Overview of the Steel and Iron Ore Market 2020

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Overview of the Steel and Iron Ore Market 2020 OverviewОбзор рынка of the Steel черной металлургии Исследовательскийand Iron Ore центр Market компании «Делойт»December 2020 в СНГ Москва,Deloitte CISNovember Research 2020 Center года Contents 01 Foreword Key Findings Overview of the Global 02 Foreword 4 Steel and Iron Ore Market 01 Overview of the Russian Key Findings 5 03 Steel and Iron Ore Market Overview of the Global Steel and Iron Ore Market 6 04 Contacts 02 Production Trends: the Global Market 7 Production Trends: China 8 Production Trends: the EU and North America 9 Consumption Trends: the Global Market 10 Consumption Trends: China 11 Consumption Trends: the EU and North America 12 Prices of Raw Materials: Iron Ore 13 Prices of Raw Materials: Coking Coal 14 Prices of Raw Materials: Ferrous Scrap 15 Steel Prices 16 The Global Steel Trade 17 03 Overview of the Russian Steel and Iron Ore Market 18 Production Trends 19 Financial Performance of Leading Russian Steelmakers 20 Consumption Trends 21 Exports of Ferrous Metals 22 Imports of Ferrous Metals 23 Key Industry Events 24 Measures to Combat COVID-19 25 04 Contacts 26 03 Foreword 01 Foreword Key Findings Overview of the Global 02 Steel and Iron Ore Market We are pleased to present you In 2020, the iron and steel Overview of the Russian 03 with the full version of our analytical industry was significantly affected Steel and Iron Ore Market report on the steel and iron ore market by the COVID-19 pandemic. in 2020. This document contains a summary 04 Contacts of preliminary data for nine months of 2020 According to our analysts’ forecasts, in 2020 and our experts’ outlook for 2020–2021. global steel output will be 1,799 million tonnes (-2.8 percent YoY), and consumption will amount We have published this report every to 1,782 million tonnes (-4.3 percent YoY). year since 2015 with the aim of providing Andrew Sedov a comprehensive study of the metals industry. Vitaly Mikhalchuk Despite the pandemic, steel output and Partner, Leader Research Projects consumption will continue to grow in 2020 of the Metals Group Please feel free to contact us if you have Leader of Deloitte in China due to large-scale initiatives aimed [email protected] any questions regarding this report. CIS Research Center at boosting investments. By the end of 2020, [email protected] China’s share in global steel production will reach 57 percent (+3 pp compared to 2019). Russian steel output in January–September 2020 was 52.5 million tonnes(-2.9 percent YoY). By year end, metals production is expected to be down by 3 percent year-on-year. 04 Key Findings 01 Foreword Key Findings Overview of the Global 02 Steel and Iron Ore Market Overview of the global steel Overview of the Russian steel Overview of the Russian and iron ore market and iron ore market 03 Steel and Iron Ore Market Decrease in global • In 2020, global steel production Decrease in Russian • In January–September 2020, steel output -2.8 % steel production is expected to decrease by 2.8 percent YoY, -3.0 % steel production went down by 2.9 percent YoY, to 52.5 million 04 Contacts to 1,799 million tonnes. tonnes. By the end of 2020, the Russian Share of major Russian Ministry of Economic Development expects • China’s output will continue to grow in 2020 China’s share in global steel producers metals output to decline by 3 percent (by 4 percent YoY) due to initiatives aimed steel production for the three year-on-year in comparable prices. 57 % at boosting investments. China’s share 87 % quarters of 2020 in global steel production will reach 57%. • For nine months of 2020, NLMK, EVRAZ, Severstal, MMK, and Metalloinvest had Decrease in global • Steel consumption will shrink by 4.3 percent Decrease in Russian a combined output of 45.4 million tonnes, steel consumption year-on-year. Decline in demand for steel steel consumption -4.3 % -8.5 % or 87 percent of Russian steel production will be uneven across the world, in this period. depending on epidemiological trends Average price for Share of exports and government support measures. • The aggregate revenues of five companies 1 tonne of hot-rolled in steel production (excluding EVRAZ) for nine months 491 USD products (FOB EU) • It is highly probable that a second wave 44 % in Russia of 2020 were USD 24 billion (-18% percent of coronavirus will result in volatile YoY), while EBITDA was USD 6.6 billion demand and prices for steel at the end (-23 percent YoY). The EBITDA margin of 2020 and first half of 2021. Average prices dropped by 2 pp: to 27.4 percent. will be at USD 491 per 1 tonne in 2020. • In 2019, steel consumption in Russia amounted to 43.7 million tonnes. In 2020, consumption is expected to decline to 40 million tonnes (-8.5% percent YoY). 05 Overview 01 Foreword of the Global Steel Key Findings Overview of the Global 02 and Iron Ore Market Steel and Iron Ore Market Production Trends: the Global Market Production Trends: China Production Trends: the EU and North America Consumption Trends: the Global Market Consumption Trends: China Consumption Trends: the EU and North America Prices of Raw Materials: Iron Ore Prices of Raw Materials: Coking Coal Prices of Raw Materials: Ferrous Scrap Steel Prices The Global Steel Trade Overview of the Russian 03 Steel and Iron Ore Market 04 Contacts 06 Overview of the Steel and Iron Ore Market, December 2020 | Overview of the Global Steel and Iron Ore Market Production Trends: 01 Foreword Key Findings the Global Market Overview of the Global 02 Steel and Iron Ore Market Production Trends: Figure 1. Global steel output In the last quarter of 2019, a sharp fall in prices the Global Market for steel amid still high prices for raw materials 1,538 1,560 1,650 1,669 1,620 1,627 1,718 1,796 1,850 1,799 1,900 1,988 Steel production (mln tonnes) resulted in lower margins and a decline Production Trends: Growth (%/ year-on-year) in global steel output. Steel production growth China 7.3 rates were down to 3.0 percent in 2019 5.8 5.6 5.6 Production Trends: 4.5 overall (compared to a growth of 4.5 percent the EU and North America 3.0 and 5.6 percent in 2018 and 2017 respectively). 4.7 Consumption Trends: the Global Market In Q1 2020, steel output declined 1.4 by 1.2 percent year-on-year. Steel output Consumption Trends: 1.2 0.4 grew by 1.2 percent year-on-year in China China while decreasing by 4.1 percent globally. Consumption Trends: 2.9 -2.8 the EU and North America Q2 2020 was more thoroughly affected by the COVID-19 pandemic. Chinese steel output Prices of Raw Materials: 2011 2012 2013 2017 2015 2019 2016 2014 2018 2021 2020 2022 remained the same, while the rest of the world Iron Ore Source: Economist Intelligence Unit (EIU) saw a decline of 20 percent year-on-year. Prices of Raw Materials: In the first eight months of 2020, steel Coking Coal production was down by 4.2% percent Prices of Raw Materials: Figure 2. Steel output, by month (mln tonnes) year-on-year. In August 2020, production Ferrous Scrap grew on a year-on-year basis for the first 152 140 157 158 164 159 156 155 151 151 148 152 151 145 147 137 149 149 153 158 156 time since May 2019 (158 million tonnes Steel Prices against 155 million tonnes). The Global Steel Trade EIU experts forecast a decline in global steel Overview of the Russian 03 production by 2.8 percent in 2020, which Steel and Iron Ore Market will be followed by 5.6 percent growth in 2021. 04 Contacts July 2019 July 2020 May 2019 May 2020 May June 2019 June 2020 June April 2019 April 2020 March 2019 March 2020 March August 2019 August 2020 January 2019 January 2020 October 2019 February 2019 February 2020 December 2019 December November 2019 November September 2019 September September 2020 September Source: World Steel Association 07 Overview of the Steel and Iron Ore Market, December 2020 | Overview of the Global Steel and Iron Ore Market Production Trends: 01 Foreword Key Findings China Overview of the Global 02 Steel and Iron Ore Market Production Trends: Table 1a. Forecast steel production (%, year-on-year) In 2019, Chinese steel production rose the Global Market 8 percent YoY to 993 million tonnes, 2019 2020 2021 2022 accounting for 54 percent of global steel output. Production Trends: Global production 3.0% -2.8% 5.6% 4.7% China Asia 5.4% 0.5% 4.6% 4.1% Despite the pandemic, in January–August 2020 Production Trends: China 8.0% 4.0% 3.8% 3.5% steel production grew by 3.4 percent YoY. the EU and North America The Chinese government announced Other Asian countries -1.5% -10.0% 7.2% 6.0% its readiness to boost investments to avoid Consumption Trends: EU -5.4% -16.0% 9.0% 5.0% the Global Market a decrease in production. Given the current North America -0.7% -15.0% 14.0% 9.0% output rates, which exceed 1 billion tonnes Consumption Trends: CIS -0.5% -4.0% 3.0% 4.9% per year, EIU analysts forecast a 4 percent China rise in 2020. Consumption Trends: the EU and North America Table 1b. Forecast steel production (mln tonnes) Since 2016, a major part of China’s old capacities have been replaced with new and more Prices of Raw Materials: 2019 2020 2021 2022 advanced ones, which keeps overall capacity Iron Ore Global production 1,850 1,799 1,900 1,988 at approximately 1.2 billion tonnes per year.
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