steel capacity outlook - oecd capacity outlook . woodmac.com 2 how we look at steel markets steel...
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woodmac.com Trusted commercial intelligence
Valentina Burrai March 2018
Steel capacity outlook
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How we look at steel markets
Steel markets are globally integrated and interdependent
Source: worldsteel, GTT, Wood Mackenzie
Market structure in finished steel terms, major producers and consumers
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Global steelmaking capacity snapshot: absolute size
We estimate that total world capacity stood at 2.3 billion tonnes of operating crude steel capacity. There is one tonne of EAF capacity per every 2.2 tonnes of BOF.
Source: Wood Mackenzie
Global crude steel capacity by region, 2017
North America
119 sites
148 Mt
South America
60 sites
73 Mt Africa*
20 sites
12.2 Mt
EU
140 sites
204 Mt East Asia
471 sites
1366 Mt
Oceania
6 sites
6 Mt
Southeast Asia
78 sites
54 Mt
South Asia
73 sites
119 Mt
Middle East
56 sites
66 Mt
North Africa
19 sites
18 Mt
Europe*
55 sites
98 Mt
CIS
55 sites
108 Mt
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Global steelmaking capacity snapshot: relative
Capacity is distributed unevenly across regions
Source: Wood Mackenzie
Crude steel capacity to consumption, 2016
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Global steelmaking capacity snapshot: relative
Steel capacity is sticky, not immutable
Source: Wood Mackenzie
Crude steel capacity to consumption, 2022 forecast
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Global steelmaking capacity
Global capacity outlook
Consolidation in East Asia is driving global capacity contraction
Source: Wood Mackenzie
Operating capacity by region
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Steel demand growth has changed pace and
geography
Market drivers of capacity growth: demand
Changes in demand growth have affected investment in additional steelmaking capacity
Source: worldsteel, GTT, NBS, Wood Mackenzie
Capacity growth will shift to South Asia
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Market drivers of capacity growth: costs
Countries with low production costs tend to be capacity hubs and global suppliers of steel
Source: Wood Mackenzie
Finished steelmaking costs, 2017
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Overcapacity has fallen sharply
Market drivers of capacity growth: profits
A cyclical business: high margins more capacity lower margins less capacity
Source: Wood Mackenzie
We expect higher margins in the medium term
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China capacity closures associated with a sharp
correction in exports
Capacity closures and utilisation rates
Industry consolidation and pollution controls in China have affected global utilisation rates
Source: Wood Mackenzie
Global utilisation rates have risen
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Drivers of capacity growth
Access to finance will remain crucial for a capital-intensive industry
Source: Maplecroft
Maplecroft business access to finance Index, 2017
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Drivers of capacity growth
Steelmaking requires a relatively skilled workforce
Source: Maplecroft
Maplecroft human capital Index, 2012
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Drivers of capacity growth
Easy transport of raw materials and finished products is essential for a cheap and dense commodity
Source: Maplecroft
Maplecroft logistics Index, 2016
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Medium- to long-term capacity additions,
forecast
Capacity expansions by region
Most of long-term growth will come from South Asia
Source: Wood Mackenzie
Capacity expansion projects by region, forecast
Africa* C.I.S. EU28 Europe* Middle East East Asia North Africa
North America Oceania South America South Asia Southeast Asia
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Connect with
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Valentina Burrai
Senior Research Manager, Global Steel and Iron Ore Markets
Biography Valentina
+44 2030 600565
Valentina joined Wood Mackenzie in 2013 as an analyst in the Steel and Iron Ore
Markets team. She is based in Wood Mackenzie’s London office.
Since joining Wood Mackenzie she has worked on steel end use demand models,
focussing on finished steel consumption by the construction, automotive, and other
steel consuming sectors in the European Union, Turkey and Japan.
Prior to joining Wood Mackenzie, Valentina worked as steel and iron ore cost analyst
for a business intelligence group, and as Eastern Europe analyst for a consumer goods
intelligence company.
Valentina holds a Laurea degree in International Relations from the University of
Trieste and an MA and PhD in Political Science from University College London.
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Disclaimer
Strictly Private & Confidential
This report has been prepared for Wood Mackenzie clients by Wood Mackenzie Limited.
The report is intended solely for the benefit of Wood Mackenzie clients and its contents
and conclusions are confidential and may not be disclosed to any other persons or
companies without Wood Mackenzie’s prior written permission.
The information upon which this report is based comes from our own experience,
knowledge and databases. The opinions expressed in this report are those of Wood
Mackenzie. They have been arrived at following careful consideration and enquiry but
we do not guarantee their fairness, completeness or accuracy. The opinions, as of this
date, are subject to change. We do not accept any liability for your reliance upon them.
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