global market situation 68 th irepas meeting...asian markets are supporting a consistent long-term...

Kim Martí

International CD

CELSA GROUP

GLOBAL MARKET SITUATION

68 TH IREPAS MEETING

Doha

March 2013

Table of Contents

2

• Macroeconomic situation

• Steel and long products consumption

• Rebars market.

• International price situation.

• Summary & Outlook

3



• Rebars market.



4

Macroeconomic situation

Global economic growth was slightly under expectations in

2012. It is projected to increase in 2013 and 2014 although

more gradual than previous forecast just by 1/10. Policy

actions have lowered risks of financial crisis in EU and USA

Source: IMF, World Economic Outlook, Update Jan 2013,

5

Manufacturing PMI surveys continue to suggest that global

manufacturing activity is gaining momentum. In January the Global

manufacturing PMI increased for the fifth consecutive month and

reached the highest level since March 2012

Macroeconomic situation. Global economy

6

Macroeconomic situation. Advanced economies

Source: IMF, World Economic Outlook, Update July 2013, Worldsteel monthly monitor December 2012

US economy shrank in Q412 due to special factors. In fact consumption

and investment grow at stronger pace Q4 than Q3. In Europe economy is

still weak but there are signs of turning point in consumer and business

confidence. While Japan has slid into recession, stimulus is expected to

boost growth in the near term.

7

Macroeconomic situation. E & D economies

Source: IMF, World Economic Outlook, Update Jan 2013, Worldsteel monthly monitor Dec 2012

Growth in E&D economies is on track to 5.5 % in 2013. Leading

indicators continue to suggest a turning point in China and in India

and weakening growth in Russia.

8

Macroeconomic situation

Source: IMF, World Economic Outlook, Update Jan 2013, Worldsteel monthly monitor Dec 2012

Global growth is projected to increase during 2013, as factor

underlying soft global activity are expected to ease. If crisis risks

don’t materialize and financial conditions continue to improve,

global growth could be stronger than projected

% GDP

Construction sector evolution

Construction industry remains as main tractor for long products. In

first part of 2012construction remained depressed in EU, showed

some pickup in NAFTA , significant performance in South America

and strong momentum in emerging Asia although at slower pace

in Q3

10



• Rebars market.



0

200

400

600

800

1.000

1.200

1.400

1.600

2009

2010

2011

2012F

2013F

551 587 623639

659

230 279 242 312 327

300

373 396395 402

58

61 6063 66

China Others Developed c MENA

11

Steel consumption situation

Source: worldsteel

1.4551.4091.380

1.140

1.300

World finished steel consumption is sustaining a consistent uptrend

since 2009 and is forecasted to continue into 2013.M

illions tonnes

12

Long products market

Source: Estimation

0

100

200

300

400

500

600

700

800

20082009

20102011 f

2012 f

573 581 645 708 749

Long Products (million ton)

World long products consumption is showing a stronger pace of

growth and is gaining share in total steel consumption.

Millions tonnes

13Source: Estimation

Long products by area

0

100

200

300

400

500

600

700

800

20082009

2010

2011

2012 f

330 400 439 475496

7154

57 47 433627

30 31 355247

43 46 44

131 8099 106 113

East & SE Asia EU-25 North America

CIS+EE+Turk Other World

Asian markets are supporting a consistent long-term in longs.

Markets in South America and Mena countries are also

contributing to this growth.

14

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

North America

CISEurope

Other WorldE & SE Asia

Total World

7,4%

-3,6%

-9,6%

4,1%

8,5%

5,8%

In 2012 long products recovered in North America and accelerate

their fall in EU. Asia and other areas kept growing at good pace to

contribute to a total growth of 5.8%

Long products by areas – 2012 VS 2011

15

Long products per product

Source: Estimation

0

100

200

300

400

500

600

700

800

2009

2010

2011

2012

143 170 190 204

3944 47 46

155168

188197

250260

290318

Wire Rod

Merchant Bars

Sections

Rebars

Reinforcing bars are the big winners gaining share in long product

consumption mix.M

illions tonnes

16

Long products by product. Rebars – 2012 vs 2011

-5,0%

0,0%

5,0%

10,0%

15,0%

North

America CIS & TurkeyEurope


Total World

3,2%

2,4%

-8,4%

5,4%

14,0%

9,8%

REBARS

Good construction activity in emerging and developing countries

powered a remarkable 9.8% growth in reinforcing bars world

consumption. North America was still suffering of poor business

conditions in construction sector and number for EU shows how

but business was there

17

Long products by product. Sections – 2012 vs 2011

-15,0%

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

North

AmericaCIS&Turkey

EuropeOther World

E & SE AsiaTotal World

-0,2%

0,8%

-12,1%

4,9%

0,1%

-0,5%

SECTIONS

Drop in consumption again was significant in EU. North America

and SE Asia stayed flat. Good numbers came from emerging

economies were sections were gaining his place in construction

markets

18

Long products by product. Merchant bars – 2012 (f) vs 2011

-10,0%

-8,0%

-6,0%

-4,0%

-2,0%

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

North

AmericaCIS &

TurkeyEurope


Total World

9,8%

-2,0%

-9,4%

-5,8%

0,8%

-5,8%

MERCHANT BARS

Improvement of economy dynamics in North America was

reflected on very strong number for MB. Rest of the markets

stayed gloomy and world consumption went down 5.8%

19

Long products by product. Wire rod – 2012 (f) vs 2011

-10,0%

-5,0%

0,0%

5,0%

10,0%

15,0%

20,0%

North

AmericaCIS &

TurkeyEurope

Other

World E & SE

Asia Total World

15,3%

-6,9% -6,6%

4,7%

9,7%

7,1%

WIRE ROD

Industrial production improved in NAmerica fuelling WR numbers.

The world number were weighted down by market fall in EU, CIS

and Eastern Eyrope

20



• Rebars market.



21

Rebars market per area

Source: Estimation

0

50

100

150

200

250

300

350

151161 183 208

57 4752

54

3031

33

3411

13

13

128 10

9

9

East & SE Asia Other World CIS+Turkey Europe North America

World reinforcing bars market growth is supported mainly from

developing economies. Reinforcing bars consumption is

consistently moving from advanced to emerging markets.M

illions tonnes

22Source: Estimation

Rebars consumption vs production per area 2012

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

N AmericaEU

CHINA

CIS & EE

TURKEY

912

176

1317

109

176

118

Consumption vs. Production (Million tons)

Production Consumption

Reinforcing bar producers should always adjust their production,

maintaining a reasonable demand/supply balance in any market

they are present.M

illions tonnes

23



• Rebars market.



100

200

300

400

500

600

700

800

900

03 04 05 06 07 08 09 10 11 12 03/13

Rebars 295 450 385 490 630 870 480 600 650 600 600

Mesh 290 500 385 500 600 870 490 610 660 610 610

Billets 260 380 330 430 580 820 430 560 600 535 525

US

D (

fo

b)

24

Reinforcing bars, wire rod and billet FOB price

After a long period of consistent uptrend, price of rebars appears

to have entered a sideway movement, sustained by a strong raw

material price.

25

0

100

200

300

400

500

600

700

800

900

03 04 05 06 07 08 09 10 11 12

Rebar 315 455 415 520 660 900 500 620 650 620

Scrap 155 255 210 265 340 450 300 375 410 395

Spread 160 200 205 255 320 450 200 245 240 225

Rebar Scrap Spread

Source: IREPAS

Reinforcing bars CFR price and spread

Usd /T

After the market drop in 2009 prices are recovering nicely due to

increasing demand, but strength in raw materials is keeping

margins very tight for rebar producers and need to be recovered

26



• Rebars market.



27

Summary & Outlook

Global economy seems to be turning the point and now heading

upwards, with developing economies being clearly at the front seat.

MENA, Asia, Central and South American markets are growing

strong. Markets in N America are also showing some momentum and

EU will be back showing positive signs at the end of 2013.

Long product consumption kept growing in 2012 supported by

markets in Asia, Mena and South America. Reinforcing bars grew

stronger than any other long products average, clearly taking share

from sections. Reasonable industrial production level helped wire rod

growth. Although in H2 2012 markets slowed down, signs point know

for markets regaining momentum in 2013.

Margins for long products have been squeezed even further in recent

month. Mills should to adjust their productions, keeping a reasonable

demand/supply balance in any market they are present. Recovery of

margins is first priority.

As consequence of general improving demand, raw materials cost

and margin pressures, price levels will move up, although volatility

and short term change in price direction will be present in the trade.

28

Thank you for your attention

global market situation 68 th irepas meeting...asian markets are supporting a consistent long-term...

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