Stainless Steel Scrap Supply & Demand and its Impact on the Primary Market

Transcription

1 Stainless Steel Scrap Supply & Demand and its Impact on the Primary Market MB Ferro Alloy Conference, Barcelona, November 11 th 2013 Paul Gielen, Sales Director CRONIMET Group

2 Let s talk about... 1 The CRONIMET Group 2 3 Stainless Steel Scrap Supply & Demand Elements disturbing the Scrap Model 4 Stainless Steel Scrap versus Primary Ni Market 5 China: Key to Future Scrap Business 6 Conclusion 2

3 1 The CRONIMET Group 3

4 CRONIMET Group Our success story >>> System supplier for the industrial production of stainless steel and integrated raw materials company Foundation of CRONIMET Ferrolegierungen mbh in Karlsruhe Entry into the U.S. market Tonnage for the first over 1 Million Entry in the Chinese market with representitive office Foundation of CRONIMET Shanghai Expansion in the U.S. Market with 3 locations Expansion Asia: New site in Singapore (CRONIMET Abcom) Cooperation with Pure Iron, Armenia Foundation of CRONIMET Mining GmbH, Karlsruhe Acquisition of the majority stake of ZCMC, Armenia Foundation of CRONIMET Chrome South Africa CRONIMET Mining GmbH becomes CRONIMET Mining AG >>> CRONIMET is established on 4 continents with more than 56 branches, over employees make our company a worldleader in the field of stainless steel and raw materials! 4

5 Annual sales 5

6 Disclaimer This presentation is provided to you for information purposes only and is not intended as an offer to enter into any transaction. The information contained in it is not necessarily complete and its accuracy cannot be guaranteed. To the extent permitted by applicable law, none of CRONIMET Group accepts any liability whatsoever for any direct or consequential loss arising from any use of this presentation or its contents, including for negligence. Copyright protection exists in this presentation. The contents of this presentation are strictly confidential and it may not be disclosed, reproduced, distributed or published by any person for any purpose without our written consent. Further information is available on request. Copyright CRONIMET Holding GmbH

7 2 Stainless Steel Scrap Supply and Demand 7

8 Stainless Steel Scrap Dynamics Revert Scrap 4. Blended Scrap How much Ni units available for blending? 1. Revert Scrap ~11% of Crude prod. 3 months until remelting 2. First-Use Scrap 5 25 % of STS market volume 6 months 3. End-Use Scrap Stimulated by Ni price Recycling Rate ~70% ~27 years of average equipment use before scraping Source: SMR 06/2012 8

9 Stainless Steel Scrap Dynamics Reclaimed Scrap 4. Blended Scrap How much Ni units available for blending? 1. Revert Scrap 2. First-Use Scrap 3. End-Use Scrap ~11% of Crude prod. 3 months until remelting Source: SMR 06/ % of STS market volume 6 months Stimulated by Ni price Recycling Rate ~70% ~27 years of average equipment use before scraping 304 scrap is the most important material; >50% of all STS is melted from scrap 9

10 Scrap Model Circle of Recycling Reclaimed Scrap Scrap Processor CRONIMET Collectors, Traders Steelworks: Melting Primary Raw Material Reclaimed Scrap Ingots, Coils, Sheets etc. Consumer Fabrication Finished Products 10

11 Stainless Steel Scrap Reserve (World) Stainless Steel Production vs. Stainless Steel Scrap Consumption (in '000 mt) Source: SMR, CRONIMET 11

12 Stainless Steel Production 1980 till now - per Region Source: SMR, CRONIMET Summary, 04/

13 Stainless Steel Scrap Ratio 304 Scrap Ratio - Summary by Region Ø Scrap Ratio 52,8 % Source: SMR, CRONIMET Summary, 04/

14 Austenitic Production versus Austenitic Scrap Availability Austenitic Scrap Availability (incl. Revert Scrap) Source: SMR, CRONIMET Summary, 04/

15 Scrap Availability vs. Consumption (in 000 mt) Source: SMR, CRONIMET Scrap Scenario,

16 Summary China is the dominating growing area of stainless production has the lowest scrap ratio This results in lower % scrap consumption world wide Taking historical production & consumption into account Europe and USA will have oversupply in scrap 16

17 3 Elements disturbing the Scrap Model 17

18 Nickel Price Overview 2002 till now Gap between Highest and Lowest Nickel on monthly basis (USD) 18

19 Impact on Scrap Availability Ni volatility introduces speculation in Ni containing scrap No steady flow of material $/mt Ni 70 $/mt in scrap 70$ / $ ROI 60% annualised 19

20 Different (Raw Material )Strategies Region Scrap Availability Scrap Input Ratio Scrap Trade Alternative Raw Materials Upstream- Investments in Ferro Alloys United States high high Exports --- very low Japan sufficient medium Exports --- high EU high medium/ high Exports --- low China low low Imports Ni Pig Iron (Chrome Ore) Indonesian Ni Ore? very high 20

21 Example of a 304 Scrap Blend - Europe 18/8-scrap 50 % 18/10-scrap 5 % Shredder 5 % Bundles 15 % Ferro-Chrome 5 % Chrome Steel 10 % Low Alloy 5 % NCT/High Alloy 5 % 100 % 21

22 Summary Ni price volatility = speculative Ni Ore availability (price) Quality of scrap cause unexpected" change to market 22

23 4 Stainless Steel Scrap versus Primary Ni Market 23

24 Nickel in Scrap (CRONIMET) versus Primary Production in t in % Primary Nickel-production Primary Nickel-consumption Nickel-content in austenitic stainless steel Nickel out of scrap (incl. Revert) % therefrom external scrap % ~ 42 % of Ni-content in austenitic production 2012 was covered by external scrap Primary Nickel % TOP 5 Nickel Producers in mt Norilsk Nickel Vale Xstrata/Glencore Jinchuan BHP Billiton CRONIMET CRONIMET supplies ~ 12 % of Ni units in austenitic stainless steel production Source: H. Pariser, Weekly Fax Service, , p

25 Primary Nickel Production 2012 Stainless steel scrap at location Long distance for primary nickel 25

26 Price Comparison LME-Nickel vs. Nickel in scrap 26

27 Summary USA and Europe: Ni in scrap is locally available and is getting more and more competitive versus primary Ni 27

28 5 China: Key to Future Scrap Business 28

29 China: Stainless Steel Scrap Market Source: SMR, CRONIMET Scrap Scenario,

30 Nickel Pig Iron LME-Nickel vs. Nickel Pig Iron (NPI) Source: Jim Lennon, Macquarie Commodities Research: The nickel market outlook, International Stainless & Special Steels Summit, Sept. 2013, p. 28 (SMM & Macquarie Research, Sept. 2012) 30

31 Scrap Price Comparison: Europe vs. China 304 Scrap Price Development in Europe and China (in ) 31

32 When will China start consuming scrap? Will LT Ni ore contracts hold the chinese back from scrap consumption? How is Ni ore imported by new legislation in Indonesia? What will be evolution of cost new Chinese Ni production? When is Ni in scrap competive against Nickel Pig Iron? 32

33 6 Conclusion 33

34 Conclusion 2013: Ni value in scrap reduced by over 25 % 2014: Taking the fact Ni in scrap has regained his status as cheapest Ni, it could attract new markets, resulting in increasing prices 34

35 Thanks for your attention!