Nlmk · RUS:NLMK
Nlmk — SBB European Steel Conference 2011
15 slides from Nlmk's conference presentation, May 2011
Slide 1: Europe & the CIS: What does the future hold?
EUROPE & THE CIS: What does the future hold? SBB European Steel Conference Global reach; local impact ANTON BAZULEV DIRECTOR OF EXTERNAL RELATIONS NLMK Barcelona, May 2011
Slide 2: CIS steel sector at a glance
CIS steel sector at a glance 12 mt CIS crude steel production CIS steel consumption 10 8 6 4 2 0 Source: Word Steel Association (WSA). State statistics organizations o Surplus of steel is exported from Russia and the CIS countries mostly as semi- finished products o There is a huge potential for the
Slide 3: Steel exports: CIS is a largest player
Steel exports: CIS is a largest player LARGEST STEEL EXPORTERS CIS EXPORTS BY PRODUCT mt % Slabs EU HRC CRC Coated Longs Japan Source: Statistic services (2005-2009) CIS EXPORTS BY DESTINATION China % EU MENA CIS Asia NAFTA Other 0 50 100 Source: WSA Source: WSA, Statistic services (2005-2009) 3
Slide 4: Crude steel production costs
Crude steel production costs CIS STEEL PRODUCTION ADVANTAGE Energy $/t 250 Other 200 Labor Labor 150 Scrap 100 Iron ore Scrap 50 Coal 0 Iron ore Cost advantage Coke o Cost advantage mainly lies in the access to low-cost raw materials Coal $/t o Ongoing assets rewamp in CIS to eat into EU advantages
Slide 5: CIS: further productivity growth
CIS: further productivity growth STEEL SECTOR PRODUCTIVITY 3 Per.hours/t Productivity index, 1993=100 2.5 EU 2 Japan 1.5 USA 1 0.5 Russia 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0 5 10 Source: WSA Russia USA Japan EU Source: McKinsey researc o Mode
Slide 6: Raw material access favors production growth
Raw material access favors production growth TOP 3 IMPORTERS % o CIS has the largest raw materials reserves: 11% 23% EU o #1 in iron ore 19% 7% EU o Top 3 – coking coal Asia LatAm o CIS Steel sector is vertically integrated 49% China 61% Asia in captive raw materials supply o >65% - coal self-suffic
Slide 7: BF production steadily becomes less and less efficient in Europe
BF production steadily becomes less and less efficient in Europe 95% % 90% 85% 80% 75% 70% 65% 60% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 BOF (EU15) run rate BOF (CIS) run rate Source: WSA, Company estimates o During the last decade BOF steel production in EU was steadily declining o
Slide 8: CIS & EU – natural trading partners in steel
CIS & EU – natural trading partners in steel RUSSIAN EXPORTS OF SEMIS CIS EXPORTS TO EU BY PRODUCT 25.000 ,000 t % 20.000 25% 15.000 10.000 75% 5.000 4.430 5.623 4.418 5.764 3.678 0.000 Semis & other Finished steel 2006 2007 2008 2009 2010 EU 27 ROW Source: Russia’s Federal Statistics Agency Source:
Slide 9: Russian quotas to the EU
Russian quotas to the EU IMPORT QUOTAS COVERED 4000 Exports are sustainably lower % ,000 t than quotas envisage 80% 3500 3000 2500 2000 1500 20% 1000 500 Flat imports (CIS) Longs imports (CIS) 0 2005 2006 2007 2008 2009 2010 Remaining volumes available for imports based on import quotas Source: Russ
Slide 10: EU: market position supported by CIS supply
EU: market position supported by CIS 240 supply STEEL FLOWS: CIS TO EU mt - Slab supply 220 - Finished steel from EU CIS: 6.7 mt 200 ROW: 1.2 mt Russia 180 Ukraine Kazakhstan 160 140 120 ROW: 15.3 mt 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 CIS: 1 mt ASU EU27 Steel production EU27 Sourc
Slide 11: EU is efficient in steel–intensive industries
EU is efficient in steel–intensive industries EU EXPORT OF MACHINERY PRODUCTS EU: VALUE ADDED BUSINESS MODEL 2500 ,000 t €/t € 955 € 1,455 2000 1500 1000 € 500 500 0 2006 2007 2008 2009 2010 1 imported Value added 1 exported Mech'l engineering Locomotives & railcars ton ton Vehicles Ships, etc Sourc
Slide 12: Russia & EU: further development trends
RUSSIA & EU: further development trends Trend 1: Upstream integration Trend 2: Downstream development Strengthening Russia’s and Developing EU processing CIS’s role as supplier of semi- outlets closer to Russian steel finished and finished steel for suppliers and consumers in the EU the CIS • Qualit
Slide 13: NLMK: Unique and competitive business model
NLMK: Unique and competetive business model Plate BU : 1,750,000 t capacity Annual production capacity (end of 2011 forecast) 12,400,000 t of steel Available slabs 7,000,000 t Strip Product BU : 2,600,000 t capacity A fully integrated supply chain with own raw material sources, conversion and logist
Slide 14: Conclusion: CIS and EU - partners in steel
Conclusion: CIS and EU - partners in steel o CIS position in low cost crude steel production perfectly fits massive sustainable market in EU which make us natural partners in steel value chain o Last decade Russia completely overhauled its crude steel facilities making it one of the modern in the wo
Slide 15: Thank you
THANK YOU SBB European Steel Conference Global reach; local impact