BMI South Korea Metals Report Q4 2011.pdf
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1、Q4 2011 insurance report issn 1750-5771 published by Business Monitor international Ltd. soutH Korea INCLUDES BMIS FORECASTS Business Monitor International 85 Queen Victoria Street London EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: Web: http:/ 2011 Business Monitor Inter
2、national. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic
3、, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher. DISCLAIMER All information contained in this publication has been researched and compiled from sources believed
4、to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omission
5、s affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. SOUTH KOREA METALS REPORT Q4 2011 INCLUDES 5-YEAR FORECAST
6、S TO 2015 Part of BMIs Industry Report CFR Main China Port; Delivery Mid West short ton. Source: Metal Bulletin. Bloomberg According to Worldsteel, steel output came in at 127 million tonnes (mnt) in July, marking growth of 11% year-on-year (y-o-y), to a large degree driven by ongoing strong product
7、ion in China. We note that in the first seven months of the year, global steel output rose by 8.2% y-o-y, and while this is a strong growth rate, we note that it is a significant slowdown from the 25.7% increased recorded over the same period in 2010. The strong outturn in 2010 was largely the resul
8、t of base effects and a surge in North American and European output, and we see the pace of production growth continuing to slow over the course of 2011. Interestingly, while it was production in North America and Europe that led the rebound in 2010, it is Asian, and in particular Chinese production
9、 which is driving growth this year. According to the China Iron and Steel Association (CISA), Chinas crude steel output is expected to come in above 700mn tonnes in 2011, exceeding its previous forecast by around 40mn tonnes. It has been reported that steelmaking programmes are proceeding without of
10、ficial approval from the government, resulting in the recurrence of the overcapacity issue. South Korea Metals Report Q4 2011 Business Monitor International Ltd Page 12 Rising Again Global Steel Output, January 2006-July 2011 (000 tonnes and % change y-o-y, RHS) Source: BMI, Worldsteel Asia Leading
11、Growth In 2011 Year-To-Date Growth In Steel Production By Region (% change y-o-y) Source: BM, Worldsteel South Korea Metals Report Q4 2011 Business Monitor International Ltd Page 13 The still-strong rise in production, combined with somewhat slower global growth, suggests that overcapacity should re
12、main in place over the coming quarters. Moreover, despite the increase in production, Worldsteel data show that capacity utilisation has fallen in recent months, pointing to potential slack in the market. Indeed, despite growing consumption, capacity utilisation has fallen to 79.7% - its lowest leve
13、l since December 2010. Lots Of Slack Here Global Steel Capacity Utilisation Levels, February 2008-June 2011 (%) Source: BMI, Worldsteel Rising Costs Hurt Margins And Help Consolidation Rising input costs such as coal and iron ore have continued to hurt producer margins and we expect this theme to re
14、main in place. Indeed, as we have been highlighting for several months now, iron prices have risen by approximately 150% since 2009, compared with a 50% increase in steel prices over the period. This had resulted in three main dynamics. First, producer margins have come under pressure, particularly
15、in China, which accounts for approximately 45% of global output. According to CISA, the steel industry has been running the lowest average sales margins (2.9%)among all industrial sectors in the first five months, well below 6.0% for all industries across the country. Second, rising iron prices have
16、 forced steel mills to turn to ferrous scrap in order to obtain cost savings through lower input prices, as well as through lower levels of energy and water usage. Third, lower margins could force further consolidation and vertical integration of the steel sector. As Chinas steel sector will continu
17、e to consolidate - driven by government directive - smaller companies could be taken over. Similarly, we continue to note the trend of vertical integration in the iron ore and steel industry, whereby steel producers aim to control a large proportion of the supply chain in mining, power and shipping.
18、 Brazilian companies such as Vale and South Korea Metals Report Q4 2011 Business Monitor International Ltd Page 14 Usiminas are two examples, but we have also seen evidence of this by Indian companies in recent months. Rising Input Costs Putting Pressure On Margins Iron Ore And Steel Prices, January
19、 2009-September 2011 (rebased 100 = January 2009) Source: BMI These cost pressures could continue to result in higher prices, as producers attempt to pass them along, although there is a risk that oversupply may limit broad-based gains. Indeed, we had previously reported that Japanese and Korean com
20、panies had started to pass on some of these costs by negotiating higher prices with their customers. In recent weeks, it was reported that some Chinese companies were either lowering steel prices, and/or developing flat price strategies for the coming months. In general however, we believe price pre
21、ssures should remain slightly to the upside, but much will depend on the demand picture. Recovery In Demand Continues: EM Increasingly Important In April, Worldsteel released its outlook for 2011 and 2012 and sees demand holding up. However, we would caution that the macroeconomic environment has si
22、nce deteriorated. The association forecasts apparent steel use rising by 5.9% to 1,359mnt in 2011, following 13.2% growth in 2010. Moreover, for 2012, the WSA forecast world steel demand will grow further by 6.0% to reach a new record of 1,441mnt. Furthermore, these forecasts suggest two key trends
23、emerging. Firstly, in 2012, steel use in the developed world will still be 14% below the 2007 level, while consumption in emerging and developing economies will be 38% higher. Secondly, emerging markets will account for an increasing proportion of global steel demand, rising from 61% in 2007 to 72%
24、in 2012. That said, these forecasts have not taken South Korea Metals Report Q4 2011 Business Monitor International Ltd Page 15 into account the fallout from the natural disaster in Japan. A breakdown of WSA estimates show that it expects Chinas apparent steel use in 2011 to increase by 5.0% to 605m
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