Nae Hee Han

LCA AND STEEL Seminar, Beijing, 19 July 2012

Steel as the Backbone of the Modern Economy

19 July 2012 2

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.

July 19, 2012 3

Content

Steel as the Backbone of the Modern Economy

Evolution of World Steel Production and Use

A Glance at the Chinese Steel Industry

Future of Steel – Challenges and Answers

Steel as Backbone of the Modern Economy

Steel was the key driver of the Industrial Revolution:

steel is essential in transport, construction, power

generation, machinery

Steel is the most widely used material in modern

society thanks to its unique combination of strength,

formability and versatility - steel is everywhere in your

life

Steel is a key material needed for industrialization and

urbanization, hence strongly associated with status of a

nation’s economy. Often times, steel industry is a

barometer of the economic health of a nation

July 19, 2012 4

Economic Development and Steel

Stages of Steel Use

per Capita

1. Very low level before

economic take-off

2. Rapid rise

3. Leveling off

4. Decline

5. Stabilization

5

Dynamic Relationship between GDP per Capita

and Steel Use per Capita

Source: worldsteel

Steel as Basis for Economic Take Off

July 19, 2012 6

Steel Use per Capita vs GDP per Capita in Different Countries

Emerging Economies: Engine of Growth for Steel

July 19, 2012 7

Source: worldsteel, Global Insight

Note: for 1982-1990 share of emerging in GDP does not include former USSR and some

countries of Eastern Europe

Collapse

of USSR

Emerging Economies’ Share in World GDP vs Steel Use

Steel as Barometer of Economic Strength

July 19, 2012 8

Per Capita Steel Use

0

100

200

300

400

500

600

700

800

900

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Japan

530

China

460

US290

kg

Per capita crude steel use

Steel Using Sectors

Construction

Mechanical Machinery

Metal Products

Automotive

Other Transport

Electrical Equipment

Domestic Appliances

July 19, 2012 9

Source: worldsteel

World, 2011

10

Steel Using Sectors

Source: worldsteel

Emerging, 2011 Advanced, 2011

Evolution of World Steel Demand

July 19, 2012 11

1951-1974:

CAGR: +5.6%

1975-1999

CAGR: +0.5%

2000-2007

CAGR: +6.8%

Apparent Crude Steel Use (1950-2011)

Source: worldsteel

Source: worldsteel

12

Shifting Centre of Gravity World Crude Steel Production, 1950 World Crude Steel Production, 1975

World Crude Steel Production, 2001 World Crude Steel Production, 2011

The China Phenomenon

July 19, 2012 13

World Developed China Other Emerging

1990-2000 115 75 71 -31

2001-2007 447 59 260 128

2008-2011 155 -54 177 32

Contribution to Steel Demand Increase ( ∆ Mt)

0

100

200

300

400

500

600

700

1950 1960 1970 1980 1990 2000 2010

0%

10%

20%

30%

40%

50%

China csp China's share in world csp

Mt

World No.1

Driving Forces of China’s Steel Growth

From 2000s: steel Intensive growth driven by

investment and urbanization

July 19, 2012 14 Source: worldsteel, Global Insight

China’s steel demand drivers

New Phase of the Chinese Steel Industry

End of steel intensive growth era

From construction and investment driven to

consumption driven

Shifting steel demand Driver

Inland provinces will derive steel demand

Motorization and Newly emerging sectors will be

demand driver

Sustainability Challenges

July 19, 2012 15

0

5000

10000

15000

20000

25000

Sha

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i

Tian

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Bei

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Jian

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Zhej

iang

Gua

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Sha

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r Mon

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Liao

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Fujia

n

Jilin

Hei

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Heb

ei

Nat

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Hub

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Cho

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Hen

an

Xin

jiang

Sha

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Sha

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Hai

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Hun

an

Qin

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Nin

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Sic

huan

Gua

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Anh

ui

Jian

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Tibe

t

Yun

nan

Gan

su

Gui

zhou

PPP$

19 July 2012 16

Multi Speed Growth within China

Group B Group C Group A

Population

55.6 mln Population

370.1 mln

Population

647.4 mln

Group D Population

259.8 mln

Shanhhai

Tianjin Beijing Xinjiang

Gansu

Xizang

Qinghai

Sichuan

Nei Mongol

Yunnan

Heilongjiang

Jilin

Liaoning

Ningxia

Shaanxi

Shanxi Hebei

Shandong

Henan

Hubei

Guizhou Hunan

Fujian

Guangdong Guangxi

Hainan

Jiangsu

Zhejiang

Jiangxi

Anhui

Source: worldsteel, Global Insight

Regional Shift in China’s Steel Demand

China’s Provincial Development Pattern: ACSU/cap vs GDP/ cap

July 19, 2012 17 Source: worldsteel, Global Insight

Motorization in China

The automotive market in China has taken off

July 19, 2012 18

Stage2-1

Popularization

Stage1

Incubation

& Take Off

Stage3

Maturity

Stage2-2

Popularization

Growth rate:

0~5%

China now

Pass. C

ars

per 1

000 p

eo

ple

19

China’s Emerging Strategic Sectors

Future of Steel - Challenges

Rebalancing in the developed world, China’s slow

down: New growth engine?

Environmental regulations

Decreasing steel intensity

Inter-material competition

July 19, 2012 20

0

500

1000

1500

2000

2500

3000

1870 1890 1910 1930 1950 1970 1990 2010 2030 2050

July 19, 2012 21

215

506

35

460

310

234

57

285

123

Africa India Brazil Middle

East

US EU China Japan World

Future of Steel – Answer

Steel demand will continue to grow to meet the need of

human civilization in the emerging and developing world

World Steel Production Per Capita Finished Steel Use

2011, kg Mt

Steel will continue to remain the backbone of the

economy by providing solutions to the sustainability of

the future economy - lighter vehicles, renewable energy,

energy conserving machinery, etc…

July 19, 2012 22

Growth of Wind Energy in Europe

Future of Steel - Answer

Future of Steel – Answer

A new thinking is emerging

Think “Value”, not just Volume

Think “Sustainability” and “LCA”

July 19, 2012 23

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