iran steel export: perspectives and competitiveness in the mena region
TRANSCRIPT
Iran steel export: perspectives and competitiveness in the MENA region
2nd Iran Steel Export Perspectives Conference September 4, 2015, Istanbul, Turkey
Andrey Pupchenko, Deputy Managing Director, Metal Expert
Contents
I. Iran’s export in post-sanctions era
II. Square billet as the most promising product now
III. Competitiveness in the MENA region
I. Iran’s export in post-sanctions era
Iran in post-sanctions era – steel export opens first
Now depressed domestic demand, limited export activity
1st
stage Iranian banks get access to SWIFT
2nd
stage new players get access to international markets, export is the top priority, as weak currency made export very competitive, earn money first!
3rd
stage oil & gas industry recovery provides solid demand for tubes and sheet products at home
4th
stage economy speed up with massive improvements in construction industry and steel demand
5th
stage import of downstream value-added products grows
© Metal Expert
IMIDRO expects Iran’s export to double in 2015
1
2
4
0
1
2
3
4
5
before 2014 2014 2015
© Metal Expert
in million t
Total 4 Mt
Khouzestan Steel Company 1.5 Mt billets and some slabs
Mobarakeh Steel 2 Mt flat products
other producers – Esfahan Steel, etc.
0.5 Mt mainly billets
The number of Iranian exporters is still limited in 2015
© Metal Expert
Capacity in 2015 9.4 Mt
incl. IMIDRO 9.3 Mt
(80% utilization)
incl. independent 0.1 Mt
Export in 2015 about 2 Mt
(mainly in the form of flat products)
Idled capacity - export* not to grow further?
Export of slabs does not seem to grow further
* - Metal Expert estimates
© Metal Expert
Capacity in 2015 14.5 Mt
incl. IMIDRO 6.3 Mt
(80% utilization)
incl. independent/private 8.2 Mt
(about 50% utilization)
Export in 2015 less than 2 Mt
Idled capacity - export potential* around 4 Mt
Square billets in Iran – there is some potential here
* - Metal Expert estimates
© Metal Expert
© Metal Expert
New steelmaking capacity 1.650
New rolling capacity 0.5
Billet surplus 1.155
Million t
Iran may be able to export additionally around 1.2 million t of billets in two years
II. Square billet as the most promising product now – fundamental shift
What creates new opportunities and disadvantages in global billet market?
• The end of 'super cycle' era
• Scrap price decreased much less comparing to iron ore
• Chinese billet export considerably increased
'Super cycle' in raw materials comes to an end as iron ore price loses 2/3 of its value
© Metal Expert
0
2
4
6
8
Oct.
99
Au
g.0
0
Jun.0
1
Apr.
02
Fe
b.0
3
De
c.0
3
Oct.
04
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g.0
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.06
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r.07
Fe
b.0
8
De
c.0
8
Oct.
09
Au
g.1
0
Jun
.11
Ap
r.12
Fe
b.1
3
De
c.1
3
Oct.
14
Au
g.1
5
Ferrous scrap, Turkey, c&f from USA
Iron ore concentrate (61.5%), China, c&f from AustraliaOct.99=1
Scrap price decreased much less comparing to iron ore as recyclers overinvested
© Metal Expert
Relatively high scrap prices reduces EAF-based mini-mills competitiveness over steelworks
© Metal Expert Source: World Steel Markets, Metal Expert estimates
200
250
300
350
400
450
500
550Ja
n.1
3
Ma
r.1
3
Ma
y.1
3
Ju
l.1
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5
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Jul.1
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$/t
Square billet cost (EAF steel) dynamics in Turkey
Square billet cost (BOF steel) dynamics in Ukraine (ArcelorMittal Kryvyi Rih)
Weak local market forces Chinese steel companies to boost exports
© Metal Expert
0
20
40
60
80
100
2013 2014 2015*
mil
lio
n t
long products flat products steel pipe
* - Metal Expert's forecast
III. Competitiveness in the MENA region
2 major trends in billet market:
I. Mini-mills install EAFs (as heritage of old strategies – before 'super cycle' came to an end)
II. Square billet replaces ferrous scrap at existing mills, i.e. billet consumption rapidly expands
© Metal Expert
© Metal Expert
Billet demand estimated by Metal Expert (on the assumption of 100% rolling capacity utilization); million t
Merchant billet market to expand in MENA
Source: World Steel Markets, Metal Expert estimates
2014 2015 billet market expansion
new billet capacity
2016
Total 8.6 11.2 2.6 0.1 11.1
Turkey 3 5.3 2.3 1.0 4.3
North Africa 3.4 3.7 0.3 -0.9 4.6
GCC 1.2 1.2 0 [3] 1.2
Other 1.0 1.0 0 [1.4] 1.0
Turkey47%
North Africa33%
GCC11%
Others9%
Turkey35%
North Africa39%
GCC14%
Others12%
In 2014 billet import was 8.6 Mt
In 2015 billet import is expected to be
11.2 Mt
© Metal Expert
Turkey's billet import to grow this year
Square billet replaces ferrous scrap in Turkey
© Metal Expert
Square billet (rebar) production costs of main suppliers in MENA
© Metal Expert
Conclusion • After sanctions removal, Iran will begin to expand export,
mainly square billets
• Billet demand from mini-mills is growing around the world and in MENA, in particular, due to overvalued scrap prices
• Iranian steel companies, with its own DRI, has the lowest cost in the region
What it is about
• New billet importers in the region, changes in market structure
• Estimates of billet consumption in the whole region, by countries and by new re-rollers
• Competitiveness analysis: comparison of billet production costs of main exporters into the region and local suppliers
• Comparison of rebar cost produced from different semis and raw materials (i.e. CIS-origin billets, Chinese-origin billets, the US and European scrap, HBI/DRI)
• Forecast of billet export into the region by CIS and Chinese producers
• Three-month price forecasts for billets in main importing countries (Turkey, Saudi Arabia, Egypt)
Metal Expert provides exclusive data and analysis in new report MENA Billet Markets
Subscription fee - $1350 Subscription department +38 056 239 88 50, +38 056 370 12 06, +38 056 370 12 07 [email protected] MENA Billet Markets is published twice a month
Exclusive statistics
• Steel-melting and re-rolling capacities in MENA
• Square billet export by CIS plants
• Turkey billet market structure
• GCC billet market structure
• Egypt billet market structure
Thank you for your attention