demand for nickel in other emerging markets
DESCRIPTION
Thomas Höhne-Sparborth, Senior Economic Analyst at Roskill Information Services delivered this presentation at the 2013 China Nickel conference. For more information about the event or to register your interest for next year’s conference, please visit our website: www.immevents.com/mining-conference/china-nickel-conferenceTRANSCRIPT
Demand for nickel in other emerging markets
Thomas Höhne-Sparborth
Senior Economic AnalystRoskill Information Services
May 16, 2013
Disclaimer
The statements in this presentation represent the considered views of RoskillInformation Services Ltd. It includes certain statements that may be deemed"forward-looking statements“. All statements in this presentation, other thanstatements of historical facts, that address future market developments, governmentactions and events, are forward-looking statements. Although Roskill InformationServices Ltd. believes the outcomes expressed in such forward-looking statementsare based on reasonable assumptions, such statements are not guarantees of futureperformance and actual results or developments may differ materially from those inforward-looking statements. Factors that could cause actual results to differmaterially from those in forward-looking statements include changes in generaleconomic, market or business conditions.
While Roskill Information Services Ltd. has made every reasonable effort to ensurethe veracity of the information presented it cannot expressly guarantee the accuracyand reliability of the estimates, forecasts and conclusions contained herein.Accordingly, the statements in the presentation should be used for general guidanceonly.
Overview
� Trends in nickel consumption
� Growth markets for nickel
� Which potential markets?
� Intensity of use of nickel
� Competing trends in nickel consumption
� Production versus consumption of stainless
� Grade substitution
� Recycling rates
� Non-stainless end uses
� Outlook
Trends in nickel consumption across major markets
On a regional basis, China was the only growth market for primary nickel from 2002-2012
-200
-100
0
100
200
300
400
500
600
700
800
China ROW CIS & OtherEurope
Americas Rest of Asia EU (27)
Consumption of refined nickel, 2002-2012e (kt)
Source: Roskill, WBMS
So why is there no growth from the other BRICS countries?
Source: Roskill, WBMS, IMF
France
Germany
Italy
Russia
Spain
United KingdomSA
China
India
Japan
South Korea
Taiwan
Brazil
CanadaUSA
Australia
EU (27)
0
5
10
15
20
25
30
35
40
0 10,000 20,000 30,000 40,000 50,000 60,000
Sta
inle
ss s
teel
co
nsu
mp
tio
n (
kg
/cap
ita)
GDP per capita (2012 US$)
Stainless steel intensity of use, 2012e
Growth markets for stainless steel production
Source: Roskill, WBMS
-1,000
-800
-600
-400
-200
0
200
400
600
800
1,000
1,200
Change in production of stainless steel, 2002-2012e (kt)
Growth in stainless production does not correlate closely with growth in nickel consumption
Source: Roskill, WBMS
-50
-40
-30
-20
-10
0
10
20
Change in consumption of refined nickel, 2002-2012e (kt)
Significant differences between countries in intensity of use of nickel hint at distinct underlying trends
Source: Roskill, WBMS
0.00
0.05
0.10
0.15
0.20
0.25
Consumption of primary nickel per unit of country’s stainless steel
production, 2012e
2012e World average nickel content in stainless 2012e
In China, growth rates in nickel consumption are lower than those of stainless steel production
Source: Roskill, WBMS
0.03
0.04
0.05
0.06
0.07
0.08
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012e
Rela
tive i
nte
nsit
y o
f u
se
Co
nsu
mp
tio
n /
pro
du
cti
on
(kt)
China: Nickel consumption vs. stainless production, 2002-2012e
Primary nickel consumption (LHS) Stainless steel production (LHS)
Relative intensity of use (RHS)
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Nic
kel
co
nsu
mp
tio
n p
er
un
it o
f sta
inels
s
Stainless steel production (kt)
Change in use of refined nickel per unit of stainless steel, 2002-2012
BrazilSouth Korea
South Africa
India
USA
Japan
Worldwide there has been convergence to lower intensity of use over the last decade
Source: Roskill, WBMS
Russia and
Ukraine
Competing trends in the use of nickel
Source: Roskill, WBMS, Global Trade Atlas
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Stainless production (kt)
India South Africa
Brazil Russia & Ukraine
0
500
1,000
1,500
2,000
2,500
3,000
3,500Stainless consumption (kt)
India South Africa
Brazil Russia & Ukraine
In the other BRICS countries, stainless consumption has increased at a much higher rate than production
Source: Roskill, WBMS, Global Trade Atlas
Difference between trends in consumption and production are accounted for through changes in net exports
-400-200
0200400600800
1,0001,2001,4001,600
Net exports of stainless steel, 2002-2012e
India South Africa
Brazil Russia and Ukraine
Total exports Total imports
• While stainless consumption in the
other BRICS countries increased by
an average of 6.8%py over the last
decade, production increased only
2.6%py
• China’s emergence as a net exporter
accounts or 42% of the decline in net
exports of the other BRICS countries
• The recent rise in net exports is largely
accounted for by rising demand in
other emerging markets
• Indonesia had estimated net imports
of 256kt of stainless steel in 2012
Source: Roskill, ISSF
The price of nickel has inspired a change in the composition of stainless steel
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
10
20
30
40
50
60
70
80
90
100
Nic
kel
pri
ce (
US
$2012/t
)
% o
f sta
inle
ss s
teel
Stainless steel production by grade, 2001-2020f
300 series (CrNi grades) 400 series (Cr grades) 200 series (CrMn grades)
Other/not known Nickel price
Source: Roskill
However, trends in manganese consumption hint at significant regional differences in this substitution process
Manganese consumption by end use, 2012e
Steel
Aluminium alloys
Cast iron
EMD, batteries, direct, other
Other non-ferrous alloys, superalloys
-10%
0%
10%
20%
30%
40%
CAGR of stainless steel production and manganese ore
consumption, 2002-2012e
Stainless steel production
Manganese consumption
Source: Roskill
Where growth in manganese consumption outpaces stainless production, substitution of 300-grades is the most likely cause
-8%
-6%
-4%
-2%
0%
2%
4%
6%
China Brazil Russiaand
Ukraine
Japan SouthAfrica
India USA SouthKorea
World
Difference between trends in stainless steel production and manganese consumption, 2002-2012e
Source: Roskill, WBMS, INSG
Recycling rates have contributed to decreased consumption of primary nickel, but at different rates
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
India Russia SouthAfrica
Brazil
Estimated change in recycling rate, 2002-2012e
0
50
100
150
200
250
300
350
Estimated stainless scrap consumption (2002 = 100)
Russia Brazil India South Africa
Source: Roskill, Airline Monitor, UNEP, Prismark
Partners, Goldman Sachs, EIU
Considerable growth expected from other applications of nickel
• Strong growth in demand for nickel
alloys from aerospace industry (23%
forecast increase in airline deliveries,
2012-2020)
• Electronics and chemical industries
expected to grow at 4-5%py globally
• World vehicle demand expected to grow
from 87M in 2012 to 107M in 2020
• 70% growth in construction sector
expected from 2010-2020
• On-going economic growth driving
demand for other nickel-containing metal
goods
End uses of primary nickel, 2012e
Stainless steel Nickel alloy
Electroplating Other steel mill
Foundry Other uses
Source: Roskill, Airline Monitor, UNEP, Prismark
Partners, Goldman Sachs, EIU
Considerable growth expected from other applications of nickel
3.3%
2.8%
3.2%
3.1%
2.2%
2.2%
1.6%
4.8%
4.3%
3.0%
Total
Others
Industrial machinery
Automotive
Other energy
Nuclear
Oil & Gas
Electronics/ appliances
Chemical/process industry
Aerospace
Forecast growth in nickel alloy consuming industries, 2012-2020f
0
100
200
300
400
500
600
700
800
900
2012 2013 2014 2015 2016 2017 2018 2019 2020
Forecast nickel consumption in non-stainless steel applications,
2012-2020 (kt)
Plating Nickel alloy
Other alloy steels Other applications
Outlook
Source: Roskill, WBMS
Considerable growth expected from other applications of nickel
0.00
0.05
0.10
0.15
0.20
0.25
Consumption of primary nickel per unit of country’s stainless steel production, 2012e-2020f
2012e
2020f
World average nickel content in stainless 2012e
World average nickel content in stainless 2020f
Source: Roskill, WBMS
Considerable growth expected from other applications of nickel
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
Nic
kel
co
nsu
mp
tio
n p
er
un
it o
f sta
inle
ss
Stainless steel production (kt)
Change in use of refined nickel per unit of stainless steel, 2002-2012e-2020f
BrazilSouth Korea
Japan
South AfricaUSA
India
Russia and
Ukraine
Primary nickel consumption in selected countries, 2012e-2020f (kt)
780
1,100
2012 2020
China
2852
2012 2020
India
29 33
2012 2020
Russia and Ukraine
35 39
2012 2020
South Africa
1318
2012 2020
Brazil
Forecast growth in world consumption of primary nickel: 4.3% - 5.3%py
For a full breakdown of growth by region, see Roskill’s upcoming Nickel report
Source: Roskill
128
187
2012 2020
USA
STEEL ALLOYS – MINOR METALS – INDUSTRIAL MINERALS
Roskill Consulting Group Ltd.
Thomas Höhne-SparborthSenior Economic Analyst
+44 (0)20 8417 [email protected]
New Nickel Market Outlook Report due Q3 2013
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