17 th Annual Zinc & its Markets Seminar Galvanized steel outlook

Transcription

1 17 th Annual Zinc & its Markets Seminar Galvanized steel outlook 6-8 May 2013 Robert Cartman Senior Metals Analyst 2013 Metal Bulletin Research 1

2 Disclaimer: Prices and other information contained in this presentation have been obtained by us from various sources believed to be reliable. This information has not been independently verified by us. Those prices and price indices that are evaluated or calculated by us represent an approximate evaluation of current levels based upon dealings (if any) that may have been disclosed prior to publication to us. Such prices are collated through regular contact with producers, traders, dealers, brokers and purchasers although not all market segments may be contacted prior to the evaluation, calculation, or publication of any specific price or index. Actual transaction prices will reflect quantities, grades and qualities, credit terms, and many other parameters. The prices are in no sense comparable to the quoted prices of commodities in which a formal futures market exists. Evaluations or calculations of prices and price indices by us are based upon certain market assumptions and evaluation methodologies, and may not conform to prices or information available from third parties. There may be errors or defects in such assumptions or methodologies that cause resultant evaluations to be inappropriate for use. Your use or reliance on any prices or other information published by us is at your sole risk. Neither we nor any of our providers of information make any representations or warranties, express or implied as to the accuracy, completeness or reliability of any advice, opinion, statement or other information forming any part of the published information or its fitness or suitability for a particular purpose or use. Neither we, nor any of our officers, employees or representatives shall be liable to any person for any losses or damages incurred, suffered or arising as a result of use or reliance on the prices or other information contained in this publication, howsoever arising, including but not limited to any direct, indirect, consequential, punitive, incidental, special or similar damage, losses or expenses. We are not an investment advisor, a financial advisor or a securities broker. The information published has been prepared solely for informational and educational purposes and is not intended for trading purposes or to address your particular requirements. The information provided is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, commodity, financial product, instrument or other investment or to participate in any particular trading strategy. Such information is intended to be available for your general information and is not intended to be relied upon by users in making (or refraining from making) any specific investment or other decisions. Your investment actions should be solely based upon your own decisions and research and appropriate independent advice should be obtained from a suitably qualified independent advisor before making any such decision Metal Bulletin Research 2

3 Zinc demand Chinese potential Construction/Auto outlook Conclusions 2013 Metal Bulletin Research 3

4 Global zinc demand by industry Chemicals 6% Misc. 4% Zinc alloying 17% Zinc semis 6% Galvanizing 50% The galvanized steel industry accounts for half of global zinc demand Steel coated in zinc to protect against corrosion Steel is zinc-coated either through hot-dip galvanization (HDG) or electrogalvanization (electroplating) (ELG) ELG typically seen as a higher-quality, longer-lasting product though most zinc-coated steel is now in the form of HDG Outside of galvanizing steel, most zinc is used in the production of zinc alloys e.g. brass and bronze Brass/bronze 17% Source: ILZSG, MBR 2013 Metal Bulletin Research 4

5 Zinc-coated steel production vs. zinc consumption 40% Zn-coated steel production 30% Zinc consumption year-on-year % change 20% 10% 0% -10% Because of its importance to global zinc demand, changes in the production of galvanized steel typically drive zinc consumption In 2012, growth in galvanized steel production fell from 8% y-o-y in 2011 to just 3% y-o-y Growth in zinc consumption likewise fell, from 3% y-o-y to -2% y-o-y So, where does galvanized steel production go from here? -20% -30% Source: ILZSG, AISI, StatsCanada, WSA, JISF, KOSA, TSIIA, MBR 2013 Metal Bulletin Research 5

6 Global Zn-coated steel production Mt Global production of galvanized steel has recovered well since the crisis Production fell by 19% in 2009 but has since bounced back 2012 production thought to be around 121Mt, up from the 2007 level of 107Mt 60 As with the global steel industry in general, however, this pattern has one key driver China Since 2007, Chinese production has grown 20Mt Since 2007, production outside of China has fallen by 6Mt The largest production falls since 2007 have come in the EU27 region, where production has fallen by 5Mt China EU27 NAFTA Japan South Korea India S.America Other Source: AISI, StatsCanada, WSA, JISF, KOSA, TSIIA, MBR 2013 Metal Bulletin Research 6

7 Indexed output of Zn-coated steel (2002 = 100) Global Ex-China Global output of galvanized steel in 2012 was 18% higher than that in 2007 Outside of China, however, galvanized steel output remains below its pre-crisis 2007 peak by some 8% With all galvanized steel growth and therefore a large part of zinc demand tied up in China, how much further can China go? Is recent Chinese growth sustainable? Will regions outside of China return to growth? Source: AISI, StatsCanada, WSA, JISF, KOSA, TSIIA, MBR 2013 Metal Bulletin Research 7

8 Zinc demand Chinese potential Construction/Auto outlook Conclusions 2013 Metal Bulletin Research 8

9 Galvanized steel consumption vs. income ( ) kg per capita South Korea Vehicle production per 000 people S.Korea 92 Japan 78 USA 33 EU27 32 In per capita terms, China is still some way behind other countries/regions in terms of its galvanized steel consumption In 2012, China consumed some 26kg of galvanized steel per person EU27 (2012) Japan (2012) Taiwan (2012) USA (2012) More mature economies tend to consume in the region of 50-60kg per person EU27 51kg/capita Japan 65kg/capita South Korea 116kg/capita Taiwan 49kg/capita USA 50kg/capita Where does China go from here? Continued growth up toward 50kg/capita? 20 China If so, this would imply another ~30Mt of consumption to arrive in China, up toward 70Mt in total ,000 20,000 30,000 40,000 50,000 60,000 PPP income per capita (current US$) Source: AISI, StatsCanada, WSA, JISF, KOSA, TSIIA, IMF MBR 2013 Metal Bulletin Research 9

10 Zinc demand by end-use Industrial machinery 7% Consumer goods 6% Infrastructure 16% Construction 51% About half of all zinc ends up being used by the construction industry A further 16% is used by the infrastructure sector Most of the zinc used by these industries will be in the form of galvanized steel The automotive sector also uses a lot of galvanized steel This sector uses proportionately more ELG than other sectors as this product typically offers better surface finish and paintability Transport 20% Source: Nyrstar, MBR 2013 Metal Bulletin Research 10

11 Zinc demand Chinese potential Construction/Auto outlook Conclusions 2013 Metal Bulletin Research 11

12 Global construction indicators (2007 = 100) Galvanized steel consumption (2007 = 100) Chinese floor space under construction ('000 m2) China 250 EU27 construction production index USA construction value put in place ($bn current prices) 250 EU27 NAFTA Source: CEIC, AISI, StatsCanada, WSA, MBR 2013 Metal Bulletin Research 12

13 Gross fixed capital formation (% of GDP) China EU27 USA China s economic growth and large-scale urbanization has driven the country s construction and infrastructure sectors Demand for new housing, roads, rails... has boosted consumption of galvanized steel Is China s level of spending on construction/infrastructure sustainable though? Increasing potential for overinvestment/bad investments Source: World Bank, MBR 2013 Metal Bulletin Research 13

14 Urban population (% of total) China EU27 USA forecasts As of 2010, China still had more than half of its population living in rural areas, predominantly inland Through to 2050 a further ~300m people in China are expected to move from rural to urban areas as the country continues its shift from agriculture -> manufacturing -> services This great migration has already, and will continue to be, associated with increased consumption of galvanized steel through increased construction, demand for appliances, automotives Source: UN, MBR 2013 Metal Bulletin Research 14

15 900 Motor vehicle ownership vs. income ( ) 120 Global light-vehicle sales (million units) Units per 000 people USA 100 ROW China 600 Japan 80 EU South Korea Mexico, Russia China (2020 forecast) Turkey China 0 10,000 20,000 30,000 40,000 50,000 Source: World Bank, IMF, AlixPartners, MBR PPP income per capita (current US$) f 2020f 2013 Metal Bulletin Research 15

16 Zinc demand Chinese potential Construction/Auto outlook Conclusions 2013 Metal Bulletin Research 16

17 Chinese galvanized steel consumption forecast to increase to ~60Mt by 2020 Up from 2012 figure of 35Mt Still plenty of demand growth to come from the auto/construction sectors Little to no growth expected in mature markets (e.g. EU, USA, Japan) ~14Mt of existing planned capacity expansions ~25% of which in China ~20% in India ~20% in other Asia ~20% in other emerging markets ~10% in Europe/USA (but all currently on hold) Global growth in galvanized steel production until 2020 to add ~2Mt of zinc demand Assuming galvanized steel production still accounts for ~50% of zinc demand in 2020, global zinc consumption to rise to about Mt by 2020, up from ~12.5Mt now 2013 Metal Bulletin Research 17

18 2013 Metal Bulletin Research 18

19 Contact details for further information: Metal Bulletin Research Nestor House, Playhouse Yard, London EC4V 5EX +44 (0) Robert Cartman Senior Metals Analyst +44 (0) Metal Bulletin Research 19