1H 2018 Results 14 September 2018
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Industry overview
Global steel, iron ore and coking coal markets • In 2018, global steel production and consumption Steel product prices vs exports from China Global steel industry are expected to increase by 4.5% and 3.9% y-o-y respectively MT Steel exports from China, MT (RHS) • Global steel prices continued to grow in 1H 2018, HRC, US$/t (LHS) mainly driven by: 1,766 1,690 1,658 650 12 1,620 1,627 1,595 o strong demand in all regions 1,520 1,504 o fall in steel exports from China 10 500 o rising worldwide protectionism 8 o high prices of coking coal and scrap 350 • 6 In 1H 2018, HRC FOB Black Sea trended in line with global steel benchmarks, increasing to an 200 4 average of US$589/t (+26% y-o-y) Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Mar-16 May-16 Sep-16 Nov-16 Mar-17 May-17 Sep-17 Nov-17 Mar-18 May-18 2015 2016 2017 2018e • In 1H 2018, 62% Fe iron ore price averaged 1 US$70/t, down 6% y-o-y, mainly due to supply Crude steel production Finished steel consumption from planned projects increasing at higher pace Source: World Steel Association, Metinvest estimates Source: Bloomberg, Metal Expert than demand growth amid a rising share of electric arc furnace output in steel production Hard coking coal price 5 Iron ore price • Premiums for Fe content and pellets soared y-o-y US$/t US$/t amid supportive demand for high grade ores and Atlantic basin pellet premium (RHS) 140 80 an efficiency drive among steel producers: Quarterly contract Daily spot index 2 62% - 58% (RHS) 70 120 o premium for 65% Fe content to 62% Fe 65% - 62% (RHS) 3 300 60 Iron ore price (LHS) 4 content jumped by 42% y-o-y to US$18/t 100 50 240 80 o Atlantic basin premium for pellets in Europe 40 increased by 29% y-o-y to US$58/t 60 180 30 • 40 In 1H 2018, average spot hard coking coal price 20 120 increased by 16% y-o-y to US$210/t, while it 20 10 averaged US$190/t in 2Q 2018, down 17% q-o-q 0 0 60 amid seasonally higher supplies Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Source: Bloomberg Source: Bloomberg, Platts 1. Apparent consumption of finished steel products 2. 58% to 62% Fe iron ore fines discount, CFR China 3. 65% vs 62% Fe iron ore fines premium, CFR China 4 4. 62% Fe iron ore fines, CFR China 5. FOB Australia
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