American Metal Market EVENTS 7 th Steel Scrap Conference October 30-31, 2013 Demand/Supply of Asian Ferrous Scrap Market Kensuke KITANI SHIMABUN Corporation 1
Today s Agenda 1. Who is SHIMABUN? 2. Current structure 3. Outlook 4. Summary 2
1. Who is SHIMABUN? 3
SHIMABUN at a glance - Founded in 1909 - Based at Kobe - Annual sales: (Headquarters of Shimabun Group) 1.5mil MT (Ferrous scrap & Steel products) - 10 stock and processing yards - 7 berths for bulk carriers 4
2. Current structure 5
Demand side 6
Scrap importers in Asia (2012) - Total import volume (gross): 37.2mil MT China Taiwan S. Korea Other 8.4mil MT 22% ASEAN 8.8mil MT 24% S. Korea 3 East Asians 20.0mil MT 54% China Taiwan Source: WSA & JETRO - 3 East Asians (S. Korea, China & Taiwan) import 54% collectively 7
Import of 3 East Asians (2012) 3 East Asians Total: 20.0mil MT - 46% from Asia (41% from Japan) US 6.8mil MT EAME* 2% Other 6% CIS 5% America 8.0mil MT 40% Asia 9.2mil MT 46% Hong Kong 0.6mil MT Source: Customs of each country Japan 8.1mil MT *EAME: Europe, Africa & Middle East - 40% from America (34% from US) - Equivalent to Turkey in total 8
3 East Asians vs. Turkey (2012) 3 East Asians Total: 20.0mil MT Turkey Total: 22.4mil MT US 6.8mil MT EAME* 2% Other 6% CIS 5% America 8.0mil MT 40% Asia 9.2mil MT 46% Hong Kong 0.6mil MT Source: Customs of each country Japan 8.1mil MT *EAME: Europe, Africa & Middle East US 6.3mil MT Russia 2.3mil MT CIS 3.0mil MT 13% America 6.7mil MT 30% Other 1% EAME* 12.5mil MT 56% EU27 11.4mil MT 9
Supply side 10
Japanese scrap export (2012) Japan Total: 8.6mil MT Vietnam Taiwan - World s 3 rd biggest exporter - 100% to Asia China 3.1mi MT Asia 8.6mil MT 99.86% S. Korea 4.9mil MT - South Korea and China dominate destinations Source: Trade Statistics of Japan 11
Japan vs. US (2012) Japan Total: 8.6mil MT US Total: 21.4mil MT China 3.1mi MT Vietnam Taiwan Asia 8.6mil MT 99.86% S. Korea 4.9mil MT Egypt Turkey 6.4mil MT *EAME: Europe, Africa & Middle East Source: Trade Statistics of Japan & US Dept. for Commerce Canada Other 2% Taiwan 3.5mil MT Mexico America 9% EAME* 6.9mil MT 32% Asia 12.1mil MT 57% S. Korea 2.8mil MT China 1.9mil MT Malaysia India 1.2mil MT Vietnam 12
3. Outlook 13
Demand side 14
40 30 20 10 0 (mil MT) Import outlook of S. Korea Domestic Consumption Import Demand Obsolete Scrap Home Scrap 2010 2015 2020 2025 SHIMABUN s estimation - Domestic consumption will be stable. (no construction plan) - Domestic generation will steadily increase. Import demand will decrease from 10mil to 5-6mil MT. 15
200 (mil MT) Import outlook of China 160 120 Domestic Consumption Import Demand 80 40 0 Obsolete Scrap Home Scrap 2010 2015 2020 2025 SHIMABUN s estimation - Domestic consumption will increase. (scrap ratio in BF/EAF) - Domestic generation will increase more rapidly. Import demand will stay around 7-8mil MT and then will slowly decrease. 16
Why? Import outlook of China (2) China is not likely to become an exporter in 10 years. - Chinese government plans to utilize more scrap in order to control iron ore consumption. - Government restricts scrap export with excessive export tariff (= de-facto ban). - For security reasons, government is likely to keep ferrous scrap inside the country, even when scrap is more than enough. 17
20 (mil MT) Import outlook of Taiwan Domestic Consumption 10 Import Demand 0 Obsolete Scrap Home Scrap 2010 2015 2020 2025 SHIMABUN s estimation - Domestic consumption will increase. (production increase in BF) - Domestic generation will slowly increase. Import demand will increase, and then will stay flat around 5-6mil MT. 18
(mil MT) 25 20 Taiwan 15 10 China 5 0 S. Korea 2010 2015 2020 2025 SHIMABUN s estimation - Import will start to decrease in the late 2010s But Import outlook of 3 East Asians - Demand will remain more than 15mil MT 19
Supply side 20
Export outlook of Japan (mil MT) 50 40 30 20 10 0 Export Capacity Domestic Consumption Obsolete Scrap Home Scrap 2010 2015 2020 2025 SHIMABUN s estimation - Domestic consumption will decrease. (high electricity cost) - Domestic generation will stay flat. Export capacity will gradually increase to 9-12mil MT. 21
Why? Export outlook of Japan (2) With more capacity to export, Japan will need new destinations. - Even now, Japan wants broader destinations. - No importing country wants to buy scrap from only one country for security reasons. - There are emerging markets of scrap in Asia. (such as ASEAN6, India) 22
4. Summary 23
Demand side: 3 East Asians will remain big importers Supply side: Japan will remain a big and stable exporter Conclusion: Japan will look for new market to export in Asia. 24
Thank you for your attention. 25