Nickel a bright future and great value Richard Matheson General Manager Asia 27 th October 2015 The Nickel Institute does not present forecasts or comments on nickel markets, prices or supply/demand. The Nickel Institute does promote the long term use of nickel to contribute to a sustainable future.
NI mission and goals Mission Promote and support the use of nickel in appropriate applications Market Development: H&E Public Policy: Science (NiPERA): Build the nickel brand. Grow and defend markets for new and existing nickel applications. Promote sound science, risk management, and socio-economic benefit as the basis for public policy and regulation. Undertake science relevant to human health and environment. 2
Member companies Vale Canada Limited PT Vale Indonesia Tbk Vale Japan Limited Approximately 85% of worldwide nickel production outside China 3
Nickel in use Today, nickel-containing materials are used in virtually every aspect of our lives including food processing, water supply, buildings, energy production, transport, electronic components, medicine, chemical production and heavy engineering.
Nickel use 2014 First Use Foundry 3% Other 4% Cu Base 1% Plating 8% Ni Base 9% End Use Alloy 8% Stainless 67% Non-Allocated 0% Metal Goods 18% Transport 15% Tubular Products 15% Electro & Electronics 11% Building & Construction 11% Engineering 30% Stainless steel is the biggest market for nickel by far 5
Examples critical but hidden use 6
Examples critical but hidden use 7
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Regional nickel consumption 2014 China is the biggest market for nickel by far 10
Stainless steel demand Demand for stainless steel driven by China 11
Stainless steel demand Nickel demand has grown by 4.2% 2002-2013 Surge in 200 series (1-3% of Ni compared with 8-11% in 300 series) 45000 200 Cr Mn Growth Rate 14.9% 40000 35000 30000 25000 300 Austentitic Growth Rate 3.1 20000 15000 10000 5000 0 Source: H Pariser 400 Ferritic Growth Rate 5.7% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Ferritic Austenitic Cr Mn Growth is driven by nickel bearing austenitics 12
Population growth Population growth from 7.3 now to 9.7 billion by 2050 and 11.2 by 2100 Main growth in Asia (60% of world population) and Africa (16%) but also in North America 80% of population in developing countries, China and India each represent nearly 20% of global population By 2050 global population will be 50% higher than today
Urbanisation Proportion of world population urbanised 1950, 30% of population 2014, 54% of population 2050, 60% projected 90% of the increase between now and 2050 will take place in Asia and Africa In China 300 million more people are expected to be urbanisedby 2050 In India 400 million more people are expected to be urbanisedby 2050 50% of Indian population equivalent of more than 800 million people will be urbanised by 2050 To accommodate this enormous change the current Indian government has allocated USD 1.2 billion in this year s budget to examine a Smart Cities program for execution in 100 Indian cities Source World Urbanization Prospects 2014 14
The 21 st Century 2050 buildings More construction About 1/3 of global energy consumption will be related to buildings About 2/3 of energy used in buildings will be related to heating (space and water) Lots of potential energy savings http://www.earthtechling.com/wp-content/uploads/2011/02/wwf2050-2.jpg http://carbonlimited.org/2009/02/05/heat-is-the-key-to-2050-co2-target/ 15
The 21 st Century 2050 food & water Food consumption will not only increase in total amounts, but also food quality and processing Substantial increase in water use to be expected for agriculture domestic and industrial uses http://www.plastemart.com/upload/literature/lit_images/freshwater.jpg http://www.globalharvestinitiative.org/wp-content/uploads/2011/08/figure2.gif 16
Water service pipes for smart cities an example of nickel s contribution to the future Access to water and sanitation, urbanization, industrialization, and higher living standards combine to increase the demand for water in cities By 2050 global water demand is projected to increase by 55%, resulting from urbanization in developing countries If we continue, the world will only have 60% of the water it needs by 2030 So the world is projected to face a 40% global water deficit under a businessas-usual scenario Source: United Nations World Water Development Report 2015 17
How nickel can solve some urbanisation issues for water Non-revenue water (the water that leaks out of the system) 25 30% non-revenue water in most parts of the world Some areas with more than 50% Need for additional water supply Need for additional water treatment Need for additional electricity Need for additional chemicals Need for additional infrastructure Need for additional dams and reservoirs Tokyo and Taipei point to a solution 18
Examples from Tokyo & Taipei Leakage reduction project Source: Bureau of Waterworks, Tokyo Metropolitan Government 19 www.imoa.info
Leakage reduction with stainless steel 20 www.imoa.info
Leakage of different pipes in Taipei Poly Butylene pipes account for 3% of length but 28% of leaks Water mains, 5% SSP, 4% Other, 2% GIP, 1% CIP, 1% Service pipes, 95% LP, 11% PB, 28% PVC, 53% Analysis of leakage cases in Taipei 21 www.imoa.info
Taipei reduced leakage rate Reduction from 27% non revenue water to 17%, after 35% implementation of stainless steel service pipe Non revenue water % 30 28 26 24 22 20 18 16 14 28.44 27.51 26.70 26.99 25.77 24.19 23.61 22.02 21.60 20.51 19.10 17.88 16.71 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Source: Taipei Water Department 22 www.imoa.info
City of Taipei Water Works Results Leakage in 2005: 365 million m3 (27%) Leakage in 2014: 219 million m3 (16.7%) Reduction by 146 million m3 / year (price/m3: NT$ 5-7.6 or US$0.15-0.23) 146 million m3 x US $0.15-0.23/m3 = $22-34 million / year About 60,000 repair cases in last six years Drought in 2002: 1377 mm rain fall over reservoir Drought in 2014: 1201 mm rain fall over reservoir Impact: no water shortage in 2014, surplus to other utility and storage 23 www.imoa.info
City of Tokyo Water Works Results Leakage in 1994: 175 million m3 (9.9%) Leakage in 2013: 33 million m3 (2.2%) Reduction by 142 million m3 / year (price per m3: 206 or US $1.70) 142 million m3 x $1.70/m3 = $241 million / year Repair cases in 1994: 48,000 / year Repair cases in 2013: 10,000 / year 38,000 repair cases x $ 2,000 / case = $76 million / year Impact between $200 and $300 million / year 24 www.imoa.info
Final Cost/Benefit Analysis - Tokyo 1.5 Disadvantage Advantage 20 200 45 1 USD millions/year 25
Megatrends: long term outlook Long-term outlook is positive for materials based on expected population growth leading to increased need for, everything: Focus on sustainability Society needs solutions to manage the expected demands and enable us to meet these challenges Nickel ispartoftheanswerforall theoldapplicationsplus: New and adapted technologies Smart solutions Energy savings Increased demand for raw materials
Reference For more information about Megatrends and nickel s place in solutions to the challenges confronting the future of mankind please see our publication: Nickel in Tomorrow s World This and other vital information about nickel can be found at our website: www.nickelinstitute.org Data from the Nickel Institute 27
Head winds Source: SMR Perception of cost 28
Current value of nickel containing materials 120 Raw Material Prices Since 2011: Ferrochrome & Nickel Indexed Price Development, Jan 2011=100 100 80 60 40 20 HC FeCr (EU, Spot) down 28.7% vs Jan '11 LME Nickel down 61.3% vs Jan '11 US$ 0.89 per lb US$ 9,911 per t Heinz H. Pariser 0 2011 2012 2013 2014 2015
Current value of nickel containing materials 140 Stainless Price Development EU / China: Grades 304 vs 430 cold-rolled Indexed Price Development, Jan 2011=100 120 100 80 60 40 20 Grade 430 EU: down 30.2% vs Jan '11 China: down 44.1% vs Jan '11 Grade 304 EU: down 39.5% vs Jan '11 China: down 49.6% vs Jan '11 Heinz H. Pariser 0 2011 2012 2013 2014 2015
Current value of nickel containing materials 2,500 Stainless Price Development Gap between 304 / 430 Declining Jan 2011 - Feb 2014: Mar 2014 - Sept 2014 Oct 2014 since Price Differential 304-430, in US$ per t 2,000 1,500 1,000 500 China Europe Price differential cut by half as Ni prices loose 45% Short-lived Ni price recovery - increase in price differential 0 2011 2012 2013 2014 2015 Faltering Ni prices induce another cut in price differential, but partially off-set by also declining 430 / FeCr prices Heinz H. Pariser
Thank you 32