April 11 th, 2011 INSG 21 st Session, Industry Advisory Panel Lisbon Global l Stainless Scrap Markets Today Dr. Gerhard C. Pariser Heinz H. Pariser Alloy Metals & Steel Market Research Xanten / Germany 1
Stainless in the Global Steel Environment Steel Production 2010 Stainless Steel Production 22% 2.2% Crude Steel Production 97.8% Stainless Steel Production 25,989 32,468 34,569 1,347 1,182 6,065 5,814 1,222 3,545 3,427 4,811 Others 2,607 Asia 12,350 13,342 Japan China 9,751 EU 27 USA 7,494 7,884 5,980 1,618 2,201 2,385 2009 2010 2011e 2
Stainless - Back on Track 40.0 Post-War Reconstruction Crisis Years Stainless Steel-Boom: Asia - Europe - USA Stainless Steel Boom: China Glob bal Stainle ess Steel Pro oduction, in Mill t 35.0 30.00 25.0 20.0 15.0 10.0 5.0 Stainless Steel Production G.R.: + 5.0% p.a. 2008-2010 World-Financial Crises 00 0.0 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 3
Outline 1. Global Stainless Scrap Markets 2. Stainless Steel made of Scrap? 3. Conclusions 4
Global Stainless Chromium & Stainless Scrap Steel Markets 5
Scrap Cycles Internal Scrap External Scrap Blend Material T I M E Influencing Factors Stainless Production Stainless Consumption Historical Stainless and Alloy Consumption, Nickel Price Recycling Time 3 days 3 months Approx. 6 months 15 20 years Recycling Ratio Approx.100 % Approx. 100% 60 80% 6
Generic & Blended Scrap Availability 8,000 7,000 6,000 5,000 Blended Scrap GrowthRate 1990-2010: 5.7 % p.a. 2000-2010: -0.9 % p.a. in 000 t 4,000 Reclaimed Scrap Growth Rate 3,000 1990-2010: 4.8 % p.a. 2000-2010: 5.9 % p.a. 2,000 Gene eric Scrap 1,000 Industrial Scrap Growth Rate 1990-2010: 4.3 % p.a. 2000-2010: 3.6 % p.a. 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 7
Scrap Availability vs. Nickel Price Development 2,600 25.00 Scrap Availabili ity, '000 t 2,400 2,200 2,000 1,800 1,600 1,400 Scrap Availability LME Cash Nickel Price 20.0000 15.00 10.00 5.00 LM ME Cash Nickel Pric ce, US$/lb 1,200 2007 2008 2009 2010 2011e 2012f 0.00 8
in % Valuation relative to Referen nceprice, Intrinsic Values of Alloying Elements in Stainless Scrap 110 100 90 80 70 60 50 but Ni is the main Scrap offers discounts determinant (e.g. grade 304 type scrap) Referenceprice 8.0% Ni Cr Nickel 18.0% Fe Molybdenum Chrome 40 2006 2007 2008 2009 2010 2011f 74.0% quantity in kg 76.3% 15.8% 79% 7.9% value in US$ 9
Stainless Chromium Made & Stainless of Steel Scrap? 10
Global Scrap Usage 1990-2010 ed Stainle ess", in % p Ratio in Stain nless Melting) "Recycl (Total Scra 50.0 45.0 40.0 35.0 30.00 40.1 RoW Ratio (excl. China) Global Ratio 42.3 Scrap Consumption Global RoW (excl. China) 37.9 47.1 47.77 38.33 25.0 20.0 15.0 10.0 50 5.0 Total Scrap Consumpti ion, in Mi ill t 589_029 25.0 1990 1997 2004 2011 0.0 11
Stainless Steel Made of Scrap? Primary Metals Internal Scrap External Scrap Outokumpu s Raw Material Mix between 2005-2009 Primary Metals 22.8-31.5% Stainless Melting Internal Scrap 20.1 20.6% External Scrap 47.9 57.1% Source: Outokumpu Oy Annual Reports, Heinz H. Pariser 12
External Stainless Scrap Ratios of Austenitic Melting Production Exter rnal Auste enitic Scr rap Ratio o, in % 80.00 70.0 60.0 50.0 40.0 30.00 20.0 10.0 0.0 70 67 66 2010 2011 2012 57 5960 61 60 52 42 43 41 36 Ø 2010: 39.9% Ø 2011: 41.1% Ø 2012: 41.8% 37 36 16 16 17 USA Europe Taiwan Japan S. Korea China 13
Chromium & Stainless Steel Conclusions 14
Long-term Stainless Scrap Availability (Austenitic CrNi Stainless Steel) 35.0 Actual Forecast 30.0 Actual Scrap Availability t in Mill 25.0 20.00 15.0 Lower Ratio Upper Ratio Austenitic Stainless Steel Production 10.0 50 5.0 DB_SCR 0.0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 15
Long-term Stainless Scrap Reserves (Austenitic CrNi Stainless Steel) 600 1980 2000 2009 2010 2020 in Mill t 500 Cum. Aust. Consumption 66.1 207.6 320.7 335.5 543.1 Cum. Scrap Consumption 20.22 91.4 157.4 167.2 296.99 Scrap Reserve 45.9 116.3 163.3 168.3 246.2 400 in Mill t 300 Cum. Aust. Consumption Scrap Reserve 200 100 Cum. Scrap Consumption DB_SCR 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 16
Summary 1. Since the introduction of Electric Arc Furnaces in Stainless melting, recycling has played a key role 2. Globally, the secondary raw material input averages between 40 and 43% - typically higher in Europe and the United States (approaching 70%), but significantly lower in China (approximately 25%) 3. Since 1970, global scrap availability has risen from barely 1 Mill t to 7.8 Mill t in 2010 and is expected to double by 2020 4. Scrap input reduces energy consumption and CO2-emissions, increasing sustainability in stainless steel making 5. Scrap is complementary to primary raw materials nickel and chrome 17
Contact Details Dr. Gerhard C. Pariser Heinz H. Pariser Alloy Metals & Steel Market Research Scharnstr. 51 46509 Xanten Germany Tel.: +49 2801 77 11 0 Email: info@heinzpariser.de You are always welcome to contact us. 18