Chrome Industry Overview

Transcription

1 Chrome Industry Overview Victor Constant Market Research Analyst 31 st Stainless & Its Alloys Conference 2017 October 26 th, 2017 Doubletree Hotel Downtown Pittsburgh, PA - USA

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3 Global outlook on Cr industry Cr industry has held its trend in Global Cr and FeCr output Millions but 2017 was off to a rocky start as EU FeCr (USD/lb) and average Cr Ore (index Jan 2012=100) prices there was a sharp fall in prices from Q Prices have picked up in the past weeks. Source: FerroAlloyNet, Metal Pages, ICDA

4 Chrome ore and concentrate overview

5 Chrome ore production by grade Mt with 17 countries worldwide Mt Metallurgical grade Chemical grade Foundry sand grade Refractory grade +/- % in volume -5.5% +30% +4% -16% Source: ICDA

6 Chemical and Foundry sand grades Chemical grade Foundry sand grade 1000 Sodium dichromate Na 2 Cr 2 O 7 Metallurgical grade Chemical grade 700, ,000 Foundry Sands Metallurgical grade ,000 in Kt 600 (in tonnes) 400, , , , Increasing use of chemical grade in 2015/2016. In 2016 the Cr ore use for Na 2 Cr 2 O 7 was around 1 Mt i.e. 786 Kt of chemical grade + 176Kt of metallurgical grade (incl.ug2) consumed for SDC i.e. 668 Kt = 550 Kt i.e. 499 Kt of foundry sand grade + 50 Kt of metallurgical grade, screened in China who started using real Cr foundry sand from Q Source: ICDA

7 Around 77% of ferrochrome production is used to produce stainless steel. Ferrochrome and stainless steel are highly correlated! Cr ore production 2016 by type Mt Chromite usage FeCr production 2016 by type Mt Ferrochrome applications FeSiCr 319 Kt FeCr HC Fe Cr 28% 3.1 Mt Charge Cr 65.7% 7.29Mt Chemical 176 Kt Source: ICDA Foundry 50 Kt Source: ICDA Source: Industry 95.36% of total chrome ore production is used in metallurgical applications in HC FeCr & charge Cr production represents 93.7% of global ferrochrome production in 2016.

8 Ferrochrome usage Source: ICDA Grade % Carbon/Cr/Si Producing countries Charge Cr Low grade HC FeCr High grade HC FeCr Cr: 45-75% C: 4-8% Si: 2.5-7% Cr: 47-65% C: max. 10% Si: up to 4% Cr: 65-72% C: max. 10% Si: max. 2.5% South Africa Finland Brazil China India Zimbabwe Kazakhstan Albania Sweden Russia Turkey Specifications of Charge Cr and HC FeCr, and their producing countries, divided into three categories separated by grade. Source: H.Pariser, ICDA

9 35 30 Overview and trends by country Cr ore and Conc. producing countries Est. Cr ore and concentrate producing countries Mt Mt Mt Millions ,000 0 Source: ICDA Global chrome ore produc9on by country Est Est. South Africa Kazakhstan India Turkey Finland RoW South Africa: down by 5.7% from 2015 due to low Turkey: down by 21% as several businesses closed domestic demand, and some companies reducing mines during low Cr prices and took time to reopen output/stopping mines amid low Cr prices during when prices rebounded. Q4 2015/Q and taking time to reopen after. Output in H is down from H but up from H Kazakhstan: down by 1.2%, relatively stable activity, some safety checks in H Output in H is up from both H1 and H Output in H is down from H but up from H India: output jumped by 25% as government reopened some mines and demand from local FeCr increased. Output in H is down from both H1 and H2 2016

10 UG2 chrome output in million tonnes UG2 output is up from 2015 following the 6-month strike in % Source: ICDA

11 Global Cr ore trade overview H Chrome ore global production H Mt Previous stocks Global Cr ore trade 7.4 Mt Domestic use + Stocks 13.3 Mt Russia 344 Kt India 65 Kt USA 35 Kt Others 361 Kt China Cr ore Imports 6.6 Mt India 2.24 Mt South Africa 6.84 Mt Finland 546 Kt Kazakhstan 2.11 Mt Source: ICDA, Official Customs Data

12 Ferrochrome overview

13 World s FeCr producing countries by capacity Produc(on capacity 2016 (in,000 tonnes) Capacity Capacity produc>on China vs South Africa FeCr produc7on ( ) China South Africa Millions China South Africa Kazakshthan Kazakhstan India China production capacity est. around: 5.0Mt South Africa production capacity around: 4.3Mt China overpassed SA in 2012 Source: ICDA Kazakhstan FeCr production capacity around: 1.5 Mt India s FeCr production capacity around: 1.3 Mt

14 12 Overview and trends by country Ferrochrome producing countries Mt Mt Mt 10 in million tonnes Source: ICDA Est. China South Africa Kazakhstan India Finland RoW China: output was up by 11.4% as local FeCr producers were encouraged to increase output by higher tender prices from Chinese stainless steel producers and higher stainless steel output. Output in H is down from H but higher than H South Africa: down by 5.7% from 2015 due to some companies shutdowns (business rescue) and taking time to restart following acquisition. Output in H is up both from H1 and H Kazakhstan: up by 3.7%, steady growth over the years. Output in H is up both from H1 and H India: up by 22.2% in response to higher domestic Cr availability. Output in H is up both from H1 and H Finland: up by 3.1%, steady growth as well. Output in H is down from both H1 and H2 2016

15 Global Ch.Cr/ HC FeCr trade overview H Charge Cr/HC FeCr global production H Global Production 6.05 Mt Global trade 3.02 Mt Domestic use + stocks 3.03 Mt (est.)

16 Source: Official Customs Data, ICDA Ch.Cr & HC FeCr imports by country of origin H Americas European Union Asia 2016 Americas EU Asia

17 Global HC FeCr trade flows in H (in 000 tonnes) USA Europe Finland Kazakhstan India 421 Russia S.Korea China Taiwan 60 Japan Major HC FeCr exporter Exports to «other» FeCr purchasing countries (in 000's tonnes) South Africa 14.2 Kazakhstan 10.6 India 22.3 Finland 1.9 Zimbabwe 4.9 Zimbabwe 75.7 South Africa Source: ICDA, based on official customs data for 2015

18 China Ch.Cr/ HC FeCr overview H Production 2.26 Mt Ch. Cr/HC FeCr 3.6 Mt Imports 1.34 Mt 1t FeCr 3.33t Stainless Steel (depending on grade) China Stainless steel output in 2016 was 24.9 Mt (7.48x3.33) +15.7% YoY, in Q it was 6.2 Mt +16% YoY, in Q it was 5.8 Mt -11.5% YoY, in Q it was 6.3 Mt -0.33% YoY 25,000 20,000 China Stainless Steel Produc2on If Chinese stainless steel production growth keeps up, in correlation FeCr production should increase. China FeCr produc8on Est.? (in '000 tonnes) 15,000 10,000 5,000 0 Source: ISSF in million tonnes Source: ICDA Est Est.

19 in 000s tonnes 1, Source: ICDA Asia: Up by 18.4% in 2016 mainly pushed by China. Eastern Europe: Up by 7.6% in Output for H was up from both H1 and H Africa: down by 79% in Output for H was up from H1 and H MC/LC overview and trends Global output down by 16.2% in H LC & MC FeCr produc.on by region Kt 663 Kt 646 Kt Asia Eastern Europe Africa Western Europe Americas Output for H was down from both H1 and H Western Europe: up by 29.9% in Output for H was up from both H1 and H Americas: up by 13.7% in 2016 due to better power supply in Brazil enabling Ferbasa to increase output. Output for H was down from H but on par with H

20 MC/LC FeCr imports by country of origin H Americas European Union Asia 2016 Americas European Asia Union Source: Official Customs Data, ICDA

21 China impact on Cr ore prices Cr ore stocks were at low levels, under 1.5 Mt end of 2015 and under 1 Mt in Q2 2017, Cr ore stocks over 2 Mt So higher Cr ore prices in Q from Q boosted by higher demand from Chinese FeCr sector. Sharp price drop in Q amid low demand and high stocks. Price were low in Q rose again and are now stabilizing. Source: FerroAlloyNet

22 China stainless steel influence on FeCr prices Sources: ISSF, CSSC Increasing stainless steel output in China in up by 15.7% YoY Average HC FeCr tender price in China by Baosteel, Tisco, Jisco (RMB/tonne) Leads to higher demand for FeCr Leads Chinese stainless steel producers to increase their FeCr tender prices Sources: FerroAlloyNet

23 Expected Regional Stainless Steel Growth TOTAL WORD kt? kt kt kt AMERICAS EUROPE CHINA Forecast 2017 Growth 2015/16 Growth 2014/15 Source: SMR (real demand excl. stock variations) Rest of the WORLD (including India and Turkey) kt + 90 kt Other ASIA (Australia, Japan, South.Korea, ASEAN)

24 To sum up What are the expectations of the Chromium Industry? The Cr industry recovered from a very difficult phase in 2015 as a result of the challenging economic conditions globally, and particularly in China which has a significant impact on the chrome industry, by decreasing prices. Restart of Chinese FeCr production locally (+11.4% in 2016) China imported significantly more Cr ore from January 2017 As stainless steel production in 2015 was down worldwide (-0.3%) and in China (-0.6%) China expects again an increase for the coming years (2016: +15.7%), Q followed that trend (+16% YoY). Cr ore and FeCr prices dropped sharply during H but have picked up in Q3, before dropping slightly in the past few weeks. Cr industry is expecting a significant restart of Europe and USA stainless steel markets, and other countries to drive global stainless steel demand: Africa (Nigeria), Brazil, Mexico, Turkey, Vietnam India with its population now almost as high as China s, and with a new government pushing for economic and industrial development, has a strong potential for the future.

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