Outlook for Nickelalloys Only the Sky is the Limit` International Nickel Study Group Lisbon 22 nd April 2008 Lisbon, Portugal presented by Markus A. Moll Senior Market Analyst Steel & Metals Market Research
MARKET RESEARCH PRODUCTS LOCATION TEAM Enduse Focused Single-Client Research M.A. Moll P.A. Moll W.D. Bentley W. Lipp O. Spaltmann T. Feichtner B. Blitz J. Normandeau R-P. Hammerle E. Pfeifer Type of Research Single Client 90 % Multi Client 10 % Market Intelligence for the Specialty Steel Industry since 1994 Multi-Client Projects & Stainless Steel Seminars '000 metric tonnes 30.000 25.000 20.000 15.000 10.000 5.000 Long Products 50 % 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006e 0 Products -2- Executive Search Know How Know Who Flat Products 50 % Steel Grades Stainless Steel 70 % www.smr.at Conferences in cooperation with Shanghai - June 08 Marbella - Nov. 08 Tool Steels, Eng. Steels, Nickelalloys & Carbon Steels 30 % www.steel-intelligence.com www.steel-executive.com executive.com Barry Hunter Assoc. Scrap Cons.
AGENDA 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -3-
Definition: > 30 % Nickel with some exceptions* ALLOY TYPE MAIN ALLOYS MAIN APPLICATIONS HPA: A286* Inconel 718 Nimonic 80A Inconel 725 Hastelloy X manifold studs jet engines, gas turbines, oil & gas diesel engine valves oil & gas jet engines, structural components Heat Resistant: 330* 600, 601 800, 800H, 800HT, 825 Calrod* various furnace components welding wire, heat shields oil & gas industry tubular heating elements Corrosion Res.: Alloy 200 Monel 400: K500 Incoloy 925 Alloy 28* L 605* battery casings shafts pins, structural parts oil & gas industry OCTG Surgical Implants Electronic Alloys: Ni 205 NiFe 36 NiFe 42 NiCr 80-20 spark plugs, welding wire shadow masks, glass seals lead frames heating elements -4- * < 30% Ni or Co-based
Global Production Volume 1989 2007e (finished products) Long Term Growth is Limited Global Production Volume 1989 2007e 275 250 225 G.R.: 2,8 % p.a. 200 in 000 tonnes 175 150 125 100 75 50 25-1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007e -5-
Production by Product Form 2006 & split into 4 Alloy Groups all in 000 tonnes (metric) All Products Total World: 272,9 Europe: 84,4 America: 90,9 Asia: 67,5 Others: 30,0 Long Products Flat Products World 164,7 World 108,2 Semis Bars Wire Seamless Tube Sheet / Plate Strip Total 52,6 Total 43,3 Total 36,7 Total 32,0 Total 60,4 Total 47,7 Heat Resistant Alloys 10% High Performance Alloys 33% Corrosion Resistant Alloys 35% -6- Electronic Alloy 26%
Market Volumes 2006 Net Importers & Net Exporters of Nickel Alloy Products 120.000 100.000 America Europe Net Exports Demand Net Imports Production 80.000 metric tonnes 60.000 40.000 Other Asia Other World 20.000 China - -7-
AGENDA 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -8-
SMC is again the No.1 Producer Worldwide Top-10 Producers control 75% of the Market Top Producers of Nickel Alloy Flat & Long Products** (2007 estimated) 45 40 Flat Long 35 30 25 20 15 10 5 - SMC VDM Imphy Alloys * ATI Carpenter Sumitomo Nippon Yakin Hitachi Haynes Daido Sandvik Foroni DN Valbruna Electrostal Mitsubishi Aubert & Duval BUAG Firth Rixon Electralloy * incl. Industeel ** Final shipments (plate, sheet, strip, bar, wire, seamless tube), excluding castings -9-
Focus on Aerospace 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -10-
Material Requirements Source: Rolls-Royce -11-
Rotating Parts Premium Segment Alloys are double Vacuum (VIM / VAR) melted or even Triplex (VIM / VAR / ESR) melted Discs Christmas Trees Blades -12-
Non Rotating Parts Duplex Melting and sometimes even Air Melting is sufficient Rings Bolts & Fasteners Engine Mount -13-
Grades used by main Engine Producers General Electrics Rolls Royce Inconel 718 65% Inconel 718 50% Waspaloy 11% Others* 20% Waspaloy 15% Others* 28% Inconel 720 11% *incl. CO based, Fe based & PM *incl. IN 901, RR 1000, C263, Others Pratt & Whitney Inconel 718 78% Others* 7% Waspaloy 15% *incl. CO based, Fe based & PM -14-
Buy to Fly The alloy producer has to melt up to 10 times the component weight Source: Rolls-Royce -15-
Accident Rates: Only 2 % of all fatal accidents are due to Engine failures -16-
The Aerospace Roller Coaster Airbus beat Boeing 453 to 441. Total in 2007 => +7% vs. 2006 1.000 Boeing* & Airbus Deliveries Number of Aircraft Deliveries 900 800 700 600 500 400 300 200 Boeing Airbus Order Backlog: 7.000 planes Annual Roll-Out: max. 1.200 units => Industry is busy for 6 Years but. Problem: There is no Cancellation Fee! 100-1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008e -17- * & other U.S. producers
AGENDA 1. Definitions, Basics & Market Structures 2. Producers 3. Focus on Aerospace 4. Future Trends -18-
Trends Few New Grades: Alloy 718+ (Teledyne Allvac) Is Nickel Substitution an Issue? o Carpenter 30% Ni grade vs Nimonic 80A for Valves o Clad Plate (var. Producers) & Bubi Pipe (Butting) are booming o Ti has re-gained applications (heat exchangers, sea-water desalination) Market transfer to China: Supply follows Demand Industry Consolidation is Overdue -19-
Market Structure 2007 and Outlook Growth Trends to 2012 for Ni used in Nickelalloys 12% of Prime Ni 3% CAGR > 6% > 3% < 3% Industrial Machinery 7% 1% Others** 7% Aerospace 21% Electronics / Electric Appliances 20% 2% 1% Other Energy* 7% Nuclear 1% Automotive 7% 1% Oil & Gas 15% Chemical / Process Industry 15% 2% * LGBGT, FGB ** Marine, Thermal Process, etc. 1% -20-
Nickel Demand in Nickelalloys will continue to grow substantially until 2010 thereafter a phase of stagnation can be expected 210 180 Ni Use In Nickelalloys in `000 tonnes 150 120 90 60 CAGR + 5% + 40,000 t or + 25% by 2012 30-2003 2004 2005 2006 2007 2008 2009 2010 2011 2012-21-
Hear more Details at these events in 2008 June 08 September 08 Our events in 2009: February: Mumbai, India September: Düsseldorf, Germany -22-