The Secrets of Long Products

Transcription

1 The Secrets of Long Products It s all about the Supply Chain London, 5 September 2013 presented by Oliver Spaltmann Senior Market Analyst Steel & Metals Market Research Reutte, Copyright September SMR GmbH SMR GmbH

2 MARKET RESEARCH SERVICES / CONFERENCES LOCATION OUR TEAM R.-P. Hammerle U. Weirather S. Posch E. Pfeifer I. Spaltmann Joy Tio M. Moll P. Moll W. Lipp A. Racu O. Spaltmann B. Blitz W. Lee T. Windberger A. Sikman W. Bulla B. Hunter Jo Zhu Conferences Enduse Focused Single-Client Research Multi-Client Projects & Stainless Steel Seminars 8 th Asian Stainless Steel Conference Kaohsiung, Taiwan June 13 in association with 12 th International Stainless & Special Steel Summit London, UK September th Stainless & Its Alloys Conference Chicago, USA September 13 Type of Research Products Steel Grades Single Client 85 % 2011 Multi Client 15 % Long Products 50 % Flat Products 50 % Stainless Steel 70 % Tool Steels, Eng. Steels, Nickel Alloys & Carbon Steels 30 %

3 Table of Contents 1. Basics 2. Demand and Supply 3. Price Development / Profitability 4. Supply Chain / Distribution

4 Regional Stainless Steel Growth Dynamics All regions (except of Americas and Others) will grow faster in 2013 Absolute Changes kt +750kt +100kt EUROPE CHINA AMERICAS +260kt +115kt kt OTHERS* OTHER ASIA Blue = Growth 2012 Red = Forecast 2013 Black = Outlook 2014 * incl. India TOTAL WORLD

5 Table of Contents 1. Basics 2. Demand and Supply 3. Price Development / Profitability 4. Supply Chain / Distribution

6 Choose your Battlefield - Global Stainless Steel Products % of the Market are Commodities; Long Products have a better market structure than Flat Products Long Products Production Change 2012 Semis 1) Total World: Share: 32% 13 Cr OCTG Tube Total World: 200 Seamless Tube** Total World: 460 Forged Products Total World: % 39% 42% -2% Long Products Rolled Bars Total World: Total World: Share: 19% Share: 39% Profiles Total World: 160 Peeled Bars Total World: CF-Bars Total World: Flat Products 38% 11% 51% Wire Rod Wire Total World: Total World: Share: 30% All Products Crude Steel: Yield: % Precision Strip Total World: 550 Total World: ,5% CR Flat* CR Strip Total World: Total World: ,5% Share: 80% CR Sheet Long Products versus Flat Products: Flat Products Total World: Welded Tube & Pipe +2% Total World: Total World: More Value and High Value Products Share: 81% HRC*** Production Volume is not everything Total World: Room for Niche Suppliers Commodities: 42% versus 51% Less Globalization and Consolidation * incl. non-industrial CrMn steels HR Flat Decoiled Sheet ** excl. 13 Cr OCTG Total World: Total World: *** excl. CRR to reporting companies Share: 20% **** incl. 'rolled slab' incl. sub-standard products in Tube & Pipe in China PMP**** Total World: 1.290

7 [ 000 metric tonnes] Import Penetation Stainless Steel Long Products: European* Market Volume The import penetration reached fall to 22% in * incl. Turkey 1,500 1,350 1,200 European Demand external Imports Import Penetration 26% 24% 22% 1, % 18% 16% 14% 12% 10% 8% % Included: - Hot rolled bars - Bright bars - Forged bars - Profiles - Wire rod - Wire

8 [ 000 tonnes] Top 20` Global Stainless Steel Long Product Producers 2012 Based on finished product production of Top 20 are Asian! * ex. Jiuli Group ** incl. 13CrOCTG

9 Table of Contents 1. Basics 2. Demand and Supply 3. Price Development / Profitability 4. Supply Chain / Distribution

10 [Euro / tonne] Stainless Steel Enduser Price Bar dia. 50 mm peeled ex Stock The Price Development reflects the Market Weakness that lasts for more than a Year now 5,500 5,000 4,500 July 13: Asia ~ 970 /t below the U.S. & ~ 530 /t below Europe 4,000 3,500 3,000 2,500 2,000 1,500 Europe America Asia

11 Profit * [ US$ / t ] Profit / Tonne by Product Form Long products outperform flat products Long Products Flat Products -900 * EBIT, EBITA or Net Profit as reported

12 Table of Contents 1. Basics 2. Demand and Supply 3. Price Development / Profitability 4. Supply Chain / Distribution

13 Supply Chain Management Important Questions in the Stainless Steel Supply Chain Management Integration of all Relevant Supply Chain Management Processes Relations to Suppliers in order to support own Production Flow Question of sourcing (local or global sourcing), Involvement of selected suppliers in own technical developments, general information exchange Customer Relation / Service Management Relationship between own Organisation and Customers (Exchange of information, real-time info about delivery dates, scheduling, customer rapports) Production Flow and Stock Management Production and Supply of products have been mainly based on past forecasts (see bullwhip effect) in the past Target: flexibilization / optimization of own manufacturing process (changes in manufacturing flow, shorter cycle times, optimization of storage/handling, inventories, warehousing) Physical Distribution Physical link between own marketing / sales managment and customers (stockholders, fabricators, end users etc) Outsourcing / Partnerships Outsourcing of material components, logistics, services including the option to form a network which is controlled by the own organisation general question to focus only on activities which give a distinctive advantage other actvities should be outsourced. For a stainless steel mill: concept of own captive distribution channel versus supply via independent distributors Measurement of Performance What impact does changes in the supply chain have on own market share and profitability? Supply Chain Management should create Value Add

14 Bullwhip Effect Increasing Stock Levels back from End User to Mill Bullwhip Effect: Phenomenon observed in forecast driven supply chain and describes that the variation in demand increases up the supply chain from consumer to supplier Order Quantity Stock Order Quantity Stock Order Quantity Stock Order Quantity Stock End Users Fabricators Distributors Mills Time Time Time Time Due to forecast errors, companies are urged to carry inventory buffers called "safety stocks". Moving up the supply chain from enduser to supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock. Consequences: inefficient production or excessive inventory Measurements to Reduce Bullwhip Effect: Implementation of Supply Chain Management in a Company in order to synchronize demand and supply. Target: Mills have to know about the order situation / stock levels at end users and all relevant points in-between mill and end user

15 Distribution Structure in Europe Long supply chains European Mills DEPOTS Master Distributors Non-EU Mills EXPORTS LEVEL I Captive LEVEL I Independent LEVEL II Component Fabricators Product Manufacturers Endusers

16 Example for Supply Chain: Aerospace 2 Years between Raw Material Purchase to Assembly of Final Product diverse Stockholding Points 2 Months Period: 1 1/2 to 2 Years best worst Stockholding Raw Materials Meltshop, Remelting & Pre-forming Forging, Rough Machining of Component Heat Treatment, Final Machining Assembly of Component (e.g. engine) Assembly of Aircraft Airline receives the aircraft months after Raw Materials have been bought