Stainless steel

a bright future
in a changing world?
BIR World Annual Conference
Rome
May 30 , 2012
Pascal PAYET-GASPARD
Secretary General ISSF
1

Agenda

Stainless steel: short term perspectives

An industry facing many challenges
but a bright long term future
Conclusions

Agenda

Stainless steel: short term perspectives

An industry facing many challenges
but a bright long term future
Conclusions

Since 1980 stainless steel has grown

faster than most metallic materials
Long term evolution of the world consumption of stainless steel and substitutes
600

CAGR 80 - 10
6,0 %

Historically, stainless steel growth

was much stronger than carbon steel
growth, a fact that led to the perception
that stainless steel was different and
immune to the woes of ordinary steel

500

400

4,6 %

Galvanized Steel

4,0 %
300
Stainless Steel
200

2,3 %
Aluminium

100

Carbon Steel

0
1980

1985

Source, ISSF, Laplace Conseil

1990

1995

2000

2005

2010

However, since 2006, stainless steel

has under-performed its competition
Recent evolution of the world consumption of stainless steel and substitutes
200

Recession started two years

earlier for stainless steel
and was much deeper; 2010
recovery is much stronger

180

160

Galvanized steel

CAGR 00 - 10

5,6 %
5,6 %
5,3 %
5,0 %

Aluminium
Carbon Steel

140
Stainless Steel
120

100

80
2000

2002

Source, ISSF, Laplace Conseil

2004

2006

2008

2010

but revival
World stainless Crude Steel Production : again 6 % pa 2001-11 !!
+24.8%

35 000

31,090

+3.3%
32,110

1 ,0 0 0 to n n es

30 000
25 000
20 000
15 000
10 000
5 000
0
2001

China
Source, ISSF

2002

2003

Asia w/o China

2004

2005

W. Europe/Africa

2006

2007

Americas

2008

2009

2010

2011

Central + East Europe

6

Agenda

Stainless steel: short term perspectives

An industry facing many challenges
but a bright long term future
Conclusions

China accounts for all the growth

since 2000
World Stainless Steel production (Million tonnes of crude steel)
35

CAGR 00-10
Total +5%

30

+0 %
Other Countries

25

+34 %

China
20

15

10

+2 %

North America

0%
0%

0
2000

Other Asia

Europe

2001

2002

Source, ISSF, Laplace Conseil

2003

2004

2005

2006

2007

2008

2009

2010

Since 2000 most of the stainless growth

is attributable to S200 & S400
35

Stainless steel production by grade (Million tonnes of crude steel)

CAGR 00 - 10
+5,0 %

30
28,4 %

S200

25

6,2 %

S400
20

15

S300

10

0
2000

2,5 %

S300 has declined in all region

of the world outside China

2002

Source, ISSF, Laplace Conseil

2004

2006

2008

2010

Raw materials prices and volatility

have increased.
500

Nickel

In addition, very
significant increase
in volatility after 2004

400

X4

300

C Steel Scrap

X 2,5

200

Chromium
100

0
2000

2002

Source: ISSF, Laplace Conseil

2004

2006

2008

2010

10

 combined with margins

squeeze
Price cost squeeze for 304 SS (/t)

Price cost squeeze for 430 SS (/t)

300
230
200
Factor cost
increase

190

Factor cost
increase

100

37 /yr
2,8%/yr
of averge price

50 /yr
2,1%/yr
of average price

-100

-200

-300

-400

Transformation
margin decrease
(net of scrap)

Transformation
margin decrease
(net of scrap)

-140
-170

-310
-340
2000

2010

2000

2010
11

 and overcapacity

CRU World Stainless Steel Conference, 6-7 February 2012

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Top 20 stainless steel companies

Source : SMR, 2010

13

Profit

14

What have been the reactions

of the producers?
Cut costs, improve productivity by using latest
technologies
Close inefficient mills (Europe-Americas)
Look for cheaper raw materials :
Nickel Pig Iron (China)
Backward integration (Asia)

Integrate into distribution to better control downwards

supply chain (Europe, Asia, Americas)
Move to higher, value added products or margins: 400
series, duplex, 316 etc
For integrated mills, split the stainless business: Aperam,
Inoxum
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Agenda

Stainless steel: short term perspectives

An industry facing many challenges
but a bright long term future
Conclusions

16

India: the next after China?

Source: SMR 2010

17

Price of competing materials

2000-2010: stainless doing well !!

steel
St st
Al

Source, ISSF

18

An industry constantly growing

in size and efficiency
Considering the 4 largest world companies in
stainless steel melting production
2000:

Over 1 Mt

34% of the market

2005:

Over 1.5 Mt

32% of the market

2012 (e):

Over 3 Mt

38% of the market

with fully integrated stainless steel shops , hot

rolling mills and a clear shift to Asia

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The raw material challenge

Nickel Pig Iron: more an opportunity than a
threat?
a ceiling to the price of nickel
a regulation to the S/D balance

Chrome
an available resource with high productivity and low
cost producers coming up

LME: a tool to be positively used !!

an opportunity to better pilot the raw material volalility
but a market still to be better regulated and more
transparent
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A sustainable material
CO2 emission from cradle to grave without the
recycling credit which is around 1ton CO2/ton
Total 3,81 ton CO2/ ton SS
Ni

0.36tonCO2/tonSS

Cr
0.65tonCO2/tonSS
17.1%
7.0% 0.6%

9.4%

Mo
27.0%

others
Electricity

38.9%

Directemissions

Rawmaterialstotal2.80tonCO2/tonSS

The stainless steel

industry itself
contributes directly
for less than 10 % of
total emissions
Most of the
emissions are
coming from
upstream: raw
materials and
electricity generation
Stainless steels
compare favorably to
competing materials
Al,Cu,Mg

Source: ISSF, SCM

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Stainless Steel Recycling

Main application
sectors

Use of finished Average life

To
SS
(in years) landfill
in manufacturing

Collected for recycling

As stainless
Total
steel

Building

16%

50

8%

92%

95%

Transportation

21%

14

13%

87%

85%

Industrial
machinery

31%

25

8%

92%

95%

Household
appliances

6%

15

18%

82%

95%

Electronics

6%

40%

60%

95%

Metal goods

20%

15

40%

60%

80%

Total

100%

22

18%

82%

90%

Source : Yale University Study 2009

ISSF - Team stainless

22

Stainless Steel
over 80 %!

Recycling:

2005
Source : Yale University Study 2009
ISSF - Team stainless

23

Chrysler Building, 1930

Stainless steel has

been used as an
architectural
material since about
1930.

Catherine Houska for Nickel Institute

24

Sustainable applications:
Bio-Gas
Bio Gas plant
Severe corrosion
conditions
Low maintenance
Source :Kosa/ISSF Book of New Applications
316Ti grade

25

Stainless
Stockholm

Steel

Bridge

High strength, corrosion resistance Long life

Source: Outokumpu Oyj/ ISSF Book of New Applications (grade SAF2205(Duplex)
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Agenda

Stainless steel: short term perspectives

An industry facing many challenges
but a bright long term future
Conclusions

27

A bright future
Despite current difficulties shared by many heavy
industries, the stainless steel industry has a bright future:
Potential growth in emerging countries is enormous
In sustainability, stainless steels are unmatched compared to
other materials
The industry is now catching up with overcapacity and
restructuring measures

Public authorities should recognise these intrisinsic

properties and help the industry :
to restructure itself
to adopt free and fair trade practices
to improve the raw materials markets transparency and avoid
excess volatility which damages its long term growth and
profitability
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Thank you for your attention!

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