Transcript Document

Reasons for price growth
in the world market and
prospects for their
correction
/the long product market/
CIS Steel in the
World Markets
11-13 April 2007,
Kiev, Ukraine
Alexander Markov
Chief Analyst
Metal Expert
www.metalexpert-group.com
Growth factors
SUPPLY
<
Supply decrease:
DEMAND
Demand increase:
China: uncertainty as to export taxes
Relatively mild winter
Russia: scrap exports decrease – fundamental
change
Inertia of the growing market
Inflation
Brazil: seasonal cut in pig iron production
Growing prices in the real estate market
EU: seasonal cutback in steel output
USA: lingering low utilization of production
capacities
Other market factors set up by sellers
Average world prices, fob
Jan 06
Apr 07
change
Jul 08
Steel scrap
170-190
330-340
1.9 times
230-250
Square billet
280-320
490-560
1.7 times
370-400
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-0.5
-1.0
Jan.05
Feb.05
Mar.05
Apr.05
May.05
Jun.05
Jul.05
Aug.05
Sep.05
Oct.05
Nov.05
Dec.05
Jan.06
Feb.06
Mar.06
Apr.06
May.06
Jun.06
Jul.06
Aug.06
Sep.06
Oct.06
Nov.06
Dec.06
Jan.07
Feb.07
Mar.07
mt
Growth factors
China: Net export of steel products and semi-finished products
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-1.5
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Growth factors
Russia: Scrap collection and distribution
3500
Export
Shipped to the domestic market
3000
2000
1500
1000
500
0
Jan.02
Apr.02
Jul.02
Oct.02
Jan.03
Apr.03
Jul.03
Oct.03
Jan.04
Apr.04
Jul.04
Oct.04
Jan.05
Apr.05
Jul.05
Oct.05
Jan.06
Apr.06
Jul.06
Oct.06
Jan.07
`000 tonnes
2500
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2300
2100
Jan.02
Apr.02
Jul.02
Oct.02
Jan.03
Apr.03
Jul.03
Oct.03
Jan.04
Apr.04
Jul.04
Oct.04
Jan.05
Apr.05
Jul.05
Oct.05
Jan.06
Apr.06
Jul.06
Oct.06
Jan.07
'000 tonnes
Growth factors
Brazil: Pig iron production
3100
2900
2700
-8%
2500
-6%
-15%
-10%
Feb/ Dec: -8%
-24%
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Growth factors
EU-15: Average daily steel production
1999-2005 average
2006
8.9%
8.2%
7.8%
7.4%
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
6.7%
Feb
7.1%
Jan
month’s share in the year
8.6%
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Growth factors
US: raw steel production
2100
2000
1800
1700
1600
1500
01-2007
10-2006
07-2006
04-2006
01-2006
10-2005
07-2005
04-2005
1400
01-2005
'000 tonnes
1900
w eek en d
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Real estate prices
USA and Russia: price dynamics in
comparison
USA: Median Price of Houses Sold
including Land Price
Russia: $/ м2 in Moscow
US: Price of Houses
265000
4.50
255000
4.00
245000
3.50
235000
US$
225000
2.50
215000
2.00
205000
1.50
195000
1.00
185000
2007
2006
2005
2004
2003
175000
2002
2007
2006
2005
2004
2003
2002
2001
2000
1999
0.50
1998
Jan.1998=1
3.00
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Steel prices
Steel scrap
Billet
Ukraine: fob Black Sea
US: fob West Coast
350
600
in proportion to US M3 growth (Jan 04=100%)
in proportion to US M3 growth (Jan 04=100%)
in proportion to US PPI growth (Jan 04=100%)
in proportion to US PPI growth (Jan 04=100%)
550
300
US$ per tonne
250
200
450
400
350
150
300
100
Apr.07
Jan.07
Oct.06
Jul.06
Apr.06
Jan.06
Oct.05
Jul.05
Apr.05
Jan.05
Oct.04
Jul.04
Apr.04
Jan.04
Apr.07
Jan.07
Oct.06
Jul.06
Apr.06
Jan.06
Oct.05
Jul.05
Apr.05
Jan.05
Oct.04
Jul.04
Apr.04
250
Jan.04
US$ per tonne
500
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Steel prices
Steel scrap
No.1 scrap, USA, fob West Coast
Billet
Billet, Ukraine, fob
in January 2002 prices
in January 2002 prices
600
350
300
500
250
400
200
300
150
200
100
100
50
0
2008
2007
2006
2005
2004
2003
2002
2008
2007
2006
2005
2004
2003
2002
0
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Thank you for your attention
e-mail: [email protected]
CIS Steel in the
World Markets
11-13 April 2007,
Kiev, Ukraine
www.metalexpert-group.com