Norsk Hydro Asa · OSL:NHY
Norsk Hydro Asa — The Norwegian Society of Financial Analysts (NFF) (May 2009)
28 slides from Norsk Hydro Asa's conference presentation, May 19, 2009
Slide 1: The Aluminium market
The Aluminium market Eigil Madsen, Corporate Strategy and Business Development NFF, May 19, 2009 (1)
Slide 2: Cautionary statement
Cautionary statement Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to (a) forecasts, projections and estimates, (b) statements of management’s plans, objectives and strategies for Hydro, such as planned expansi
Slide 3: Dramatic reduction in values. May 08
Dramatic reduction in values. May 08 Integrated Emerging Market Mining & Metal 215 187 162 Market Cap (US$bn) NA 34 5 32 20 4 Alcoa Hydro Century United Chalco Hindalco BHP Rio Vale Rusal Billiton Tinto (3)
Slide 4: Dramatic reduction in values. May 09
Dramatic reduction in values. May 09 Integrated Emerging Market Mining & Metal Market Cap (US$bn) 141 94 70 NA 10 19 7 0.5 2 Alcoa Hydro Century United Chalco Hindalco BHP Rio Vale Rusal Billiton Tinto Source: Thomson Reuters Market cap as of May 8th. (4)
Slide 5: Historic collapse in LME since July 2008
Historic collapse in LME since July 2008 Feb and Mar 2009: 1370 USD/ton level. April: 1460. MTD May 1530. Have prices bottomed? 3m LME 1980-2009 USD/tonn 4500 Real terms* 4000 3500 3000 2500 2000 1500 Nominal terms 1000 500 jan. 80 jan. 81 jan. 82 jan. 83 jan. 84 jan. 85 jan. 86 jan. 87 jan. 88 jan.
Slide 6: 3m LME development
3m LME development 3 400 27 000 26 000 3 200 25 000 3 000 24 000 23 000 2 800 22 000 2 600 21 000 EUR and USD/tonne 20 000 2 400 NOK/tonne 19 000 18 000 2 200 17 000 2 000 16 000 15 000 1 800 14 000 1 600 13 000 12 000 1 400 11 000 10 000 1 200 9 000 1 000 8 000 Jan.08 Feb.08 Mar.08 May.08 Jun.08 Ju
Slide 7: Base metals price index (USD)
Base metals price index (USD) 160 Index, Jan 08 = 100 140 120 100 80 60 40 20 Jan.08 Feb.08 Mar.08 May.08 Jun.08 Jul.08 Oct.08 Nov.08 Dec.08 Jan.09 Feb.09 Mar.09 May.09 Sep.08 Apr.08 Aug.08 Apr.09 Aluminium Nickel Tin Zinc Copper Lead (7)
Slide 8: LME forward curves 2003-09
LME forward curves 2003-09 3700 3450 3200 2950 LME USD/ton * 2700 2450 2200 1950 1700 1450 1200 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 jan.03 jan.04 jan.05 jan.06 jan.07 06.jan.08 09.jul.08 05.jan.09 11.mai.09 (8)
Slide 9: Year-on-year growth RoW (excluding China)
Year-on-year growth RoW (excluding China) (9) -5 % -20 % -15 % -10 % 0% 5% 10 % 15 % 20 % 25 % 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 GDP 1989 1990 1991 1992 1993 1994 Al consumption 1995 1996 1997 1998 1999 2000 expected globally ex. China in 2009
Slide 10: Year-on-year growth RoW (excluding China)
Year-on-year growth RoW (excluding China) (10) -5 % -20 % -15 % -10 % 0% 5% 10 % 15 % 20 % 25 % 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 GDP 1989 1990 1991 1992 1993 1994 Al consumption 1995 1996 1997 1998 1999 2000 expected globally ex. China in 2009
Slide 11: Global supply demand gap ex. China still at a high level
Global supply demand gap ex. China still at a high level Global ex China (annualised per month) 27 000 26 000 25 000 annulised kT per month 24 000 23 000 3.6 mill tons 22 000 21 000 20 000 19 000 18 000 mar. 08 mar. 09 okt. 08 okt. 09 nov. 07 des. 07 jan. 08 feb. 08 apr. 08 mai. 08 jun. 08 aug. 08 n
Slide 12: Supply adjustments lagging the demand reductions
annualised kT per month (12) Source: CRU -3 000 -2 000 -1 000 0 1 000 2 000 3 000 4 000 5 000 6 000 7 000 jan. 99 8 000 apr. 99 jul. 99 okt. 99 jan. 00 apr. 00 jul. 00 okt. 00 jan. 01 apr. 01 jul. 01 okt. 01 jan. 02 apr. 02 jul. 02 okt. 02 jan. 03 apr. 03 jul. 03 demand reductions okt. 03 jan. 04 ap
Slide 13: China: More balanced than ROW
China: More balanced than ROW Curtailed capacity is being restarted 15 000 14 000 annualised kT per month 13 000 12 000 11 000 10 000 9 000 8 000 mar. 08 mai. 08 mar. 09 jul. 08 jan. 08 apr. 08 jun. 08 jan. 09 apr. 09 nov. 07 des. 07 feb. 08 aug. 08 sep. 08 okt. 08 nov. 08 feb. 09 dec. 08 Source: CR
Slide 14: China: Supply demand balance
annualised kT per month (14) Source: CRU -2 000 -1 500 -1 000 - 500 0 500 1 000 1 500 2 000 jan. 99 mai. 99 sep. 99 jan. 00 mai. 00 sep. 00 jan. 01 mai. 01 sep. 01 jan. 02 mai. 02 sep. 02 jan. 03 mai. 03 sep. 03 jan. 04 China balance mai. 04 sep. 04 jan. 05 China: Supply demand balance mai. 05 sep.
Slide 15: LME inventories 2008-2009
LME inventories 2008-2009 4 000 000 3 500 000 3 000 000 2 500 000 tonnes 2 000 000 1 500 000 1 000 000 500 000 Jan.08 Feb.08 Mar.08 May.08 Jun.08 Jul.08 Oct.08 Nov.08 Dec.08 Jan.09 Feb.09 Mar.09 May.09 Sep.08 Apr.08 Aug.08 Apr.09 LME inventories (15)
Slide 16: LME stocks – still increasing
LME stocks – still increasing 4 500 4 000 3 500 Collapse of domestic aluminium consumption in USSR 3 000 2 500 tonnes 2 000 Downturn after 9/11 1 500 1 000 500 0 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 ´8 ´8 ´8 ´8 ´8 ´8 ´9 ´9 ´9 ´9 ´9 ´9 ´9 ´9 ´9 ´9 ´0 ´0 ´0 ´0 ´0 ´0 ´0 ´0 ´0 now LME inven
Slide 17: Rapidly increasing inventories
Rapidly increasing inventories USD per tonne Days 3 500 110 100 3 000 90 2 500 80 70 2 000 60 50 1 500 40 1 000 30 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Aluminium inventories (days of consumption)* LME 3 month average *IAI and LME reported stocks.
Slide 18: Significant curtailments announced
Significant curtailments announced Announced capacity curtailments in percent of 2008 production 35 % 30 % 29 % 28 % 25 % 22 % 21 % 20 % 15 % 11 % 10 % 10 % 5% 0% Hydro C entury Aluminium C halco Alcoa UC Rusal Rio Tinto Source: CRU / company reports / Hydro estimates (18)
Slide 19: Announced capacity curtailments
Announced capacity curtailments 12 % 3% Alcoa C entury 7% Hydro China ~3.5 million tonnes* Rio Tinto Rest of world ~3.4 million tonnes 51 % 6% UC Rusal Total ~6.9 million tonnes Other C hina 7% 14 % Source: CRU / company reports / Hydro estimates. *Not adjusted for reports of restarts in China (19)
Slide 20: April speed indicates a need for additional curtailments ex China
April speed indicates a need for additional curtailments ex China Production Consumption 27000 26000 1000 t production and consumption ~1.9 mill tons World ex China, annualised 25000 24000 23000 3.6 mill tons 22000 21000 20000 19000 18000 2007 2008 Jan 2009 Feb 2009 Mar 2009 Apr 2009 speed speed spe
Slide 21: LME stocks still increasing week by week
LME stocks still increasing week by week But is it a trend shift to a lower speed of growth that we currently observe?? 210000 190000 170000 150000 130000 110000 90000 70000 50000 30000 10000 nov. 08 nov. 08 feb. 09 feb. 09 jul. 08 jul. 08 jul. 08 aug. 08 aug. 08 sep. 08 sep. 08 okt. 08 okt. 08 des.
Slide 22: China remains balanced in the longer term
China remains balanced in the longer term 1 000 tonnes Primary / alloyed Semis Fabricated Scrap Total ● Swift response to drop in demand 250 ● Production curtailments 200 ● Strategic government purchases Net import 150 100 ● Shanghai price currently significantly 50 higher than LME 0 ● Encourages pr
Slide 23: LME vs Shanghai aluminium price
USD/ton (23) 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 3600 Jan.07 Feb.07 Mar.07 Apr.07 May.07 Jun.07 Jul.07 Aug.07 Sep.07 Oct.07 Nov.07 difference Dec.07 Jan.08 Feb.08 Mar.08 Apr.08 May.08 Jun.08 SHFE (incl VAT) Jul.08 Aug.08 Sep.08 LME Oct.08 Nov.08 LME vs Shanghai* aluminium pri
Slide 24: Hydro improves cost position
Hydro improves cost position Business operating cash cost USD/tonne 3 400 Dynamic cost curve 3 000 ● Falling input costs 2 600 ● Production curtailments and capacity closures 2 200 1 800 1 400 Accumulated tonnage (1 000 tonnes) 1 000 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 BOC Q1 20
Slide 25: 2009 outlook
2009 outlook ● Aluminium prices to remain low ● Limited forward visibility ● Indication of slowing LME inventory build-up ● No substantial pick-up in demand ● Primary aluminium consumption excluding China could decline up to 15-20% from 2008 ● Chinese consumption in line with 2008 ● Industry input c
Slide 26: Large populations in early aluminium consumption growth phase
Large populations in early aluminium consumption growth phase (26)
Slide 27: Healthy long term demand for aluminium
Healthy long term demand for aluminium ● Properties lead to increased market share ● Aluminium intensive urbanisation and infrastructure ● Climate challenge – aluminium as part of the solution ● Recyclability more important with high energy price ● Beyond current downturn ● Return to trend growth of
Slide 28: www.hydro.com
www.hydro.com
Norsk Hydro — The Norwegian Society of Financial Analysts (NFF) (May 2009) on 6ix