2017 Results 19 March 2018
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Industry overview
Global steel, iron ore and coking coal markets • In 2017, global steel consumption rose by 2.8% Steel product prices 3 Global steel industry y-o-y and global steel production by 5.3% y-o-y • In 2017, global steel prices continued to grow, MT US$/t mainly driven by: 1,691 Billet 1,669 1,622 1,620 1,606 1,598 1,578 1,558 o 600 strong demand in all regions HRC Slabs o China restructuring its steel industry with the 500 aim of increasing efficiency by cutting excess capacity 400 o China introducing monetary stimulus measures, leading to increased domestic 300 infrastructure spending and robust steel demand 200 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 o rising worldwide protectionism 2014 2015 2016 2017e o higher prices of coking coal 2 1 Crude steel production Finished steel consumption • HRC FOB Black Sea trended in line with global Source: World Steel Association Source: Metal Expert steel benchmarks, increasing to an average of US$508/t in 2017 (+31% y-o-y) • 62% Fe iron ore price averaged US$72/t in 2017 Hard coking coal price 5 Iron ore price 4 (+23% y-o-y), driven by: o stronger global demand for higher grade US$/t US$/t products amid a drive to improve steel 300 Quarterly contract 150 production efficiency and closure of induction Daily spot index furnaces in China, which spurred greater 240 120 utilisation of furnaces using iron ore products as key raw material 90 180 o increased prices for steel products 60 120 o delayed new capacity launches • Spot hard coking coal proved one of the most 30 60 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Apr-14 Oct-14 Apr-15 Oct-15 Apr-16 Oct-16 Apr-17 Oct-17 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 volatile commodities, driven mainly by the supply side. While the spot price averaged US$189/t in 2017 (+33% y-o-y), it varied from US$141/t to US$305/t. Source: Bloomberg Source: Bloomberg 1. Global steel production does not include production at induction furnaces in China 2. Apparent consumption of finished steel products 3. FOB Black Sea 4 4. 62% Fe iron ore fines CFR China 5. FOB Australia
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