Stainless Steel & Nickel Alloys

Mo End Use Analysis 2013 First / End Use and Focus on Oil & Gas

R.-P. Hammerle U. Weirather S. Posch E. Pfeifer I. Spaltmann Joy Tio OUR TEAM OUR

M. Moll P. Moll W. Lipp A. Racu

O. Spaltmann B. Blitz W. Lee T. Windberger A. Sikman W. Bulla B. Hunter Jo Zhu The

The ‘Oil & Gas

‘Moly Squad‘ Squad‘ LOCATION

Conferences

in association with 9th Asian 13th International 28th Stainless & Stainless Steel Stainless & Special Its Alloys Enduse Focused Multi-Client Projects & Conference Steel Summit Conference Hong Kong Istanbul, Turkey Chicago, USA

Single-Client Research Stainless Steel Seminars June ‘14 September ’14 September ’14 SERVICES / SERVICES

CONFERENCES www.smr.at www.steel-intelligence.com

Type of Research Products Steel Grades

Tool Steels, Flat Stainless Single Long Eng. Steels, Multi Products Steel Client Products Nickel Alloys & Client 50 % 70 % 85 % 50 % Carbon Steels MARKET 15 % 30 % © CopyrightRESEARCH SMR SMR GmbH GmbH 2013 2011 http://www.smr.at - 1 - Content

1. Supply and Demand

2. Mo First Use 2012

3. Analysis of Primary Mo and Mo in Scrap

4. Mo End Use 2012

5. Trends and Forecast

© Copyright SMR GmbH 2013 http://www.smr.at - 2 - Regional Primary Mo Production / Demand 2010 - Q1/13 (in Mo Content) Oversupply in the second Half of 2012 – Substantial Production Drop (destocking) in Q1/13

Production * (in '000 metric t - Mo content) Change (%) 2012 vs. Region 2010 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Q1 2013 Q1/13 vs Q1/13 vs 2011 Q1/12 Q4/12 North America 78,6 83,0 19,5 19,4 19,9 21,2 79,9 21,0 -4% 8% -1% South America 52,5 58,8 12,7 14,3 12,9 12,4 52,3 12,3 -11% -4% -1% China 72,5 80,3 23,0 25,5 22,3 23,1 93,9 18,3 17% -20% -21% Other 15,7 14,3 3,7 3,7 3,9 3,6 15,0 4,3 5% 15% 18% Total 219,3 236,5 58,9 62,9 59,0 60,3 241,1 55,9 2% -5% -7%

Use * (in '000 metric t - Mo content) Change (%) 2012 vs. Region 2010 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 2012 Q1 2013 Q1/13 vs Q1/13 vs 2011 Q1/12 Q4/12 Europe 58,7 67,5 17,2 15,3 14,8 14,3 61,5 16,1 -9% -6% 13% USA 23,2 26,1 6,7 6,4 6,4 5,8 25,3 5,9 -3% -12% 1% Japan 22,8 23,9 6,2 6,3 6,1 6,2 24,7 6,4 3% 4% 4% China 68,1 80,6 15,9 25,4 22,3 22,0 85,6 17,5 6% 10% -20% CIS 9,7 10,3 2,4 2,3 2,5 2,5 9,7 2,5 -5% 4% 2% Other 25,2 28,5 7,9 7,9 7,2 7,2 30,1 7,2 6% -9% 0% Total 207,6 236,8 56,2 63,6 59,3 57,9 237,0 55,6 0% -1% -4% Up- / Destocking 11,7 - 0,4 2,7 - 0,7 - 0,4 2,4 4,0 0,3

* excluding spent catalysts

1. Supply and Demand

2. Mo First Use 2012

3. Analysis of Primary Mo and Mo in Scrap

4. Mo End Use 2012

5. Trends and Forecast

Mo First Use Mo First Use incl. Mo in Scrap only Primary Mo

Nickel Nickel Mo-Metal Mo-Metal Alloys Alloys 5% 4% 3% 5%

Tool Steels 8% Tool Steels 11% Engineering Foundries Steels 8% Engineering Foundries 36% steels 7% 321kt 237kt 43% Chemicals Chemicals 12% 11%

Stainless Steels Stainless 21% Steels 26%

1. Supply and Demand

2. Mo First Use 2012

3. Analysis of Primary Mo and Mo in Scrap

4. Mo End Use 2012

5. Trends and Forecast

140.000 Scrap Ratio: 14% Total Scrap Ratio: Mo in Scrap 120.000 26% Primary Mo 15.900 Scrap Ratio: 100.000 40% Remarks: Use of Spent Total Mo in Scrap: Catalysts for Catalyst Production (Chemicals) higher ~84,000 kt 80.000 than expected in scrap report (2012) Use of Mo Metal Scrap for Mo 33.400 Metal Production

60.000 Scrap Ratio: 50% Scrap Ratio:

Mo Units [ tonnes [ Units ] Mo 101.330 11% Scrap Ratio: 19% Scrap Ratio: 40.000 Scrap Ratio: 60% 2% 3.500 51.030 17.840 20.000 4.550 28.860 230 18.140 19.710 9.000 11.880 6.070 - Constructional Stainless Steel Alloy Tool Steel / Chemicals Cast Iron Super Alloys Mo-Metal Eng. Steel HSS

Real Intrinsic Value Discounts vs. Theoretic Values Too (based on Ni 90 - Cr 85 - Fe 100 ‘rule’) Expensive 1.000

800

NPI (5%) 600

400 NPI (11%) 200

(200) Minus Real Scrap Price Real Scrap Minus

US$ / t Difference: Difference: / t US$ (400)

(600) Average 10.3 % Discount Theoretic Theoretic (800) Today 19.3 % Discount (1.000) Too Cheap (1.200)

65%

60%

55%

50%

45% 61% Mo Units [ in in [ Units %] Mo

40% ROW 44% 35% 37% 35% 33% 30% Europe USA China Other Asia ROW

1. Supply and Demand

2. Mo First Use 2012

3. Analysis of Primary Mo and Mo in Scrap

4. Mo End Use 2012

5. Trends and Forecast

Electronics & Medical 2% Aerospace & Defence Others* 4% 5%

Building / Construction Oil and Gas (incl. Catalysts, 6% Refinery) 20%

Power Generation 7%

Chemical/Petrochemical Other Transportation 14% 8%

Process Industry (excl. CPI) 8% Automotive 13% Mechanical Engineering 13%

Total End Use 321,400 t * incl. Pigments, Coating s and Lubricants

© Copyright SMR GmbH 2013 http://www.smr.at - 12 - Total Mo End Use by Segments (incl. Mo from Scrap) Oil & Gas: ~20,000 t bigger than second ranking CPI - Top4 Segments account for 60% of Mo Use 63,800 t – mainly in 75,000 CRA Materials and Ref. Catalysts 70,000 Chemicals Cast Iron 65,000 Total End Use 45,200t – mainly Mo in Mo-Metal STS (316/Duplex) 321,400 t 60,000 ATS / HSS 55,000 43,000 t – Constr. Eng Super Alloys Steel, ATS, Cast Iron 50,000 Stainless Steel 41,500 t – Constr. Constructional Eng. Steel 45,000 Eng Steel, ATS 27,400 t – Constr. Eng., ATS 40,000 25,300 t – STS and 35,000 ATS/HSS 14,800 t – driven by Mo

in Chemicals (Pigments, Mo Use t in Use Mo 30,000 23,500 t – Constr. Coatings, Lubricants etc Eng., STS 25,000 20,000 18,800 t - dominated by STS 11,500 t – Super- 15,000 alloys, Constr. Eng. 10,000 6,600 t 5,000 0

* incl. Pigments, Coatings and Lubricants

Other World* 12,7 ROW Average World: 46 gr per Capita

Other Asia 49,3

China 76,5

of which USA 142,6

Americas 66,5

Europe 113,7

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 * incl. CIS, Middle East,India and Africa

Growth and Underestimated in 70.000 previous report 2011 (Previous Report) 2012: Basis 60.000 revised 2012

50.000

40.000

2012: Basis revised

[tonnes] 30.000

20.000

10.000

Mo Production Mo First Use Mo End Use Primary Mo Use at Mills and in Consumption in End Use Segments at Ore/Concentrate Metal / Chemical Production Fabricators and Consumers

ROW ROW 11% ROW 8% Europe 6% 21% Other Europe Asia 26% Other 15% Asia 16%

China America 39% 55% China America America 36% 15% 21% China 31%

241,000 t 237,000 t 321,000 t Primary Mo Primary Mo Primary Mo and Mo in Scrap

1. Supply and Demand

2. Mo First Use 2012

3. Analysis of Primary Mo and Mo in Scrap

4. Mo End Use 2012

5. Trends and Forecast

175

150

100 = =

125 2012 2012

100

Index Base: Base: Index Europe America

China Other Asia

ROW 75 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

*Source: IHS, SMR estimates

Other Truck and Bus Parts Frame Parts / 4% Chassis (Trucks) 6% Cranes Tractors 3% Tanks 3% 5% Power Train - Trucks & Busses Engine - Passenger 7% Cars Offroad Trains 22% Vehicles 12% 52% Engine - Trucks & Busses Automotive: 4% 43,000 t Other Transport: (Passenger Cars/Trucks) Ships 25,300 t 30% Other Passenger Power Train - Car Parts Passenger Cars 12% 29% Frame Parts / Chassis (Car) 11%

10 yr. Growth above average Average Below average

Instrumentation Catalysts 2% Textile Industry Desalination 6% 5% 4% Heat Exchangers 6% Glas Process / HT Furnace 7% Food Processing Flow Control Chemical 38% (Valves, Fittings, Process Other Process Pumps, Seals) Industry: Pulp & Paper Industry: 11% 45,200 t 13% 27,400 t Tanks & Columns Pipes incl. Internals 23% 50% Metal / Steel Processing 33%

10 yr. Growth above average Average Below average

Energy Mix* Other 2012 Renawables 25.1% Solar / Transmission Geothermal Waste-to Energy 3% Energy 6% 1% Hydro Energy 3% Wind Power 5.2% Fossil Energy 61.8% Nuclear Power 6% Coal Fired Plants 42% Nuclear Pollution Control Energy 7% 7.9% Power Generation: 23,500 t Energy Mix* Other 2022 Renawables Wind Power 26.1% 9% Gas / Oil Fired Plants 23%

Wind Power Fossil Energy 10.9% 54.7% 10 yr. Growth above average

Average Nuclear Energy Below average 8.4% *EIA Energy Outlook 2013 – installed generating capacity

Other Defense Other Machinery 7% 14% Guns & Muzzles Cold Working 8% 4% Mining 22% Turbine Parts EDM Tanks & Armored 56% 3% Vehicles 12% Bearing Mechanical Engineering: Aerospace/Defense: 7% 41,500 t 11,500 t Other Heavy Machinery 15% Recycling, Milling Other Aerospace 11% 15% HSS-Working Hot Working 13% 11% Airframe 2%

10 yr. Growth above average Average Below average

Infastructure 6% Medical Equipment General Building / 20% Construction 8% Architectural Applications 47% Heating Consumer Durables / /Ventilation / Building and Electr. / Med. Equipm.: Aircondition Construction: 6,600 t 17% 18,800 t Consumer Goods 41% Structural Electronics Applications 39% 22%

10 yr. Growth above average Average Below average

5.0%

4.5%

4.0%

3.5% Average Growth - All Segments

3.0%

2022 in % in 2022

- 2.5%

Total

Oil & Gas

2.0%

Growth 2012 Growth

1.5%

1.0%

Transportation

0.5%

Automotive

Mechanical Engineering Mechanical Other Generation Power Industry Process Construction & Building Defense / Aerospace Others O/G: Processing Prod./ Exploration/

Chemical / Petrochemical /Petrochemical Chemical Industry

Catalysts Catalysts O/G:Refinery / O/G:Refinery

Consumer Goods / Med. / Electr. / Med./ Goods Consumer

0.0%

*) incl. Mo in Scrap Mo Use in t (2012)

45,000

40,000 2022 vs. 2012 +44% WORLD 35,000

30,000 + 111 kt + 35% 25,000

ROW Units in t in Units

20,000 Mo

15,000 +30%

10,000 +56% +28% +19% 5,000

0 Incl. Mo in Scrap China Americas Other World Other Asia Europe

450.000 ACTUAL FORECAST

400.000 Forecast GR (12-22): 3.3% p.a. Crisis and 350.000 Post-Crisis GR (07-12): 4.2% p.a.

300.000

China Growth GR (00-07): Mo Input in t (Mo Content) t (Mo in Input Mo End Use 2000-2007 250.000 4.5% p.a. End Use 2007-2012 Forecast 2013-2022 Pot. Destocking 2013-15 200.000

Source: Baker Hughes

Source: Butting

Source: SBO

©Reutte Copyright, September SMR GmbH 2013 2013 http://www.smr.at© SMR GmbH Content

1. Introduction

2. Applications

3. Moly Use in Oil & Gas – Past, Present and Future

© Copyright SMR GmbH 2013 http://www.smr.at World Primary Energy Demand Oil & Gas is still expected to account for around 50 % of the world energy demand by 2035. Production of oil and especially gas will continuously grow until then.

18.000

16.000 Other Renewables 14.000 Bioenergy 12.000 Hydro 10.000

Mtoe 8.000 Nuclear

6.000 Coal

4.000 Gas 2.000 Oil 0 2000 2010 2015 2020 2035

2000 2010 2015 2020 2035 Share Oil 36% 32% 31% 30% 27% Share Gas 21% 22% 21% 22% 24% Share Oil & Gas 57% 54% 53% 52% 51%

Source: International Energy Agency, World Energy Outlook 2012, Energy trends to 2035, New Policies Scenario

120 300 Deepwater Onshore Shallow Water (< 500 ft) Shallow Water (< 500 ft) Onshore Deepwater

100 250

80 200

60 150

40 100

Million barrels/day Million Index based on 2005 on based Index

20 50

0 0 2005 2011 2015 2020 2025 2030 2035 2005 2011 2015 2020 2025 2030 2035

Source: International Energy Agency, World Energy Outlook 2012

© Copyright SMR GmbH 2013 http://www.smr.at Meters Drilled per year – Medium Term Outlook When comparing total drilling depths in meters, the deepwater share is lower but growing fast. To produce 1 million barrels/day, more onshore metres need to be drilled compared to a deepwater project.

180 250 Deepwater 160 230 Shallow Water

140 210 Onshore

120 190

100 170 Onshore 80 Shallow Water 150

60 Deepwater 130

Million meters drilled meters Million Index based on 2005 on based Index 40 110

20 90

0 70

Source: Quest Offshore

© Copyright SMR GmbH 2013 http://www.smr.at Onshore Drilling Shale gas/oil developments (fracking) led to a renaissance of US onshore drilling. Mo is used for OCTG & Drillpipe, non-magnetic drill string equipment, fracking pumps and downhole tools.

160 160 U.S. Vertical Drilling 140 140

U.S. Directional/Horizontal Drilling

120 120

100 100

80 80 ROW 60 60

Europe Million meters drilled meters Million Million meters drilled meters Million 40 Asia 40 N America 20 20

0 0

Fracking accounts for around 65 % of the U.S. Mo demand for oil & gas!

Source: Quest Offshore

OCTG e.g. API 5CT H40, J55, N80, M65, C75, L80, C90, C95, T95, P105, P110, Q125

Drillpipe e.g. API 5DP E-75, X-95, G-105, S-135, sour service SS95, SS105

Linepipe X70, X80 (normally no Mo, but in China Nb is replaced by Mo), X100

Alloy Steels 4130, 4140, 4145H, 4330, 4340, 8630, F22, F5, F11, F60, 9Cr/1Mo, proprietary grades like VAM Drilling ERS 425

Stainless Steels Martensitic: 13Cr, Super 13Cr, 410, 420, F6NM, Carpenter Custom 465®

Austenitic: 304, 321, 316, 317L, 347

Duplex: Duplex (22 Cr), Superduplex (25 Cr), Lean Duplex

PH: 13-8, 17-4 PH, 15-5 PH, ATI S240

Superaustenitics: 6Mo grades, 904L

Non Magnetic: e.g. Böhler (P530, P550, P580, P650), ATI (Datalloy 2, Staballoy AG17), Carpenter (15-15HS, 15-15LC, SCF19)

Nickel Alloys 28, 625, 718, 725, 825, 925, 945, C276, C22, G3, P750 400, 600, 800, K500, Invar

The era of easy accessible oil & gas has ended! • Titanium

• Increasing offshore production

• Rapid growth of ultra-deepwater production • Ni Alloys

• Increasingly severe operating conditions • 28Cr (Alloy 28) (higher pressure, higher temperature, higher corrosion) • Superduplex (25 Cr) • Boosting technologies to increase brownfield production • Duplex (22 Cr)

CRA demand is driven by the production/reservoir • 300 series austenitic conditions (sorted by importance): • 13Cr, martensitic

1. Corrosiveness (H2S, CO2, Chloride) 2. Temperature • Alloy Steel 3. Pressure Pressure Corrosiveness, Temperature, • Carbon Steel There is no alternative to CRAs!

Content

1. Introduction

2. Applications

3. Moly Use in Oil & Gas – Past, Present and Future

Risers LNG 9% 8% Drill String 7% Valves Gas 10% Linepipe Topsides 19% 20% Wellheads 7%

Flowlines Pumps 12% 7% Others 20% Subsea Split Others Connectors OCTG & 6% Drill Pipe 41% Control Units Downhole Tools 5% 15% Welding Wire 4% Trees Others Umbilicals 4% 4% Top Mo Containing Appplications by Steel Type 2% Application Alloy Steel Stainless Steel Nickel Alloys No. 1 OCTG & Drill Pipe Topside Processing Downhole Tools No. 2 Linepipe OCTG OCTG No. 3 Downhole Tools Infield Flowlines Topside Processing No. 4 Wellheads LNG Valves No. 5 Drill String Components Risers Wellheads No. 6 Subsea Connectors Pumps Infield Flowlines Avg. Mo No. 6 Subsea Trees Valves Subsea Connectors No. 8 Valves Welding Wire Subsea Trees Content No. 9 Risers Drill String Components Drill String Components No. 10 Blowout Preventers Umbilicals Risers 0.6% Share Top 10 99% 92% 90%

Grades Used : • AS (majority): API 5CT Gr. 1 (e.g. H40, J55, N80 – some veriations of these grades can have little Mo), Gr. 2 (e.g. M65, C75, L80, C90, C95, T95), Gr. 3 (P110), Gr. 4 (Q125), Gr. 5 (producer specific grades) • STS: 13Cr, Super 13Cr, Duplex, Super Duplex • NA: 625, 825, G3, G50, C276, Alloy 28

Grades Used (AS) Grades Used (13Cr) Source: Vallourec API 5CT Gr. 2 16% 13 Cr API 5CT 88% API 5CT Gr. 3 Super Gr. 1 20% 13Cr 50% 12% API 5CT Gr. 4 API 5CT 7% Gr. 5 6,5% Source: Tenaris, Drill Pipe Mo Content Grades Used (Duplex, NA)

API 5CT API 5CT Gr. 4 Gr. 5 Alloy 28 43% 10,1% 27% Alloy 825 API 5CT API 5CT Duplex/ 10% Avg. Mo Gr. 3 - API 5CT Gr. 1 Superd. No Mo Content Gr. 2 1% 59% G3 0% 46% 3% 0.5% Other Ni 1,2%

• The following topside equipment can be installed on platforms: water treatment, seawater systems, separators, heat exchangers, oil treatment, gas treatment, compressors, water injection systems, tanks, vessels, flare stacks, etc. which all are connected by process piping systems and instrumentation tubing.

Grades Used : • STS: 304, 316L (also for cladding/weld overlay), 317, 321, Duplex 2205, Source: Aker, subsea Super Duplex 2507, LDX 2101, 904L, 6 Moly (254 SMO, 654 SMO) compressor inlet scrubber • NA: 625 (also for cladding/weld overlay), 800, 825, 400

Grades Used

304/321 13% 316/317 62% Duplex 19% Source: Argo Flare Services, flare stack

6 Mo 3% Avg. Mo

904L Content Othr Ni 800/400 625/825 0,5% 2.9% 0,2% 0,5% 1,3%

Source: Baker Hughes Types of Downhole Tools: • Flow control: sliding sleeves landing nipples, polished bore receptacles, etc. • Safety systems: subsurface safety valves • Packers • Liner hangers • Sand control: gravel packs, screens

Grades used: • AS: 4130, 4140, 4330, 9Cr • STS: 13Cr, Super 13Cr, 410, 420, Super Duplex 25Cr • NA: 718, 725, 725HS, 825, 925, HS

Grades Used

4330/ 4340 Other 23% AS 3%

13Cr 4140/ 9% 4130 49% 410/420 8% Other STS 718 Avg. Mo 1% Source: Baker Atlas 2% Content Other Ni 725 925 1% 2% 2% 0.7%

Infield Flowlines Valves Risers

2.3% 1.9% 2.3%

Source: Butting, mechanically lined Sources: Cameron Source: Nexans, flexible pipe Source: Claxton Engineering, BuBi® pipe high pressure drilling riser

Subsea Trees LNG Drill String Tree Components

1.1% 2.2% 0.4%

Source: FMC Technologies, Source: Erndtebrücker Source: SBO, non-mag Source: Dyna-Drill, downhole subsea tree Eisenwerk, LNG pipes drill collars motor

1. Introduction

2. Applications

3. Moly Use in Oil 6 Gas – Past, Present and Future

9,0 160 Gas Linepipe Total Steel 8,0 Alloy Steel OCTG & Drill Pipe 150 Other Applications Mo Steel

7,0 140 Mo Content

6,0 130

5,0 120

4,0 110

In 1,000 tonnes 1,000 In 3,0 100 Index based on 2005 on based Index 2,0 90

1,0 80

0,0 70

150 Alloy Steel

140 Stainless Steel Nickel Alloy

130 Offshore drilling Onshore drilling

120

110 Index based2012on Index 100

80 2012 2013f 2014f 2015f 2016f 2017f 2018f

2007 2012 2018

Nickel Nickel Nickel Alloys Alloys Alloys 9% 7% 9%

Stainless Alloy Steel Steel Stainless Alloy 33% 50% Steel Steel Alloy 35% 56% Stainless Steel Steel 60% 41%

+15%

33,600 t 40,230 t 46,200 t Mo Units Mo Units Mo Units

2007 2012 2018

Others Others Others 9% 7% 9%

Linepipe 10% Linepipe Linepipe 27% 31%

OCTG OCTG 62% OCTG 64% 81%

- 3%

18,715 t 24,000 t 23,200 t Mo Units Mo Units Mo Units

2007 2012 2018

Others Others Others Mart./ Mart./ Mart./ 2% 3% 3% 13Cr 13Cr 13Cr 6Mo 6Mo 6Mo 7% 6% 5% Grades Grades Grades 7% 8% 8%

300 300 Series 300 Series 51% Series 51% 53% Duplex Duplex Duplex 31% 33% 32%

+41%

11,878t 13,323 t 18,700 t Mo Units Mo Units Mo Units

2007 2012 2018

725 725 725 10% 12% 11%

28 28 13% 625 625 11% 28 625 45% 42% 42% 10%

825 825 825 11% 11% 11%

718 718 718 7% 7% 7% 925 925 925 Other Other Other 5% 6% 6% 12% 11% 10%

+46%

3,000 t 2,900 t 4,200 t Mo Units Mo Units Mo Units

2007 2008 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 2018f CAGR in t of Mo Units 07-12 12-18 07-18 Drill String 550 554 458 494 587 607 602 608 636 660 691 757 2.1% 3.7% 3.4% Blowout Preventers 38 51 49 62 56 58 67 64 57 57 56 54 7.9% -2.3% 2.1% Wellheads 586 587 468 488 538 555 583 570 617 639 665 672 -1.4% 3.5% 2.2% Subsea/Christmas Trees 321 316 252 277 247 299 361 388 399 389 409 410 -2.8% 4.4% 4.1% OCTG Casing/Tubing STS/NA 1,654 1,482 1,160 1,293 1,473 1,759 1,907 1,988 2,076 2,042 2,133 2,136 1.1% 3.0% 4.8% OCTG Casing/Tubing AS 12,000 11,800 10,000 11,400 13,050 14,811 15,214 15,887 16,591 17,329 18,101 18,911 4.3% 4.3% 5.5% Downhole Tools 1,180 1,119 863 942 1,039 1,204 1,246 1,289 1,360 1,369 1,455 1,477 -0.1% 3.6% 3.8% Subsea Manifolds 68 79 37 32 28 55 71 81 84 79 85 88 -11.8% 6.4% 6.1% Umbilicals/Flying Leads 221 337 186 378 333 201 419 442 453 481 546 551 0.5% 13.9% 8.6% Jumpers 26 30 17 13 13 22 29 36 36 36 38 39 -9.7% 8.3% 7.4% Flowlines 1,074 653 928 971 945 945 855 891 1,055 1,644 1,804 1,872 1.5% 16.0% 7.0% Gas Line Pipes (mainly China) 5,000 5,000 4,000 4,412 6,000 7,576 4,831 2,094 5,116 9,137 5,127 2,205 8.1% -7.3% -2.0% Risers 650 730 632 680 532 693 802 773 1,036 1,076 1,498 1,669 -1.6% 16.3% 8.7% Subsea Connectors 519 515 464 482 464 502 595 582 664 677 734 751 -1.3% 6.6% 4.4% Subsea Control Units 203 205 191 186 198 202 224 213 239 241 251 254 -0.5% 3.8% 2.6% Subsea Sensors 41 41 38 37 40 40 45 43 48 48 50 51 -0.5% 3.8% 2.6% Control and Injection Lines 188 145 169 178 156 180 222 202 253 270 281 288 0.2% 8.1% 6.0% Wirelines and Slicklines 93 92 70 72 84 86 86 86 89 92 95 100 -1.9% 2.6% 1.4% Processing (Topsisde/Subsea) 6,004 7,485 5,579 5,320 7,295 7,839 7,778 9,030 8,308 10,574 10,048 10,003 3.5% 5.1% 5.6% FPSO 665 734 353 371 773 272 453 815 861 815 815 861 -11.5% 18.0% 5.2% Liquefied Natural Gas (LNG) 333 224 83 304 551 633 467 309 257 211 310 506 22.9% -6.5% 4.0% Pumps 579 571 436 446 521 533 531 532 552 569 591 620 -1.9% 2.7% 1.4% Compressors 7 7 5 5 6 6 6 6 7 7 7 7 -1.9% 2.6% 1.4% Valves 1,067 852 742 736 908 784 1,055 1,069 1,070 1,378 1,495 1,318 -3.8% 9.4% 5.2% Actuators 13 11 9 9 11 10 13 13 13 17 18 16 -3.4% 9.2% 5.0% Fracking Pumps/Blocks 30 31 28 32 39 29 22 36 38 39 41 45 1.9% 10.0% 3.4% Welding Wire 485 229 347 369 315 328 261 310 358 518 580 524 -2.6% 13.4% 4.1% Total 33,598 33,880 27,565 29,989 36,204 40,230 38,744 38,356 42,272 50,393 47,927 46,182 3.4% 4.1% 4.5%

• Mo content will grow faster than total steel demand; the avg. Mo share is expected to increase from 0.55 % in 2012 to 0.75 % in 2018.

• OCTG: 41 % of Mo use in 2012 – 45 % in 2018; the average Mo share was growing from 0.45 % in 2007 to 0.50% in 2012 and is expected to remain stable now.

• Gas Line Pipe: Mo grades are mainly used in China; demand heavily fluctuating based on project activity (19 % of Mo use in 2012 but just 5 % in 2018); the average Mo share is expected to grow from 0.25 % to 0.3 %.

• Processing (Topside/subsea)/FPSO: 20 % of Mo use in 2012 – 24 % in 2018; driving demand for 316 and Duplex; relatively high average Mo share with 2.9 %. Rising practice of ‘seabed processing’.

• Other Applications: 20 % of Mo use in 2012 – 24 % in 2018; main applications with increasing shares: Flowlines 12 -> 15 % (avg. Mo 2.3 %), Risers 9 -> 14 % (avg. Mo 2.3 %), Umbilicals 2 –> 5 % (avg. Mo 3.8 %).

• Fracking: main consumption comes from alloy steel OCTG (avg. Mo 0.49 %), drill string components (avg. Mo 0.42 %) including non-magnetic drill collars (avg. Mo 0.66 %), downhole tools (avg. Mo 0.68 %) and fracking blocks (mainly alloy steel 4340/4310 avg. Mo 0.26 % - new solution PH STS grades are Mo free).

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