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현대 , 동부제철 가동이 한중일 시장에 미치는 영향

현대 , 동부제철 가동이 한중일 시장에 미치는 영향. 이은영 DBS Vickers Securities 애널리스트. Asia Steel Market after Korean new capacity operation. Dec 2009 Eun-Young Lee. Content & Summary. Overview on steel industry of 3 Asian Countries Korea Steel Industry – Net exporter but importing huge tonnes of steel

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현대 , 동부제철 가동이 한중일 시장에 미치는 영향

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  1. 현대, 동부제철 가동이 한중일 시장에 미치는 영향 이은영 DBS Vickers Securities 애널리스트

  2. Asia Steel Market after Korean new capacity operation Dec 2009 Eun-Young Lee

  3. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  4. Overview on steel industry of 3 countries Korea, China and Japan : Steel: Demand & Supply Source: DBS Vickers

  5. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  6. Korea : Net Exporter Increasing export volume but stagnant net export volume Korea Steel: Demand & Supply Korea Steel : Import volume Net export volume : 15m ton(‘98), 5.8m ton(’08) Export volume : 5.5m ton(‘98), 20.8m ton(’08) Source: KOSA, DBS Vickers

  7. Korea : but Importing huge volume Surged import of steel products used as raw materials. Korea Steel : Import volume (A) Import including products used as raw material:5.7m ton(’97)→28.9m ton (’08) (B) Import of steel product : 3m ton(‘97) → 15m ton(’08) (A-B) Import of raw material steel products : 2.7m ton(’97) → 13.9m ton (’08) Weight of import to total steel demand : 12% (‘97) → 36%(’08) Source: KOSA, DBS Vickers

  8. Importing more steel products as raw materials Korea Steel : Net export vs. net export considering import of products used as raw materials Turned to net importer of steel during ’02~’08 : 1.2m ton(’02) → 8.2m ton (’08) Expect to switch net exporter in 2009 : 1.3m ton(’09F) → 2.7m ton (’10F) Source: KOSA, DBS Vickers

  9. Switch to net importer of flat steel Korea Steel : Net export (import) by steel products Long Steel : enlarged net import, 0.3m ton (’97) → 2.8m ton(’08) Flat Steel : 3.8m ton of net export(’97) → switch to net importer in 2008(1.3m ton) Source: KOSA, DBS Vickers

  10. Aggravated shortage of raw materials for flat products  Korea Steel: slab import  Korea Steel: HRC import Net import volume : slab(4.4m ton) and HRC(3.7m ton) in 2008, c 12% of consumption of each product. Source: Bloomberg, DBS Vickers

  11. Japan and China, the main supplier of HRC Korea : HRC import by origin Japan : 69%(’03) → 41%(’08) → 58%(’09.1~9) China : 9%(’03) → 52%(’08)→ 18%(’09.1~9) Source: Kosa, DBS Vickers 11

  12. Japan, the major supplier of Slab Korea : Slab import by origin Japan : 22%(’03) →25%(’08) → 51%(’09.1~9) Source: Kosa, DBS Vickers 12

  13. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  14. Japan, the biggest steel exporter in the world Japan : Crude steel production/nominal consumption and net export Net Export volume : 42m ton(’76)→ 11m ton(’91) → 36m ton(’07) → 32m ton(’08) Source: JISF, DBS Vickers 14

  15. Japan, overcapacity to surpass domestic demand Japan : Overcapacity Demand/Overcapacity (m ton): 73.6/78.7(’85)→ 68.9/60.1(’99) → 73.9/55.9(’08) → 53/77(’09) Source: JISF, DBS Vickers 15

  16. Japan, Utilization rate is a key variable for OP margins Japan : Utilization rate vs. OP margins Source: JISF, DBS Vickers 16

  17. Japan: Export, a inevitable option to maintain util.rates Japan : Export and Import Source: JISF, DBS Vickers 17

  18. Japan : flat steel products are major export products Lager export volume : HRC → Galvanized sheet → Heavy Plate → CRC Japan : HRC  Japan : Heavy Plate Source: JISF, DBS Vickers

  19. Japan : High export ratio of flat steel products Higher export ratio : Galvanized sheet → CRC → HRC→ Heavy Plate Japan : Galvanized sheet  Japan : CRC Source: JISF, DBS Vickers

  20. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  21. China, a determinant of global supply and demand China : Crude steel production/nominal consumption and net export Net Export volume : -30m ton(’03)→ 45.8m ton(’07) → 6.7m ton(’09F) Source: CEIC, DBS Vickers 21

  22. China, ongoing capacity expansion & lower util. rates China : Crude steel capacity/output and utilization rates Additional capacity increase : 80m ton(’09F)→ 43m ton(’10F) → 21m ton(’11F) Utilization rates : 89%(’06)→ 75%(’09F) Source: CEIC, DBS Vickers 22

  23. China, Sustainable import and less export of semi China : Export/Import and Net export of semi finished steel product Import : 18.8m ton(’06)→ 15.4m ton(’08) → 17.2m ton(’09F) Net export of semi-finished products : 8.7m ton(’06)→ 1m ton(’08) → -0.2m ton(’09F) Source: CEIC, DBS Vickers 23

  24. Chinese demand growth is stronger than expected China: Nominal steel consumption China : Net export vs. steel prices Source: Bloomberg, DBS 24

  25. High Inventory in China remains risk factor China : Steel Inventory & HRC spot price Producer’s inventory Source: IISI, Bloomberg, DBS Vickers 25

  26. Inventories of flat steel in South-eastern region are high China: Inventory by product in the middleman China: Inventory by region in the middleman Source: IISI, Bloomberg, DBS Vickers 26

  27. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  28. Korea : Major export products are downstream flat products  Korea Steel: Export by product Source: KOSA, DBS Vickers 28

  29. Korea : Major import products are upstream flat products  Korea Steel: Import by product Source: KOSA, DBS Vickers 29

  30. Korea : Diversified export, concentrated import  Korea Steel: Export by regions  Korea Steel: Import from regions Source: KOSA, DBS Vickers 30

  31. Japan : Key supplier for upstream steel flat product  Japan : Export by product Source: JISF, DBS Vickers

  32. Japan : Korea is the biggest export market  Japan : Export by region Source: JISF, DBS Vickers

  33. China, Flat steel are major export/import products China : Export/Import by products Source: CEIC, DBS Vickers 33

  34. China, Korea is #1 export market China : Export by products China : Import by products Source: CEIC, DBS Vickers 34

  35. S.E Asia would become most competitive export market China : Export/Import by products China I: 0.8m E : 6.1m E : 3.7m I : 14.3 E:12m Korea Japan E: 2.7m I : 9.6 E :13.6m S.E Asia E : 4.6m Source: CEIC,JISF,KOSA DBS Vickers

  36. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  37. Capacity development in Korea Korea : New facilities to be completed in 2009~2011 Source: Company, DBS Vickers 37

  38. Heavy Plate, to switch surplus from shortage Korea : Heavy Plate’s demand/supply forecast Source: CEIC, DBS Vickers 38

  39. HRC, expect surplus in 2011 Korea : HRC demand/supply forecast Source: CEIC, DBS Vickers 39

  40. CR Products retain burden for export but.. Korea : CRC/Galvanized sheet demand/supply forecast • Capacity expansion in China(’08~10) • CRC : + 32m ( + 40%) • GAL : + 9m (+ 25%) Source: CEIC, DBS Vickers 40

  41. Growing Chinese automobile demand to trigger better demand of CR products China Automobile; production and sales China Home appliance; sales unit Source: CEIC, DBS Vickers 41

  42. Content & Summary • Overview on steel industry of 3 Asian Countries • Korea Steel Industry – Net exporter but importing huge tonnes of steel • Japan Steel Industry – Export is main supporter for steel industry • China Steel Industry – Dynamic but volatile or growing but problematic • Implication of steel trade of 3 countries • New challenge : The operation of new facilities in Korea going forward. • What should be required strategy for increasing competition? Source: DBS Vickers

  43. Our Steel Demand Forecasts is bearish compared to IISI 2009 2010 IISI & DBSV(2010) Source: IISI, DBS Vickers 43

  44. Over capacity up along with expansion World: Steel demand and capacity Source: IISI, DBS Vickers 44

  45. Anticipate intensifying competition in Asia market Competition intensity by product Source: IISI, BCG, Mirae Asset Research Estimates

  46. Required Strategy For the government • Monitor closely domestic and oversea steel markets • Reshuffling measures and system to support fair competition • Recruit and breed expert on trade relationship Source: IISI, BCG, Mirae Asset Research Estimates

  47. Required Strategy For the companies • Financial Healthiness • Competitiveness in Quality • Competitiveness in Cost • A marketing scheme for oversupplied market. • Carry on self-restructuring and encourage industry restructuring • Strengthen monitoring in the export markets, secure the talented in trade matters. Source: IISI, BCG, Mirae Asset Research Estimates

  48. Thank You

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