1H 2019 Results 16 September 2019
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Industry overview
Global steel, iron ore and coking coal markets • In 2018, global steel output rose by 4.5% y-o-y, Steel product prices vs exports from China Global steel industry while consumption increased by 4.9% y-o-y. In 2019, global steel consumption is expected to MT 1,890 Steel exports from China, MT (RHS) increase by 1.3% y-o-y and global steel production 1,808 1,730 1,735 HRC, US$/t (LHS) 1,627 1,712 1,632 by 2.8% y-o-y 1,520 700 12 • In 2019, global steel prices have decreased amid 600 10 weak demand in several regions, including 500 Europe, intensified trade tensions and 8 400 expectations of a global recession 6 300 • Sluggish demand in Europe and high raw material 200 4 prices have pushed European steel producers to Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 2016 2017 2018 2019E reduce production. Economy stimulus measures were widely announced across major economies 1 Crude steel production Finished steel consumption • In 1H 2019, HRC FOB Black Sea decreased by 16% y-o-y to US$495/t, from US$589/t in 1H 2018 Source: World Steel Association, Metinvest estimates Source: Bloomberg, Metal Expert • In 1H 2019, the 62% Fe iron ore price jumped by 32% y-o-y to US$92/t amid supply cuts after the Hard coking coal price 3 Iron ore price tailing dam collapse in Brazil and Cyclone US$/t US$/t Veronica in Australia Exports from Australia and Brazil, MT (LHS) Quarterly contract Daily spot index 300 • 150 200 In 1H 2019, premiums for pellets grew amid tight Atlantic basin pellet premium, US$/tonne (RHS) 2 175 market conditions resulting from pellet supply Iron ore price, US$/tonne (RHS) 125 240 150 reductions from Brazil. The Atlantic Basin 100 125 premium increased by 16% y-o-y to US$67/t 180 75 100 • 75 In 1H 2019, the average contract hard coking coal 50 120 price decreased by 3% y-o-y to US$209/t, 50 25 25 nonetheless remaining high due to supply 60 0 0 constraints (including slow production growth in Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-16 Jan-17 Jan-18 Jan-19 Jul-16 Jul-17 Jul-18 Jul-19 China and logistical disruptions in Australia) Source: Bloomberg, Platts Source: Bloomberg, Platts 1. Apparent consumption of finished steel products 2. 62% Fe iron ore fines, CFR China 3. FOB Australia 4
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