Looking Back to the Future Market for Prepainted Steel

Transcription

1 Looking Back to the Future Market for Prepainted Steel Dr. Terry Goodwin Director - Marketing, Tata Steel Europe 49 th ECCA Autumn Congress Krakow (18-20 May 2015) 1

2 Content Introduction Today Conclusions 9 2

3 Career History TSE ECCA Director Marketing 2013 Portfolio responsibilities including OCS Product & Market Development Corus Colors Chairman Marketing Committee ECCA President ECCA Vice President UK Group Chairman Portfolio responsibilities including OCS 2000 Coated Steel R&D

4 Content Introduction Today Conclusions 9 4

5 1995 Key Business Environmental Factors Economic environment Steel consumption strongly influenced by economic cycles (especially for building and construction) No significant intercontinental business opportunities Legislative environment Environmental regulations (zinc, chromate, PVC, isocyanates,voc ) have influence on product development Fire regulations Competition More competition of Asian countries for basic products (on the long term not considered as significant) Eastern countries are developing their installations - Increasing attractiveness of the OC market Technology Innovation is slow especially as far as process innovation is concerned Product development depending on chemical knowledge, i.e. to a great extent on our paint suppliers 5

6 KT 1995 Market Outlook OCS Consumption in Western Europe ( ) Construction Other industries Major Appliances Automotive growth rate: 6% p.a growth rate: 2% p.a growth rate: 8% p.a growth rate: 11%

7 1995 Installed capacity in Western Europe 250 Line Capacity (1,000 tpy) OCS Line Date of Completion 7

8 KT 1995 Strategy Learnings 1995 Market Outlook OCS Consumption in Western Europe ( ) 1995 View of installed capacity in Western Europe Construction Other industries Major Appliances Automotive growth rate: 6% p.a Line Capacity (1,000 tpy) OCS Line growth rate: 2% p.a growth rate: 8% p.a growth rate: 11% Date of Completion 5 Optimistic view of the future market Large share of the market was captive A large and increasing number of medium/small sized customers Rate of investment in capacity supported the industry optimism Was in the industry becoming like the rest of the steel industry over-investment in capacity to create imbalance in supply and demand? 8

9 Content Introduction Today Conclusions 9 9

10 2005 It was all about consolidation Usinor BSSP Hoogovens % of the European capacity in the hands of 10 players Voest Raut. SSAB TKS Corus Arcelor % of the European capacity in the hands of 5 players Just like the rest of the steel industry! 10

11 2005 Global Market Outlook ~6% 16,000 23, Global 4,500 ~4% North America 6,000 4,500 ~5% South America ~4% 6, Eastern Europe Western Europe ~15% Turkey ~5% Africa ~7% ~10% ,500 Russia ~10% China India ~15% Global OCS market will be worth > 11bn by ,000 5,400 4,000 ~4% Australasia & Asia (excluding China, India) 11

12 2005 Market Outlook 2005 West European OCS consumption to increase by 2m tonnes, or 50%, between 2001 and 2010 Western Europe, apparent consumption by sector, m tonnes Construction Appliances Automotive Other 2005 European consumption shows firm growth in both the Western and Eastern hemispheres 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 OCS consumption, 000 tonnes Eastern Europe, CIS & Baltic Western Europe * 2010* * 2010* Continued optimism for future market growth Debate over whether automotive was a true OCS market required capacity but attracted investment Accelerating growth in central and eastern Europe for all industries OCS was no different Local investment were raising the first concerns about over-capacity 12

13 Colorcoat - Polish Commercial buildings 13 Opel Showrooms Colorcoat Prisma Zeus Gorstal 2011 Klaudyny Street Colorcoat Prisma - Anthracite Pruszyński Sp. z o.o Intercar - Colorcoat Prisma Oyster Trimo 2012 Getin Bank Colorcoat HPS200 Ultra Anthracite Rozbud 2012 Aluron Colorcoat Prisma Grey Aluminium Pruszyński Sp. z o.o

14 2005 Understanding the signals Growth of OCS consumption in auto sector continues through 00 s OCS imports from Asia increase dramatically after OCS consumption in auto sector * 2008* 2010* Did we as an industry really understand this market? Different forces compared to our core market Vehicle development cycles enabled far quicker product substitution e.g. HDG for EZ Time to look outside Europe why were these producers exporting? ECCA itself was encouraging the development of capacity in emerging economies through access to the shared knowledge of the European industry 14

15 2005 Strategy Learnings 2005 West European OCS consumption to increase by 2m tonnes, or 50%, between 2001 and View of installed capacity in Western Europe 250 Western Europe, apparent consumption by sector, m tonnes Construction Appliances Automotive Other Line Capacity (1,000 tpy) OCS Line * 2010* Date of Completion Did we think this growth could go on forever? Single source of information derived from views within the industry can create strategic blindness Continued investment in the single future Everybody seemed to miss the credit crunch of 2008 it has not been the same industry since then 15

16 Content Introduction Today Conclusions 9 16

17 EU steel demand is expected to grow by around 2% p.a. in the next 10 years EU - Apparent demand for finished steel (Mt) EU - Sector forecast (2008=100) % p.a ~2% +2.3% p.a For reference: Latest Eurofer forecast (February) :+1.9% for 2015, +2.6% for % p.a. 60 World Steel (Oct 2014) Cars and trucks Construction Machinery Source: Worldsteel ( ), Oxford Economics, LMC, Eurofer

18 Content Introduction Today Conclusions 9 18

19 Lessons for the future Single view of the market can lead to wrong decisions Multiple scenarios for the future improve decision-making Understand the weak signals What is the appropriate response? Everybody is moving not always at the same speed as you are Clarity and speed on decisionmaking 19

20 Threat of imports Looking forward OCS is in a vulnerable position Low Automotive Some threat of substitution driven by weight reduction and CO 2 legislation. Rail, Aerospace Small, niche sectors with low competitive and material threat. Technical alignment and relationships critical. Lifting & Excavating Steel under significant threat within a consolidated market Construction Steel the material of choice but sub sectors and key geographies have high competitive intensity. Packaging Market driven by legislation and the need for sustainable products and solutions. OCS High High Threat of alternative materials Low 20

21 Considerable uncertainty about future construction demand EU - Sector forecast (2008=100) % p.a % p.a % p.a Tube Plate Galv Decks OCS Fit Out Sections Mesh Rebar Cars and trucks Construction Machinery Today Base Optimistic Pessimistic Strip Steel only 21

22 Current ECCA Statistics 6,000,000 5,000,000 4,000,000 3,000,000 2,000, mt forecast in 1995 for % 12% 7% 8% 2008 Ijmuiden 139,537 25% 3% 3% 4% 16% ,000,000 Tonnes Maubeuge 230,147 41% 70% 74% White Goods Transport Building General Industry Other Applications White Goods Transport Building General Industry Other Applications Pre-painted steel grew by 3% y/y in 2014 to 4.9 mt Biggest increase on general industry & service centres (16%), followed by the building Industry (4%); other sectors declined Production in Europe has not yet reached the 2008 levels (772 kt down in 2014 when compared with 2008 volumes) CAGR for the period ( ) of -2.4% Positive CAGR for the General Industry (1.8%) White Goods showing the poorest result (-13%) The building industry is the largest consuming sector (3.6 mt), accounting for three-quarters of pre-painted steel demand in 2014 (74%) General Industry is the second-largest segment (16% in 2014; 772 kt) Both Building and General Industry & Service Centres are expanding its relative importance for the total prepainted steel demand, gaining share from Transport and White Goods Source: ECCA 22

23 Pessimistic Optimistic 2025 Market Scenarios Construction PESTLE Customer OCS Government policies support growth in construction to drive and sustain GDP growth. Increased demand for products as consumer confidence returns leads to Private sector investment. Reduced focus on lowest price tender and capital cost eases margin squeeze. Adoption of sustainable and whole life costing of buildings increases mix of environmental products and solutions. Accelerate value in use strategies for steel markets for premium products and break through technologies. Develop further steel s sustainability credentials vs. competitive materials concrete and timber. Key Points Implications for Customers Implications for OCS PESTLE Customer OCS Structural overcapacity throughout value chain in Construction in Europe. Cost reduction in sharp focus for whole value chain from design, through to delivery. Even greater focus on cost for products. Increased international competition as firms move to markets and segments with signs of activity and growth. Suppliers and customer less focused on Europe move operations to growth markets of Asia, Middle East. With designers working on projects elsewhere steel not the natural choice for structure or envelope. 23

24 2025 Construction Opportunities Smart is the new green Urbanisation Adaptive Architecture Arcology (Architecture + ecology) Retro-fit for low carbon buildings Design for deconstruction 24

25 2025 Beyond Construction Colour Function Consumer Transport Materials integration Surface Performance 25

26 Content Introduction Today Conclusions 9 26

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28 Facts about the future Population growth means that there will be an extra 2.5bn extra people by apartment buildings for 100 people are required every day If that is not an opportunity then what is? 28

29 Other organisations are thinking about it already Arup Future Foresight 34

30 If this is the future then how can OCS be part of the solution? Arup Future Foresight 35

31 Competitive materials are already included Arup Future Foresight 36

32 Functional surfaces are essential Arup Future Foresight 32

33 How can OCS/prepainted metal respond to these longer term opportunities? Ulsab (1990 s) Future Steel Vehicle (2000 s) The world s most sustainable shopping mall Wood: The Future of Construction? 33

34 Content Introduction Today Conclusions 9 34

35 Conclusions The OCS industry has been slow to adapt and respond to the external business environment The future looks like being considerably different to the past The industry needs to be ready to exploit the opportunities that can now be seen ECCA will play a key role in coordinating industry-wide initiatives that are a feature of other industries 35

36 Looking Back to the Future Market for Prepainted Steel Dr. Terry Goodwin Director - Marketing, Tata Steel Europe 49 th ECCA Autumn Congress Krakow (18-20 May 2015) 36