Katrina Barkova

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Global Slab Marketcurrent trends future
outlook
World Steel Semis Market October 6-8 2008,
Istanbul
Katrina Barkova Global steel market specialist
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Metal Expert in brief

• Reliable source of information on global steel
  and raw materials markets since 1994
• Provider of daily news, weekly reviews, monthly
  analytical bulletins, quarterly forecasts,
  special reports and consulting services
• Organizer of international steel and raw
  materials conferences
• Offices in Dnipropetrovsk (Ukraine), Moscow
  (Russia), and Houston (Texas, USA)

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Content

• World slabs trade in 2007 major suppliers and
  consumers
• H1 2008 changes of global slab market picture
• Outlook for slab market balance in 2009-2012

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Slab Exports in 2007
CIS is the major global slab supplier holding
about 40 market share, with Russia being No1
having supplied over 8 mln tones Japan shipped
3.5 mln tones Brazil exported 2.7 mln tones and
China was still an ambitious market player with
2.5 mln tones of slab exports
In 2007 global slab market kept stable at the
level of 31.2 mln tones
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Slab Imports in 2007
USA was still the biggest single slab importer
(19 of world import), despite poor flat products
market conditions South-East Asia is the biggest
importing region in the world holding 48 of all
imported slabs Namely, South Korea - 4.4 mln
tones, Taiwan 3.7 mln tones, Indonesia 1.5
mln tones and Thailand - 1.3 mln tones Western
European countries hold about 30 of global
import Major buyers are Italy and Germany with
3.08 and 1.94 mln tones
mln tones
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Price changes 2007-2008
Export price for CIS slabs, fob Black Sea
During 2007 prices were fluctuating in the range
slightly more then 100 usd when in H1 of 2008 the
average number of increase was app 100 usd per
month In the same time for the last two months
prices have dropped with the average speed of app
200 usd
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Top slab suppliers changes in H1 2008
Chinas leaving the market led to 2 decrease of
global slab trade in H1 2008 despite grown
supplies from other countries
mln tones
CIS countries are still keeping the first roles
in slab trade but Brazil is only one step behind
with the increase of almost 55 in H1 2008
compared to H1 2007
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Why CIS is increasing slab export?
Good slab market fundamentals in general with
rapid price growth in H1 08 supported by
increased quotations for finished steel products,
especially plate in Europe, where CIS companies
operate captive re-rolling assets
Italy slab prices vs prices for flats
SEA slab prices vs prices for flats
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Shortage of slabs in South East Asia after China
had stopped exporting
Why CIS is increasing slab export?
Import from CIS, 000 tones
Export of slabs from Russia to SEA, 000 tons
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Slab market changes in H1 2008
Western Europe decreased imports both due to
lowered HR flats output in H1 2008 (e.g. in
Germany, France) and increased crude steel output
(e.g. in Italy, Belgium)
Iranian market sharply cut slab purchases due to
unfavorable flats market situation. Still,
rolling capacities exceed slab-making ones by
around 2 mln tones
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Slab market outlook CIS potential
By 2010 CIS producers could ramp up merchant slab
output (i.e. export) to over 23 mln tonnes
through higher capacity utilization Currently
with recent launches of new equipment slab-making
capacities are used only by 50 in Ukraine and
70 in Russia In 2011-2012 further increase is
expected due to projects at NLMK, Zaporozhstal
and Vorskla Steel
- export volume - nominal merchant slab
capacities
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Slab market outlook CIS potential
shipments, mt
share,
CIS mills keep buying foreign assets Shipments
to captive assets account for about 50 of all
CIS export now The trend is obvious not only for
CIS, but for ArcelorMittal group, several
Brazilian projects etc. The trend is expected to
persist
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Slab market outlook Brazil
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Slab market outlook Brazil
Merchant slabs capacities, mln tones
Brazil could become the second largest slab
supplier in the world by 2010
- Export from Brazil estimated according to
Scenario1 Export from CIS estimated at the max
level (see above)
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Slab market outlook Turkey

• Turkey formerly 1 mln tpy importer could easily
  become substantial slab exporter next year
• Slab exports from Turkey in 2007 and 2008 is
  minor due to
• lack of steelmaking capacities (especially in
  case of Colakoglu)
• good billet market fundamentals, as Colakoglu
  and Isdemir can both switch between slab and
  billet production
• But already in 2011 shortage of slabs will arise,
  and even more substantially than in the past

Hot-rolling vs slab capacities, mln tones
- not taking into account actual steelmaking
capacity and ability to switch to billet
production
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World slab market outlook consumers
Merchant slabs requirements in MENA countries
By 2010 major changes are expected to happen in
Middle East (incl North African) and South East
Asia. In particular, in Middle East substantial
quantity of semis will be required by Saudi
Arabia (2.15 mln tpy) and Morocco (1 mln tpy) due
to installation of hot rolling mills by
Al-Tuwairqi Group and Magreb Steel
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World slab market outlook consumers
SAE market in the coming years will still require
substantial quantity of slabs due to continuous
development of re-rolling facilities, but in the
same time there a lot of ambitious integrated
mills projects which can turn to real threat for
traditional slab suppliers. In South Korea
Dongkuk Steel in 2009 will enlarge plate-making
capacities (not supported by casting ones) by 1.5
mln tpy to 3.9 mln tpy In Thailand Canadoil
Group is planning to launch 1.2 mln tpy
plate-making mill in 2009, which later possibly
could be enlarged to 1.5 mln tpy. In the same
time Sahaviriya Steel Industries in 2010 will
start up 5 mln tpy conticaster to be
self-sufficient Vietnam is turning to switch
from import of HR products to their production.
Among the projects there are Cuu Long (0.3 mln
tpy of plates in 2009), of Essar Vietnam Steel
Corporation (2 mln tpy of HR strip in H2 2010).
Also must be mentioned greenfield project of
Formosa Plastics Group (1.5 mln of merchant
slabs), though dates are not confirmed yet In
India all the major steel groups are investing
heavily in crude steel production, including
slab-oriented. As for re-rollers, Welspun Gujarat
company has launched a 1.5mln tpy hot-rolling
mill with intention to source slabs from domestic
market as well as from Mexico and Europe
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Summary

• Slab market have been changing in 2007-2008, and
  even more significant changes are expected in the
  years to come
• Main slab exporters will be further increasing
  capacities on one hand, while trying to deminish
  spot sales on the other hand
• In South East Asia many re-rolling as well as
  steelmaking facilities will be coming on stream,
  affecting the market
• Expanding production of HR flats in Middle East
  will be supporting demand for imported slabs
• But still ambitious projects of the major
  existing semis suppliers could lead to oversupply
  on the global scope

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Products
Market industry news, analysis, statistics,
price database

• - Raw materials (scrap, pig iron, DRI / HBI, iron
  ore, coal, coke, ferro-alloys)
• Steel Semis (slab, billet, pipe billet)
• Finished steel products (flats, longs, pipes)
• Freight

Regions

• Turkey
• CIS (Russia, Ukraine, Kazakhstan)
• Europe South Europe (Italy, Spain), Central
  Europe (Poland, Romania, Czech, Slovakia),
  Balkans (Bulgaria, Serbia, Albania, Bosnia)
• Middle East (Iran, UAE, Syria, Saudi Arabia,
  Jordan) North Africa (Egypt, Algeria)
• India
• US
• China
• Southeast Asia (Taiwan, Thailand, Vietnam,
  Philippines, Singapore)