stainless steel a bright future in a changing world ppg may 2012
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1
Stainless steel a bright future
in a changing world?BIR World Annual Conference
RomeMay 30 , 2012
Pascal PAYET-GASPARDSecretary General ISSF
2
Agenda
Stainless steel: short term perspectives An industry facing many challenges … but a bright long term future Conclusions
3
Agenda
Stainless steel: short term perspectives An industry facing many challenges … but a bright long term future Conclusions
4
Since 1980 stainless steel has grownfaster than most metallic materials
0
100
200
300
400
500
600
1980 1985 1990 1995 2000 2005 2010
Galvanized Steel
Stainless Steel
Aluminium
Carbon Steel
Long term evolution of the world consumption of stainless steel and substitutes CAGR 80 - 10
6,0 %
4,6 %
4,0 %
2,3 %
Historically, stainless steel growthwas much stronger than carbon steel growth, a fact that led to the perceptionthat stainless steel was « different » andimmune to the woes of « ordinary » steel
Source, ISSF, Laplace Conseil
5
However, since 2006, stainless steelhas under-performed its competition
80
100
120
140
160
180
200
2000 2002 2004 2006 2008 2010
Galvanized steel
Stainless Steel
Aluminium
Carbon Steel
Recent evolution of the world consumption of stainless steel and substitutesCAGR 00 - 10
5,6 %5,6 %5,3 %5,0 %
Recession started two yearsearlier for stainless steeland was much deeper; 2010recovery is much stronger
Source, ISSF, Laplace Conseil
6
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
1,0
00
to
nn
es
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
China Asia w/o China W. Europe/Africa Americas Central + East Europe
+24.8%31,090
+3.3%32,110
World stainless Crude Steel Production : again 6 % pa 2001-11 !!
Source, ISSF
…but revival
7
Agenda
Stainless steel: short term perspectives An industry facing many challenges … but a bright long term future Conclusions
8
China accounts for all the growthsince 2000
World Stainless Steel production (Million tonnes of crude steel)
0
5
10
15
20
25
30
35
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Europe
North America
Other Asia
China
Other Countries
CAGR 00-10Total +5%
+34 %
0 %
0 %
+0 %
+2 %
Source, ISSF, Laplace Conseil
9
Since 2000 most of the stainless growthis attributable to S200 & S400
Stainless steel production by grade (Million tonnes of crude steel)
0
5
10
15
20
25
30
35
2000 2002 2004 2006 2008 2010
S300
S400
+5,0 %
2,5 %
6,2 %
28,4 %
S200
CAGR 00 - 10
S300 has declined in all regionof the world outside China
Source, ISSF, Laplace Conseil
10
Raw materials prices and volatilityhave increased….
X 4
X 2,5
0
100
200
300
400
500
2000 2002 2004 2006 2008 2010
In addition, very significant increase
in volatility after 2004
C Steel Scrap
Nickel
Chromium
Source: ISSF, Laplace Conseil
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… combined with margins squeeze …
190
-310-340
-400
-300
-200
-100
0
100
200
300
2000 2010
230
-140-170
2000 2010
50 €/yr2,1%/yrof average price
37 €/yr2,8%/yrof averge price
Factor costincrease
Transformation margin decrease(net of scrap)
Price cost squeeze for 304 SS (€/t) Price cost squeeze for 430 SS (€/t)
Factor costincrease
Transformation margin decrease(net of scrap)
15
What have been the reactionsof the producers? Cut costs, improve productivity by using latest
technologies Close inefficient mills (Europe-Americas) Look for cheaper raw materials :
– Nickel Pig Iron (China)– Backward integration (Asia)
Integrate into distribution to better control downwards supply chain (Europe, Asia, Americas)
Move to higher, value added products or margins: 400 series, duplex, 316 etc…
For integrated mills, split the stainless business: Aperam, Inoxum
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Agenda
Stainless steel: short term perspectives An industry facing many challenges … but a bright long term future Conclusions
19
An industry constantly growingin size and efficiencyConsidering the 4 largest world companies in stainless steel melting production
with fully integrated stainless steel shops , hot rolling mills and a clear shift to Asia
2000: Over 1 Mt 34% of the market2005: Over 1.5 Mt 32% of the market2012 (e): Over 3 Mt 38% of the market
20
The raw material challenge
Nickel Pig Iron: more an opportunity than a threat? – a ceiling to the price of nickel– a regulation to the S/D balance
Chrome– an available resource with high productivity and low
cost producers coming up LME: a tool to be positively used !!
– an opportunity to better pilot the raw material volalility … but a market still to be better regulated and more transparent
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7.0%
17.1%9.4%
0.6%38.9%
27.0%
NiCrMoothersElectricityDirect emissions
0.65ton CO2/ton SS
0.36ton CO2/ton SS
Raw materials total 2.80ton CO2/ton SS
A sustainable material
The stainless steel industry itself contributes directly for less than 10 % of total emissions
Most of the emissions are coming from upstream: raw materials and electricity generation
Stainless steels compare favorably to competing materials Al,Cu,Mg
Total 3,81 ton CO2/ ton SS
Source: ISSF, SCM
CO2 emission from cradle to grave without the recycling credit which is around 1ton CO2/ton
22
Stainless Steel Recycling
Main applicationsectors
Use of finished SS
in manufacturing
Average life(in years)
To landfill
Collected for recyclingTotal As stainless
steelBuilding 16% 50 8% 92% 95%Transportation 21% 14 13% 87% 85%Industrial machinery
31% 25 8% 92% 95%
Household appliances
6% 15 18% 82% 95%
Electronics 6% - 40% 60% 95%Metal goods 20% 15 40% 60% 80%Total 100% 22 18% 82% 90%
Source : Yale University Study 2009
ISSF - Team stainless
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Stainless Steel Recycling:over 80 %!
2005Source : Yale University Study 2009
ISSF - Team stainless
24
Chrysler Building, 1930
Catherine Houska for Nickel Institute
Stainless steel has been used as an architectural material since about 1930.
25
Sustainable applications: Bio-Gas
• Bio Gas plant
• Severe corrosion conditions
• Low maintenanceSource :Kosa/ISSF Book of New Applications316Ti grade
26
High strength, corrosion resistance – Long lifeSource: Outokumpu Oyj/ ISSF Book of New Applications (grade SAF2205(Duplex)
Stainless Steel BridgeStockholm
27
Agenda
Stainless steel: short term perspectives An industry facing many challenges … but a bright long term future Conclusions
28
A bright future
Despite current difficulties shared by many heavy industries, the stainless steel industry has a bright future: – Potential growth in emerging countries is enormous– In sustainability, stainless steels are unmatched compared to
other materials– The industry is now catching up with overcapacity and
restructuring measures Public authorities should recognise these intrisinsic
properties and help the industry :– to restructure itself – to adopt free and fair trade practices – to improve the raw materials markets transparency and avoid
excess volatility which damages its long term growth and profitability
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