vcp market demand sidf presentation jan 2013

SS VCP STRATEGIC PLAN 2013-2017

Vitrified Clay MarketGCC

STRATEGIC PLAN 2013-2017


WHY CLAY PIPES?

• Vitrified clay pipes (VCP) have been used for over 6000 years

• Clay pipes are chemically resistant.• They have high crushing strengths • VCP is lay and forget piping system


MARKET DATA

• In 2011 some 195,000t was sold in the GCC worth SR280 million

• Average price per tonne SR1435• Actual demand was considerably greater than ability

to supply. National Water Company (NWC) and Directorates say their need for clay pipes in the Kingdom was for 262,000t worth SR350 million

• By 2017 the demand will have expanded to 410,000t.


SOME MARKET FACTORS

• Saudi Government prioritizes completion of sewage networks

• Ministry of Water & Electricity announces the need for an investment of SR 350billion in sewage networks over the next 20 years

• Population of GCC due to double in 25 years-– Increased demand for housing/schools/hospitals and

therefore infrastructure and sewage networks.

• FIFA WORLD CUP 2022 in Qatar


DEMAND DATA

NWC VCP REQUIREMENT FOR RIYADH TONNES 2012-2017 (2017 ESTIMATED)

DIAMETER 2012 2013 2014 2015 2016 2017DN200SS 7018 7720 8492 9341 10275 11303DN200ES 10191 11210 12331 13564 14920 16412DN250SS 396 436 480 527 580 638DN250ES 582 641 705 775 853 938DN300SS 252 277 304 335 368 405DN300ES 381 419 461 508 558 614DN350ES 656 721 794 873 960 1056DN400ES 1167 1284 1413 1554 1709 1880DN450ES 806 886 975 1072 1180 1297DN500ES 2134 2347 2582 2840 3125 3437DN600ES 2260 2486 2735 3008 3309 3640TOTAL 25843 28428 31270 34397 37837 41621% CHANGE 10 10 10 10 10

AVERAGE TONNES /km 58.3 58.3 58.3 58.3 58.3 58.3


DEMAND DATA

NWC VCP REQUIRMENT FOR JEDDAH TONNES 2012-2017 (2017 ESTIMATED)

DIAMETER 2012 2013 2014 2015 2016 2017DN200SS 1186 1825 8213 11388 8943 9837DN200ES 1723 2650 11925 16536 12985 14284DN250SS 0 0 0 0 0 0DN250ES 0 0 0 0 0 0DN300SS 0 0 0 0 0 0DN300ES 4230 6110 37130 50760 36660 40326DN350ES 0 0 0 0 0 0DN400ES 2850 4200 21750 30000 22500 24750DN450ES 0 0 0 0 0 0DN500ES 1824 2508 15504 20748 15960 17556DN600ES 1525 2440 12810 16775 12200 13420TOTAL 13338 19733 107332 146207 109248 120172% CHANGE 48 444 36 -25 10AVERAGE TONNES /km 93.9 93.1 97.6 96.8 95.8 95.8


DEMAND DATA

NWC VCP REQUIREMENTS FOR MAKKAH TONNES 2012-2017 (2017 ESTIMATED)

DIAMETER 2012 2013 2014 2015 2016 2017DN200SS 0 0 4380 3609 913 821DN200ES 0 0 6360 5240 1325 1193DN250SS 0 0 0 0 0 0DN250ES 0 0 0 0 0 0DN300SS 0 0 0 0 0 0DN300ES 11062 8519 33582 20597 4451 4006DN350ES 0 0 0 0 0 0DN400ES 2411 776 2925 2396 488 439DN450ES 0 0 0 0 0 0DN500ES 1507 632 2998 2930 274 246DN600ES 1571 1297 1998 1208 305 275TOTAL 16551 11225 52242 35980 7755 6979% CHANGE -32 365 -31 -78 -10

AVERAGE TONNES /km 113.7 109.2 82.1 80.0 75.4 75.4


DEMAND DATA

NWC VCP REQUIREMENTS FOR TAIF TONNES 2012-2017 (2016/2017 ESTIMATED)

DIAMETER 2012 2013 2014 2015 2016 2017DN200SS 2975 591 712 1500 1649 1814DN200ES 4320 858 1034 2177 2395 2635DN250SS 0 0 0 0 0 0DN250ES 0 0 0 0 0 0DN300SS 0 0 0 0 0 0DN300ES 3190 1656 373 1319 1451 1596DN350ES 0 0 0 0 0 0DN400ES 2263 725 297 980 1077 1185DN450ES 0 0 0 0 0 0DN500ES 2381 548 291 1377 1515 1666DN600ES 1865 366 223 743 817 899TOTAL 16995 4745 2929 8096 8905 9796% CHANGE -72 -38 176 10 10AVERAGE TONNES /km 74.3 81.2 62.4 72.8 72.8 72.8


DEMAND DATA DIRECTORATES PIPLINES TONNES NEEDS FOR VCP 2012-2017 2012 2013 2014 2015 2016 2017RIYADH 16902 16902 16902 16902 16902 16902MAKKAH 20564 20564 20564 20564 20564 20564MADINAH 8451 8451 8451 8451 8451 8451QASSIM 15024 15024 15024 15024 15024 15024ASIR 18780 18780 18780 18780 18780 18780NAJRAN 4695 4695 4695 4695 4695 4695BAHA 32865 32865 32865 32865 32865 32865JAZAN 8169 8169 8169 8169 8169 8169EASTERN PROVENCE 17841 17841 17841 17841 17841 17841HAIL 32865 32865 32865 32865 32865 32865NORTHERN BORDER 5540 5540 5540 5540 5540 5540TABUK 4695 4695 4695 4695 4695 4695JOUF 3380 3380 3380 3380 3380 3380TOTAL DIRECTORATES 189772 189772 189772 189772 189772 189772


MARKET SIZE 2012-2017

DEMAND TONNES 2012-2017

2012 2013 2014 2015 2016 2017

TOTAL DIRECTORATES 189,772 189,772 189,772 189,772 189,772 189,772

TOTAL NWC 72,727 64,131 193,774 224,680 163,744 178,568

REST OF GCC 31,000 33,000 35,000 37,000 39,000 41,000

TOTAL TONNES 293,499 286,902 418,546 451,452 392,516 409,340

Source: Directorates/NWC and Market intelligence- ISBC ReportNote: KSA tonnage based on size range DN200-600mm diameter pipes


COMPETITION

SVCP Strengths

• The largest installed capacity at 185ktpa• The oldest and are well established • Can be considered a truly one stop shop• Have defended clay pipes really well• Can call on German partners to supply extra volume.

Weaknesses• Still not achieved all capacity of new facility• Monopoly supply situation and therefore influences market

approach


COMPETITION

CPCStrengths

• Installed capacity of 60 000t• Modern plant• Now in 3rd full year of operation• Have already been approved by SASO and Ministry Of Water & Electricity

Weaknesses

• Not yet fully operational- Delays and extra loans affecting costs & margins.

• Only approved for sizes DN200 and DN300 grade A and B• No know how technical partners• In the throws of re-organizing its– likely to cause further delays as new

team takes time to gel.


Competition

Sweillem-EgyptStrengths

• Have over 25 years manufacturing experience• Capacity of 50ktpa- output 40ktp• Excellent product quality ( have coveted MPA approval).• Excellent hands on technical expertise in the family from all

generations.Weaknesses

• Limited GCC market penetration- Sell mainly in Western area.• Poor image in some KSA regions


AICCP

Strengths• Installed capacity of 60,000t• Plan to manufacture in last quarter of 2013• Will have know how from Sweillem• 2014 output will be 15,000t• Can start trading straight away with Sweillem pipes or semi

finished products• Own mine for clay

Weaknesses• Delays in completing the project• No Natural Gas supply may cause cost disparity.


Bench Marking-Competition Extruder Information

SVCPSWEILLEMCIPACKEPCOCPCAIC

754234

185

5050

20

6060

26.4285714285714

1012.51020

15

Extruder Installed CapacitiesNo: Pipe Extruders Installed Capacity'000's t/aCapacity /Extruder '000's t/a

SVCPSWEILLEMCIPACKEPCOCPCAIC

140

40

20

106

0

20

85520

7680

40

50

10

0

Extruder Output Efficiency Actual Output 000's t/a Output / Extruder 000's t/a% Efficiency


Table showing supply versus demand

Estimated Outputs/SalesYEAR 2013 2014 2015 2016 2017SVCP 190,000 190,000 195,000 195,000 195,000CPC 25,200 45,000 60,000 60,000 60,000AICCP 5,000 15,000 45,000 60,000 60,000SWEILLEM 5,000 0 0 0 0

TOTAL Supply 225,200 250,000 300,000 315,000 315,000SHORTFALL/SURPLUS -61,702 -168,546 -151,452 -77,516 -94,340

Source: NWC, Directorates and market estimates ISBC report.Note: KSA demand is based on sizes DN200-600mm


DEMAND V SUPPLY GAP

1 2 3 4 50

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

GAP ANALYSIS OF MARKET DEMAND V SUPPLY OF VCP 2013-2017

YEAR TOTAL TONNES SUPPLIED SHORTFALL


BEYOND 2017

The next graph shows that there is a strong demand for VCP up to 2026.

3 scenarios are given

1. NWC 10% Growth figures, 2. Growth in line with economic estimates at 6.6% 3. No Growth


Graph of Demand beyond 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

Conservative growth at 6.6% v NWC 10% rate as forecast for Riyadh 2010-2026 and no growth

year Tonnes at 6.6% growthtonnes at approx 10% growth incl GCC tonnes if no Growth incl GCC

Source NWC


DEMAND V SUPPLY GAP

1 2 3 4 50

50000

100000

150000

200000

250000

300000

350000

400000

450000

500000

GAP ANALYSIS OF MARKET DEMAND V SUPPLY OF VCP 2013-2017

YEAR TOTAL TONNES SUPPLIED SHORTFALL


Conclusions

• There will be a shortfall in supply by 60,000t in 2013

• In 2014 the shortfall will be 168,000t.• NWC and contractors welcome competition

It is, therefore, my considered opinion that the market can easily support a 3rd manufacturer.

vcp market demand sidf presentation jan 2013

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