Presentation is loading. Please wait.

Presentation is loading. Please wait.

ABM-63rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28th July – Santos, Brasil.

Similar presentations

Presentation on theme: "ABM-63rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28th July – Santos, Brasil."— Presentation transcript:

1 ABM-63rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28th July – Santos, Brasil

2 The steel world is moving ….
For about 25 years, steel industry suffered from chronic overcapacity and real steel prices declined by about 3%/year Since 2000, the huge demand from China and to a lesser extent from other emerging markets reduces global overcapacity causing prices to surge across the major steel markets. Global steel production Mt 2000 Growth phase Vicious cycle Booming 1800 1600 4.5%/year 1400 1200 8%/year 0.7%/year 1000 800 5.9%/year 600 400 200 1950 1960 1970 1980 1990 2000 2010 Source : IISI, ArcelorMittal Marketing 2

3 A new demand growth dynamic due to emerging countries expansion…
China steel apparent demand from 1984 to 2007 – millions of tonnes World steel apparent demand from 1950 to 2007 – millions of tonnes Since the beginning of this decade, the demand for steel has been strong and growing quickly. You can see this on the left side of the slide. This strong growth has been driven principally by the rapid industrialization of China, but steel consumption in other emerging economies such as Brazil, Russia, India, East Europe and the Middle East is also growing at a strong rate. On the right hand side we show apparent demand for steel in China from 1984 to 2007 in millions of tonnes. Demand has been very strong with average growth in excess of of 18% per year from 2001 to This is due of course to the country becoming more and more industrialized and urbanized. The combination of China and other emerging economies has led to an average 7% growth of the steel market in the last 7 years. Chinese new dynamic and growth in other emerging economies have led to an average 7% growth of the steel market in the last 7 years Source IISI

4 …has been answered by capacity expansion and increase in utilisation rate
Demand and production increase between 2000 and 2007 World steel industry operational capacity utilisation rate estimates Increase in capacity utilisation and de-bottlenecking in the rest of the world Developed world* Emerging world China capacity increase China This increased demand has essentially been met by (i) capacity expansion in China and (ii) an increase in capacity utilisation and de-bottlenecking in the rest of the world. On the chart on the left, you see demand growth and production growth in millions of tonnes from 2000 to 2007. Demand growth outside of China was 203 million tons during this period, of which close to 90% came from « other emerging markets ». How was this increase in demand met? It was met partly via increased capacity utilisation and de-bottlenecking (135 million tons). The remainder came from Chinese exports (i.e. China was in fact needed to fill the gap). On the right hand side, we show how the supply/demand equation in the steel industry has changed. Over the past 30 years, capacity has often exceeded production by around 15%. Today, demand, in conjunction with little new capacity, has increased to the point where we are, on a global basis, at very high levels of capacity utilisation (facing constraints). Outside of China, not one major Greenfield operation has been completed in the last ten years An increase in steel demand of approximately 500mt over 7 years The steel industry is operating globally at a high level of utilisation rate *Developed world includes US, Canada, EU15, Japan and Korea Sources: IISI and ArcelorMittal estimates

5 BRICs countries will represent almost 70 % of the steel consumption growth (2006-2015)
650 Total world about Mt of which BRIC about Mt, 68% of the total EU15 USA Japan Brazil Russia/CIS India China 1: Mature Economies steel demand not expected to drop 2: While Emerging countries remain a major driver of steel demand 5

6 Opening new Challenges
Growth, if continued at current conditions, will put further strain on: Energy CO2 and on our environmental footprint in general Raw material resources

7 High expected increase of energy demand
Energy demand will increase with about 60 % between 2002 and 2030! More than 66% of the increase in world energy demand between 2002 and 2030 will come from developing countries, especially in Asia. China counts for over 20% of the total increase. Source: OECD Factbook 2005 (Organisation for Economic Co-operation and Development)

8 …Enhancing CO2 Challenge
ArcelorMittal reduced CO2 emissions by over 20% since 1990, through technological developments and investments. This result exceeds the European Kyoto target by about two and a half times. But there is still much further progress to realize as steel making in countries like the CIS or China has a much higher CO2 emission rate, up to 2 times the levels allowed in Western Europe, Japan or North America. ULCOS (Ultra Low CO2 Steelmaking) Project: Consortium of 48 European partners Ambitious project, which aims to reduce steel production emissions by 30% to 70%. This 5 – year program, begun in 2005, will select from a vast number of potential technologies a few solutions for a pilot program.

9 Raw materials…huge price evolution

10 (*) Based on Hatch Beddows Report, 2005
There is no risk of scarcity, but many factors will lead to much more lower quality materials Concentrated in a small number of countries Unevenly distributed in quality Suppliers: Big-3 oligarchy has no reasons to be reversed Steel companies securing their long-term supplies through vertical integration Asia becoming the major producer of crude steel (and thus the major importer of raw materials) (*) Based on Hatch Beddows Report, 2005

11 Iron Ores – Mapping of main Reserves (Volume expressed in Ton Billions Iron)
leaders challengers NAFTA 3,8 / 7,9 SOUTH AMERICA 15,8 / 11,4 EU15+3 2,5 / 3,0 CIS 25,8 / 22,7 China 6,9 / 3,2 AFRICA 6,3 / 3,6 OCEANIA 11,3 / 9,6 Rest of ASIA 6,3 / 4,8 TOTAL 79 / 66 Bt Iron Sources : USGS–’05 / US Bureau of Mines-’85 – ALMOST CONSISTENT

12 Iron Ores – Quality of main Reserves

13 Demand / Supply – 2004 towards 2015 and more
In the medium-term primary raw materials supply should be eased by announced capacity expansions, BUT . . . Main suppliers will manage these programs to maintain a tight equilibrium Based on a “medium” growth rate scenario (3 %), various situations 2015 Required Announced new capacities Major/ Influent players 2004 Exporters Importers Iron Ores (seaborne) 1185 (600) 1640 (> 830) End ’12: (+ 300) Australia Brazil China  Coking Coals (seaborne) 420 (120) 580 (> 170) End ’10: global ? (+ 60) Australia India  (?) Pellets (exports) 300 (120) 415 (170) Few visibility End ’07: ~ (+ 20) Brazil BF / DRI plants Coke (trade) 350 (30) 484 Exist / captive coke 50% China Poland ? ? ( Expressed in Mt)

14 Prices – Long-term trends
The downtrend is broken, and prices will probably “swing” around a higher trend line even if very difficult to make valuable forecasts over 15 years Continuous decrease for commodity material  unlikely to be recovered Landing at [Price ’ % of the Gap (’05 – ’04)]  considered as the most optimist High prices on a permanent basis  should be possible when considering: unprecedented China boom, what about India ? big suppliers power to keep prices under control need to shift towards poorer, less accessible, logistically constrained, …, raw materials 1 3 2 2 3 1 In all cases, transition between a RM pricing system dominated by Japan and Europe to one that will be dominated by China

15 From Blast Furnaces to new routes
Raw material scarcity at higher cost increasing amount of fine ores (from sinter feed to pellet feed) Quality issues of ores: high P ores , high Alumina ores, high Zn ores; Fe content; Fe++ content Lack of coking coal and of coke Quality issues of scraps Lack, high cost of ferro alloys Requiring process adaptation To use fine ores and non coking coal with wide range of properties Offering flexibility towards iron sources and coals Being an energy efficient process Environmental friendly: Low emissions: NOx, SOx, dioxines, particulate materials, HAP, …

16 Corex A technologically proven alternate to BF route
Largest unit : 1.2 – 1.5 Mtpy

17 COREX flow sheet AM experience at Saldanha

18 Evolution of COREX tech. developed by to use fine ores
Finex Evolution of COREX tech. developed by to use fine ores 3 or 4 fluidized bed reactors Compacting of DRI Briquetting of coal

19 MIDREX or HYL-III = shaft furnace

20 ArcelorMittal 2007 key figures
310,000 employees in more than 60 different countries Sales of US$ billion EBITDA of US$19.4 billion Operating income of US$14.83 billion Net income of US$ billion Shipment of mt 116 mt of steel produced Net debt of US$22.5 billion An integrated leader of the Metals and Mining sector

21 More than 3 times larger than next competitor
ArcelorMittal not only leading the steel industry but the Metals & Mining sector Crude Steel production in 2006 (Mt)* Turnover in 2006 (USD billion) ** More than 3 times larger than next competitor * Metal Bulletin ** Result from the merger between Ansteel and Bensteel.

22 ArcelorMittal Growth Plan 2012 Brownfield expansion projects

23 8 Greenfield projects focused in growing regions
ArcelorMittal Greenfield projects overview 600,000t long products mill in Russia 50/50 JV of 4.8mt hot strip mill in Turkey 1.4mt DRI/Billet plant in Egypt 12mt integrated plant in Jharkhand, India 600,000t seamless tube mill in Saudi Arabia 12mt integrated plant in Orissa, India 300,000t pipe mill in Nigeria 400,000t bar mill in Mozambique Projects ideally positioned to capture market growth expected in India, Middle-East, CIS and Africa

24 Thanks for your attention

Download ppt "ABM-63rd Annual Conference Challenges for Steel Industry Pierre Gugliermina, Chief Technology Officer, ArcelorMittal 28th July – Santos, Brasil."

Similar presentations

Ads by Google