Transcript Slide 1

European Steel in a Globalized Market
Prof. Dr.-Ing. Dieter Ameling
Senior Counselor ThyssenKrupp Steel
former President German Steel Federation
former Chairman Steel Institute VDEh
ABM’s 63rd Annual Congress
July 28 – August 1, 2008
Santos – SP - Brazil
ThyssenKrupp Steel
European Steel in a Globalized Market
Steel in a globalized environment
Raw materials – short and expensive
European steel industry – sustainable, innovative and
competitive
Steel and the energy and climate policy of the EU
EUROFER‘s proposal to reduce the steel industries
CO2-emissions worldwide
ThyssenKrupp Steel
ThyssenKrupp Steel
Explosion of World Crude Steel Production and Continuous Casting
Stahl-Zentrum
11.07.2008
ThyssenKrupp Steel
The European Union – 27 Member States
Stahl-Zentrum
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The Ranking of Gross Domestic Product (GDP) by Actual Prices 2006
Stahl-Zentrum
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ThyssenKrupp Steel
EU 27: No. 2 in World Crude Steel Production
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ThyssenKrupp Steel
The Top 10 Steel Producers in the EU 27, 2007
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ThyssenKrupp Steel
World Trade in Steel
Excludes internal trade within the EU 25
Source: ISSB
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ThyssenKrupp Steel
Main Regional Steel Trade Flows (2007)
China No. 1 Steel Exporter
EU 27 No. 1 Steel Importer
Source: ISSB
Stahl-Zentrum, 11.07.2008
ThyssenKrupp Steel
China:
Imports and Exports
Steel Mill Products
up to May 2008
and forecast 2008
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EU 27: Chinas Export Target No. 1 outside Asia in 2007
Total export volume : 68,3 Mill. t
India
4%
EU-27
16%
Philippines
2%
Singapur
3%
Indonesia
2%
South-Korea
21%
USA
6%
Hongkong
3%
Asia total:
52,7 %
Thailand
3%
Others
30%
Vietnam
6%
Taiwan
4%
Source: Trade Statistic German Steel Federation
Stahl-Zentrum, 11.07.2008
ThyssenKrupp Steel
Actual Antidumping Complaints of EUROFER
No. 1 against EU 27 hot dipped coated sheet imports from China
1.753
2.000
1.500
1.000
500
750
178
0
2005
2006
2007
Str 28Mrch08
and
No. 2 EU 27 stainless cold rolled sheet imports from China, Korea, Taiwan
No. 3 EU 27 wire rod imports from China and Turkey
Source: official EU trade statistic (Eurostat) with own calculations
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ThyssenKrupp Steel
The Influence of the Chinese Government on the Industry
Free or cheapened
electric power supply
Preferential Loans
and Direct Credit
Governmental regulation
of production and
external trade
Subsidized
freight rates
Disregarding of environmental
and occupational safety standards
Support of
individual companies
Land grants
Fiscal development aid
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Governmental support of
developments
of raw material sources
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ThyssenKrupp Steel
Blast Furnace in China
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Source: GEO 11/2007
11.07.2008
ThyssenKrupp Steel
Coking Plant in China
Stahl-Zentrum
Source: GEO 11/2007
11.07.2008
European Steel in a Globalized Market
Steel in a globalized environment
Raw materials – short and expensive
European steel industry – sustainable, innovative and
competitive
Steel and the energy and climate policy of the EU
EUROFER‘s proposal to reduce the steel industries
CO2-emissions worldwide
ThyssenKrupp Steel
ThyssenKrupp Steel
Price Development of Iron Ore and Coal
11.07.2008
ThyssenKrupp Steel
Overseas Iron Ore Exports
of the 10 Largest Exporting Companies in 2006
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ThyssenKrupp Steel
Conditions for the Application of the EC Merger Regulation
a. Worldwide turnover of all joining companies with more than
5 Billion EUR and
Rio Tinto: 22 Billion $ (2006), BHP: 39 Billion $ (2007)

b. turnover in the EU of at least two joining companies with
more than 250 Million EUR each and

Rio Tinto: 3,9 Billion $ (2006), BHP: 11 Billion $ (2007)
c. the joining companies shouldn‘t have a share of more than
2/3 of their turnover within the same member state.
()
We require an intervention of Brussels to stop the merger
of BHP and Rio Tinto!
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Prices for Hot Metal, DRI and Scrap again on a Record High
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European Steel in a Globalized Market
Steel in a globalized environment
Raw materials – short and expensive
European steel industry – sustainable, innovative and
competitive
Steel and the energy and climate policy of the EU
EUROFER‘s proposal to reduce the steel industries
CO2-emissions worldwide
ThyssenKrupp Steel
ThyssenKrupp Steel
Stahl-Zentrum
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ThyssenKrupp Steel
Indicators of
Sustainable
Steel
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Reducing Agents Consumption of Blast Furnaces
in the World, 2006
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Energy Efficiency
and
CO2-Emissions
of the
German Steel Industry
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Innovations for the Future
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Climate Change – Steel is the best Choice
Steel – driver of innovations to increase efficiency of resources
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ThyssenKrupp Steel
Climate Change – Steel is the best Choice
Steel – driver of innovations to increase efficiency of resources
Stahl-Zentrum
11.07.2008
European Steel in a Globalized Market
Steel in a globalized environment
Raw materials – short and expensive
European steel industry – sustainable, innovative and
competitive
Steel and the energy and climate policy of the EU
EUROFER‘s proposal to reduce the steel industries
CO2-emissions worldwide
ThyssenKrupp Steel
ThyssenKrupp Steel
Renewable Energy and Climate Change Package
of the European Commission of 23.01.08:
The plan calls for a:
20% increase in energy efficiency
20% reduction in greenhouse gas (GHG) emissions
20% share of renewables in overall EU energy consumption by 2020
10% biofuel component in vehicle fuel by 2020
„These targets are very ambitious: today 8.5% of energy is renewable.
To achieve a 20% share by 2020 will require major efforts across all
sectors of the economy and by all Member States.“
2005 is the new basis for all calculations within the framework of this
package.
Stahl-Zentrum
30.01.2008
ThyssenKrupp Steel
GHG Target:
-20% compared to 1990
-14% compared to 2005
EU ETS
-21% compared
to 2005
Non ETS sectors
-10% compared to 2005
27 Member State targets, stretching from -20% to +20%
Source: European Commission, DG Environment
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ThyssenKrupp Steel
The Energy and Climate Package drastically Reduces
the Crude Steel Production within the EU
1. -21 % CO2 reduction from 2005
to 2020
2. Specific CO2-emissions could
decrease from 1.7 to 1.56 t
CO2/t steel
3. Compared to expected steel
production in 2020 of 236 Mt this
would only allow a reduced steel
production of 168.3 Mt
 = -67.7 Mt = -28.7 % Steel
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ThyssenKrupp Steel
The Energy and Climate Package of the European Commission
of 23.01.08 Drives the Industry Away
For the energy-intensive industries sufficient allowances are
indispensable to prevent relocation to outside Europe:
1. The needed certificates have to be allocated free of charge. The
foreseen auctioning would lead to a massive loss in international
competitiveness.
2. A general sectoral CO2 reduction target of 21 % cannot be fulfilled by
the steel industry. The energy-intensive industries are characterised
by process related emissions. Today, they are working at the
minimum level.
3. Further electricity price increases through auctioning obligation for
power producers cannot be borne in the international competition.
4. Industry needs investment certainty. Clear decisions must be made.
Otherwise investments would be stopped, which would result in a
lack of competitiveness as well.
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The Global Energy Related CO2 Emissions are further Increasing
The Measures of EU 27 without any realistic Effect
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CO2 Emissions Trading in the European Union –
Does it make Sense?
Stahl-Zentrum
11.07.2008
European Steel in a Globalized Market
Steel in a globalized environment
Raw materials – short and expensive
European steel industry – sustainable, innovative and
competitive
Steel and the energy and climate policy of the EU
EUROFER‘s proposal to reduce the steel industries
CO2-emissions worldwide
ThyssenKrupp Steel
ThyssenKrupp Steel
Disadvantages of the Existing Emissions Trading System
Absolute caps are equivalent to caps on production and lead to
relocations to outside the EU.
The reduction targets are set „top down“ and are not consistent with
technological reduction potentials.
Because the emissions trading directive does only refer to direct
emissions the reduction potentials of the steel industry are not
addressed adequately.
The pricing-in of allowances which were allocated free of charge as
well as auctioning lead to inadequate increases of electricity prices.
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ThyssenKrupp Steel
Main Characteristics of the Baseline and Credit System
An ETS tailor-made for the steel industry.
•
Emissions are determined in an integrated way taking into
consideration all stages of production. Inputs like coke or electricity or
credits resulting from using by-products do also count.
•
The average amount of European emissions serves as a basis for
the allocation of allowances.
The scheme brings about continuous improvement in terms of
efficiency: The average amount of European emissions serving as a
reference for allocation, incentives for emission cuts are created what
directly impacts on the average emissions amount ("moving target").
Ex-post-allocation taking account of the production quantity instead of
absolute emissions ceilings.
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Facts about the Emissions Trading System for Steel
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Advantages of the Baseline and Credit System
Existing technological reduction potentials, but also the limits
concerning process emissions are regarded.
The system results in continuing efficiency improvements because
the orientation to the emission average gives incentives to reduce
emissions. This influences the emission baseline („moving target“).
Production growth is not constrained. The baseline and credit
emissions trading system targets only at efficiency.
No incentives for relocations of production to outside the EU.
The system is more attractive for states outside the EU and their
steel industry.
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European Steel in a Globalized Market
Summary
The world steel production continuous to grow.
EU 27: No. 2 in world crude steel production
China became the No. 1 steel exporter in 2007.
Raw materials remain short and expensive.
European steel industry – sustainable, innovative and
competitive
The Energy and climate package of the European
Commission of 23.01.08 drives the industry out of
Europe.
The only solution is a sectoral approach.
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11.07.2008