 11

12 Current market trends natural gas demand and price forecast Consumption Price gas price as of Feb 02, 2011: $/MMBTU 4.43 forecast until 2015: below $/MMBTU 6.0 Sources: Consumption: Price Chart: 12

13 Proven natural gas reserves as of Jan 2, 2010 (trillion cubic feet) Middle East 2668 annual consumption: Eurasia 2170 approx. 110 trillion cubic feet (= 110 quadrillion BTU) > reserves for approx. 60 years Asia 539 Africa 495 world reserves: estimate as of 2010 North America 319 World total: 6,609 trillion cubic feet approx. 355 trillion cubic feet (6 %) above 2009 estimate Europe Source: 13

14 Current market trends drilling activity average world rig count: 2010 FC: 2963 (act. 3226) 2011 FC: FC: compared to 2010: biggest growth expected in the US followed by BRIC countries Source: Drilling and Production Outlook, Spears & Associates, December 2010, (excluding Russia, China and Central Asia) 14

15 Pipeline projects in pre-construction phase current worldwide pipeline projects: total 809 projects total 342,000 km length new announcements as of Nov Number of projects Total length km Middle East 20 29% 5,948 47% North America 20 29% 3,110 25% Africa 5 7% 1,716 14% Europe 12 18% 755 6% of which newly announced September through November 2010: 68 projects totaling 12,500 km half of which in the Middle East Australasia 6 9% 754 6% Asia 4 6% 268 2% Latin America 1 1% 27 0% Total 68 12,578 Source: Simdex Pipeline Projects Worldwide Guide Nov Update 15

16 Current market trends positive outlook for the pipe business? positive outlook for the oil and gas business drilling activity increasing > worldwide pipe demand growing multiple pipeline projects in pre-construction phase, particularly in the Middle East copious incremental pipe capacities in many main markets expected to come on stream in 2011/12 - supply exceeding demand traditional suppliers facing increasing competition from emerging market manufacturers? 16

17 Current trade restrictions on the US market effect on pipe business US domestic pipe industry - successful antidumping trade suits minimal Chinese pipe presence on the US OCTG and Line Pipe market millions of mt lost in the US looking for new outlets in other markets > price pressure US domestic mills adding local capacity to satisfy demand 17

18 Future challenges short term (2011): removal of economic stimulus measures in Europe and the US, austerity measures in the Euro zone political imbalance long term: local content to create jobs increasing protectionism against imports self-sufficiency limited supply of raw material sources > increasing raw material prices > pipe prices increasingly volatile supply & demand imbalance 18

19 Developments in individual pipe markets North America shale drilling - strong growth in drilling activity, increasing use of specialty connections OCTG consumption: small diameters (up to 7 ): increasing 9 5/8 and larger: limited offshore activity - decreasing domestic industry strives for high % of self-sufficiency in pipe supply several new pipeline projects 19

20 Developments in individual pipe markets South America recent major offshore discoveries in Brazil pipeline projects several projects completed in the last years Brazil: infrastructure projects, mechanical pipe demand increasing general demand growing at a high rate 20

21 Developments in individual pipe markets Europe nascent shale drilling industry in Western & Central Europe automotive industry: strong pipe demand, mainly for export powergen projects in Central Europe 21

22 Developments in individual pipe markets - Africa political volatility potentially causing disruptions to drilling activity pipe for oil & gas applications mainly imported, supply from local mills very limited Nigeria: local content required for finished pipe Angola / Nigeria: mainly offshore activity Gabon, Chad, Congo: some onshore activity, operated by IOC & NOC JVs rig count: 138 > limited pipe demand 22

23 Developments in individual pipe markets FSU Russia: 20% duty on products where local supply exists striving for self-sufficiency pipeline projects and pipeline repairs robust welded pipe demand * construction industry* steel pipe Caspian area: plastic pipe Chinese companies participating in drilling activities with Chinese pipe Ukraine: channeling vast overcapacities towards Russia and FSU in general gradually declining market for external suppliers, only highly developed specialty grades and connections imported * Source: World Steel Association, Russia 2020 report, October

24 Developments in individual pipe markets Middle East local content increasingly requested by operators pipe capacities: Jesco, a seamless pipe mill with 400k mt capacity, completed in Q3/2010 Jubail seamless pipe mill, announced capacity: 600k mt, reportedly under construction pipe processing/ finishing facilities in place in the Emirates (in addition to SSPF in KSA) importers supply the bulk of high-end products at this time going forward: traditional importers to partner with local content suppliers 24

25 Developments in individual pipe markets China Chinese pipe demand: approx. 45 million mt seamless: approx. 11 million mt welded: approx. 34 million mt thereof pipeline construction: approx. 8% Chinese pipe supply: capacities 2010: approx. 98 million mt capacities 2013: approx. 111 million mt equals world pipe demand self-sufficiency in pipe supply OCTG imports reduced from 80% to 2% in the last 20 years 25

26 Chinese pipe capacities figures in million mt existing expected by 2013 FC expansions new mills seamless (carbon) welded stainless / cold drawn TOTAL Sources: API - Simdex Pipe Mills of the World, China Iron & Steel Association, published annual reports of major pipe manufacturers, web pages of pipe manufacturers, Steel Business Briefing 26

27 World pipe demand 2010 vs. Chinese capacity (all figures are approximate in million mt) world pipe demand: 100 thereof seamless OCTG 10 Line pipe 5 30 other 15 thereof welded OCTG + Line pipe 25 other vs. Chinese capacity 2010: 98 (thereof 50% seamless) 2013 forecast: world pipe demand 110 (thereof 30% seamless) Chinese total capacity 111 (thereof 50% seamless) Sources: MBR Research Seamless Tubes and Pipe Monthly, drilling engineers of numerous customers, SMR market study 2004, Sumitomo presentation 2007, Rig Count: Spears and Associates, additional sources: US: OCTG Situation Report and Preston Pipe Report, China: CISA statistics, Russia/FSU: EVRAZ presentation dtd Sep 07 during ECON Meeting Beijing, Middle East: trade statistics (Austrian trade office Ryadh) 27

28 Supply Announcements of incremental capacities (in Million mt) since Jan total: > 40 million mt to be strategically placed (local content) welded seamless 13 million mt 31 million mt

29 Conclusion - supply & demand in balance in 2020? world pipe demand 2010: approx. 100 million mt Seamless: 30 Welded: 70 announcements of incremental capacities since January 2006: approx. 44 million mt seamless: 31 welded: 13 if world pipe demand increases 4% per year: 2020 demand will reach approx. 148 million mt will seamless replace some welded pipe? 29

30 Sources of information EIA US Energy Information Administration, January 2010 IMF (International Monetary Fund) World Economic Outlook, October 2010 World Steel Association, Russia 2020 Report, October 2010 Simdex, November 2010 International Energy Agency, Oil market report, December 2010 US department of commerce and department of labor, December 2010 Spears & Associates, December 2010 BP, January 2011 United Nations, World Population Prospects, January 2011 Metal Bulletin, monthly publications 30