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현대 , 동부제철 가동이한중일 시장에 미치는 영향
이은영DBS Vickers Securities 애널리스트
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Vickers Research and DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.
Asia Steel Market after Korean new capacity
operation Dec 2009
Eun-Young Lee
Content & Summary
Source: DBS Vickers
1.1. Overview on steel industry of 3 Asian CountriesOverview on steel industry of 3 Asian Countries
2. Korea Steel Industry – Net exporter but importing huge tonnes of steel
3. Japan Steel Industry – Export is main supporter for steel industry
4. China Steel Industry – Dynamic but volatile or growing but problematic
5. Implication of steel trade of 3 countries
6. New challenge : The operation of new facilities in Korea going forward.
7. What should be required strategy for increasing competition?
Overview on steel industry of 3 countries
Source: DBS Vickers
Crude steel ouput
Steel production
ASU Export ImportProduction-ASU
Export-Import
Korea 08 53.60 64.50 58.57 20.79 28.94 5.93 -8.15
9F 49.00 57.00 45.80 20.22 20.25 11.20 -0.03
China 08 500.49 581.73 537.94 59.18 15.63 43.79 43.55
09F 555.31 670.26 663.50 23.67 17.16 6.76 6.51
Japan 08 105.50 91.32 73.89 34.50 7.20 17.43 27.30
09F 80.10 70.00 53.00 29.71 2.60 17.00 27.11
Korea, China and Japan : Steel: Demand & Supply
Content & Summary
Source: DBS Vickers
1. Overview on steel industry of 3 Asian Countries
2.2. Korea Steel Industry – Net exporter but importing huge tonnes of Korea Steel Industry – Net exporter but importing huge tonnes of steelsteel
3. Japan Steel Industry – Export is main supporter for steel industry
4. China Steel Industry – Dynamic but volatile or growing but problematic
5. Implication of steel trade of 3 countries
6. New challenge : The operation of new facilities in Korea going forward.
7. What should be required strategy for increasing competition?
Korea : Net Exporter
Korea Steel: Demand & Supply Korea Steel : Import volume
Source: KOSA, DBS Vickers
0
10
20
30
40
50
60
70
76 79 82 85 88 91 94 97 00 03 06 09F
(m ton)
Net Export(Production-ASU)
Production
ASU
Net export volume : 15m ton(‘98), 5.8m ton(’08)
0
5
10
15
20
25
85 88 91 94 97 00 03 06 09F
(mil Ton)
20
25
30
35
40
45(%)Steel product exportweight % to production
Export volume : 5.5m ton(‘98), 20.8m ton(’08)
Increasing export volume but stagnant net export volume
Korea : but Importing huge volume
Source: KOSA, DBS Vickers
0
5
10
15
20
25
30
81 84 87 90 93 96 99 02 05 08
(m ton)
Import of products as raw material(A-B)
Import including products used as raw materials(A)
Import(B)
(A) Import including products used as raw material:5.7m ton(’97)→28.9m ton (’08)(B) Import of steel product : 3m ton(‘97) → 15m ton(’08) (A-B) Import of raw material steel products : 2.7m ton(’97) → 13.9m ton (’08)Weight of import to total steel demand : 12% (‘97) → 36%(’08)
Korea Steel : Import volume
0
5
10
15
20
25
30
81 84 87 90 93 96 99 02 05 08
(m ton)
0
5
10
15
20
25
30
35
40
(%)
Import including products used as raw materials(A)
Weight to Total demand(Domestic + Export)
Surged import of steel products used as raw materials.
Importing more steel products as raw materials
Source: KOSA, DBS Vickers
Turned to net importer of steel during ’02~’08 : 1.2m ton(’02) → 8.2m ton (’08)
Korea Steel : Net export vs. net export considering import of products used as raw materials
(10)
(5)
0
5
10
15
20
81 84 87 90 93 96 99 02 05 08
(m ton)
Export-Import including products used as raw materials
Net export
Expect to switch net exporter in 2009 : 1.3m ton(’09F) → 2.7m ton (’10F)
Switch to net importer of flat steel
Source: KOSA, DBS Vickers
Long Steel : enlarged net import, 0.3m ton (’97) → 2.8m ton(’08) Flat Steel : 3.8m ton of net export(’97) → switch to net importer in 2008(1.3m ton)
Korea Steel : Net export (import) by steel products
(4)
(2)
0
2
4
6
8
10
12
81 83 85 87 89 91 93 95 97 99 01 03 05 07
(m ton)
Long steel
Flat steel
Flat Steel including raw materials
10
Source: Bloomberg, DBS Vickers
Net import volume : slab(4.4m ton) and HRC(3.7m ton) in 2008, c 12% of consumption of each product.
Aggravated shortage of raw materials for flat products
-5.0
-4.5
-4.0
-3.5
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
(m ton)
-14
-12
-10
-8
-6
-4
-2
0(%)
Net import volume(L)
Weight of net import to the total consumption(R)
Korea Steel: slab import Korea Steel: HRC import
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
(m ton)
-20
-15
-10
-5
0
5
10
15
20
25
30(%)
Net import volume(L)
Weight of net import to the total consumption(R)
11
Japan and China, the main supplier of HRC
Source: Kosa, DBS Vickers
Korea : HRC import by origin
0
100
200
300
400
500
600
700
800
900
1,000
03.1 04.1 05.1 06.1 07.1 08.1 09.1
0
10
20
30
40
50
60
70
80
90
(%)Excluding China & Japan Import from China
Import from Japan Weight % of Japan
Weight % of China
Japan : 69%(’03) → 41%(’08) → 58%(’09.1~9) China : 9%(’03) → 52%(’08)→ 18%(’09.1~9)
12
Japan, the major supplier of Slab
Source: Kosa, DBS Vickers
Korea : Slab import by origin
Japan : 22%(’03) →25%(’08) → 51%(’09.1~9)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2003 2004 2005 2006 2007 2008 2009.1~9
(m ton)
0
10
20
30
40
50
60(%)
ow
Australia
Brazil
CIS
China
Japan
Weight % ofJapan
Content & Summary
Source: DBS Vickers
1. Overview on steel industry of 3 Asian Countries
2. Korea Steel Industry – Net exporter but importing huge tonnes of steel
3.3. Japan Steel Industry – Export is main supporter for steel industry Japan Steel Industry – Export is main supporter for steel industry
4. China Steel Industry – Dynamic but volatile or growing but problematic
5. Implication of steel trade of 3 countries
6. New challenge : The operation of new facilities in Korea going forward.
7. What should be required strategy for increasing competition?
14
Japan, the biggest steel exporter in the world
Source: JISF, DBS Vickers
Japan : Crude steel production/nominal consumption and net export
40
50
60
70
80
90
100
110
120
130
69 72 75 78 81 84 87 90 93 96 99 02 05 08
(m ton)
0
5
10
15
20
25
30
35
40
45(m ton)Net Export(R) Consumption(L)
Production(L)
Net Export volume : 42m ton(’76)→ 11m ton(’91) → 36m ton(’07) → 32m ton(’08)
15
Japan, overcapacity to surpass domestic demandJapan : Overcapacity
0
10
20
30
40
50
60
70
80
90
100
81 83 85 87 89 91 93 95 97 99 01 03 05 07 09E
(m ton)
0
20
40
60
80
100
120
140
160(%)Capacity surplus(capacity-production, L)
Over Capcity(capacity-consumption, L)Overcapacity ratio to consumption(R)
Demand/Overcapacity (m ton) : 73.6/78.7(’85)→ 68.9/60.1(’99) → 73.9/55.9(’08) → 53/77(’09)
Source: JISF, DBS Vickers
16
Japan, Utilization rate is a key variable for OP margins
Japan : Utilization rate vs. OP margins
(2.0)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
81 84 87 90 93 96 99 02 05 08
(%)
40
50
60
70
80
90
100
(%)
OP margins(L) Utilization rate(R)
Source: JISF, DBS Vickers
17
Japan: Export, a inevitable option to maintain util.rates
Japan : Export and Import
0
5
10
15
20
25
30
35
40
45
85 88 91 94 97 00 03 06 09E
(m ton)
0
5
10
15
20
25
30
35
40
45(%)
Japanes steel export
Export ratio to production
Import ration to production
Source: JISF, DBS Vickers
Japan : flat steel products are major export products
Japan : Heavy Plate Japan : HRC
Lager export volume : HRC → Galvanized sheet → Heavy Plate → CRC
- 1000
- 500
0
500
1000
1500
2000
2500
3000
91 94 97 00 03 06 09.1~10
(k ton)
0
5
10
15
20
25
30(%)
Net Export
Export ration to prodcution
- 4,000
- 2,000
2,000
4,000
6,000
8,000
87 90 93 96 99 02 05 08
(k ton)
- 40
- 20
20
40
60
80
(%)
Net Export
Export ration to prodcution
Source: JISF, DBS Vickers
Japan : High export ratio of flat steel products
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
89 92 95 98 01 04 07
(k ton)
0
10
20
30
40
50
60
70
80
(%)
Net Export
Export ration to prodcution
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
89 92 95 98 01 04 07
(k ton)
30
40
50
60
70
80
90
(%)
Net Export
Export ration to prodcution
Higher export ratio : Galvanized sheet → CRC → HRC→ Heavy Plate
Japan : CRC Japan : Galvanized sheet
Source: JISF, DBS Vickers
Content & Summary
Source: DBS Vickers
1. Overview on steel industry of 3 Asian Countries
2. Korea Steel Industry – Net exporter but importing huge tonnes of steel
3. Japan Steel Industry – Export is main supporter for steel industry
4.4. China Steel Industry – Dynamic but volatile or growing but China Steel Industry – Dynamic but volatile or growing but problematic problematic
5. Implication of steel trade of 3 countries
6. New challenge : The operation of new facilities in Korea going forward.
7. What should be required strategy for increasing competition?
21
China, a determinant of global supply and demand
Source: CEIC, DBS Vickers
China : Crude steel production/nominal consumption and net export
Net Export volume : -30m ton(’03)→ 45.8m ton(’07) → 6.7m ton(’09F)
-40
60
160
260
360
460
560
660
760
1996 1998 2000 2002 2004 2006 2008
(m ton)
(40)
(30)
(20)
(10)
0
10
20
30
40
50
(m ton)
Net Steel Export(Crude Steel)ConsumptionProduction
22
China, ongoing capacity expansion & lower util. rates
Source: CEIC, DBS Vickers
China : Crude steel capacity/output and utilization rates
Additional capacity increase : 80m ton(’09F)→ 43m ton(’10F) → 21m ton(’11F)Utilization rates : 89%(’06)→ 75%(’09F)
0
100
200
300
400
500
600
700
800
900
2001 2002 2003 2004 2005 2006 2007 2008 2009F 2010F 2011F
(m ton)
50
55
60
65
70
75
80
85
90
95(%)Crude steel output
CapacityUtilization rates
23
China, Sustainable import and less export of semi
Source: CEIC, DBS Vickers
China : Export/Import and Net export of semi finished steel product
Import : 18.8m ton(’06)→ 15.4m ton(’08) → 17.2m ton(’09F)Net export of semi-finished products : 8.7m ton(’06)→ 1m ton(’08) → -0.2m ton(’09F)
-40
-20
0
20
40
60
80
1996 1998 2000 2002 2004 2006 2008
(m ton)
(5.5)
(3.5)
(1.5)
0.5
2.5
4.5
6.5
8.5
10.5
(m ton)
Net Steel Export(Semi-f inished steel product, R)
Exports based on crude steel
Imports based on crude steel
24
Chinese demand growth is stronger than expected
China: Nominal steel consumption China : Net export vs. steel prices
Source: Bloomberg, DBS
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
03/9 04/9 05/9 06/9 07/9 08/9 09/9
0
100
200
300
400
500
600
700
800
900
1,000(US$/ton)
Net Export(Import) of Steel P roducts
HR coil spot price in China
(m ton)
Net import
Net export
10
20
30
40
50
60
70
03.1 04.3 05.5 06.7 07.9 08.11
(m ton)
-20
-10
0
10
20
30
40
50
60(%)Chg % of nominal consumption
Nominal steel consumptionFinished Steel Prdouction
25
High Inventory in China remains risk factor
China : Steel Inventory & HRC spot price Producer’s inventory
Source: IISI, Bloomberg, DBS Vickers
0
1000
2000
3000
4000
5000
6000
7000
06.6 06.12 07.6 07.12 08.6 08.12 09.6
(RMB/ ton)
0
1
2
3
4
5
6
7(m ton)
Steel Inventory in China(R)
HRC spot price in China(R)
2
3
4
5
6
7
8
9
10
02.1 03.1 04.1 05.1 06.1 07.1 08.1 09.1
(m ton)
15
20
25
30
35
40(%)
Inventory of large & medium sized steel companies
Inventory ratio against production
Inventories of flat steel in South-eastern region are high
26
China: Inventory by product in the middleman China: Inventory by region in the middleman
Source: IISI, Bloomberg, DBS Vickers
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
06.7 06.12 07.5 07.10 08.3 08.8 09.1 09.6
(m ton)
30
40
50
60
70
80(m ton)Long steel products inventory
Flat steel products inventoryIron ore inventory
0
0.5
1
1.5
2
2.5
06.7 07.1 07.7 08.1 08.7 09.1
(m ton) BeijingGangZhouShanghai
Content & Summary
Source: DBS Vickers
1. Overview on steel industry of 3 Asian Countries
2. Korea Steel Industry – Net exporter but importing huge tonnes of steel
3. Japan Steel Industry – Export is main supporter for steel industry
4. China Steel Industry – Dynamic but volatile or growing but problematic
5.5. Implication of steel trade of 3 countries Implication of steel trade of 3 countries
6. New challenge : The operation of new facilities in Korea going forward.
7. What should be required strategy for increasing competition?
28
Korea : Major export products are downstream flat products
Korea Steel: Export by product
2007 2008 Weght % 2009.1~10 Weght %
Long proudct 2.74 2.50 12.1 2.72 16.2
Flat product 13.71 14.79 71.1 12.20 72.7
Heavy and medium plate 0.86 1.16 5.6 1.06 6.3
HRC 3.34 3.75 18.0 3.42 20.4
CRC 3.20 3.61 17.3 3.20 19.1
Coated sheet 4.88 5.03 24.2 3.48 20.7
Pipe 1.42 1.80 8.7 0.82 4.9
Billet & slab 0.27 0.62 3.0 0.30 1.8
Total 19.14 20.79 100 16.79 100
Source: KOSA, DBS Vickers
29
Korea Steel: Import by product
Source: KOSA, DBS Vickers
2007 2008 Weght % 2009.1~10 Weght %
Long proudct 5.27 5.33 18.4 2.19 13.4
Flat product 13.52 16.11 55.7 9.06 55.3
Heavy and medium plate 4.66 7.21 24.9 3.60 22.0
HRC 7.60 7.70 26.6 4.61 28.1
CRC 0.30 0.26 0.9 0.15 0.9
Coated sheet 0.56 0.49 1.7 0.26 1.6
Pipe 0.71 0.67 2.3 0.36 2.2
Billet & slab 6.36 6.14 21.2 4.32 26.3
Total 26.50 28.94 100 16.40 100
Korea : Major import products are upstream flat products
30
Korea : Diversified export, concentrated import
Korea Steel: Export by regions
Korea Steel: Import from regions
2007 2008 Weght % 2009.1~10 Weght %
China 3.83 3.71 17.8 4.33 25.8
Japan 2.87 2.74 13.2 1.49 8.9
S.E Asia 3.38 4.59 22.1 3.75 22.3
Europe 2.21 2.24 10.8 1.32 7.9
USA 1.96 2.25 10.8 0.89 5.3
M.S America 0.96 1.23 5.9 0.93 5.5
Total 19.14 20.79 100.0 16.79 100.0
Source: KOSA, DBS Vickers
2007 2008 Weght % 2009.1~10 Weght %
China 13.16 14.31 49.4 4.65 28.3
Japan 9.55 9.39 32.4 7.96 48.5
S.E Asia 0.43 0.56 1.9 0.87 5.3
Europe 0.07 0.08 0.3 0.06 0.3
USA 0.06 0.12 0.4 0.04 0.2
CIS 0.90 1.81 6.2 1.00 6.1
Total 26.50 28.94 100.0 16.40 100.0
Japan : Key supplier for upstream steel flat product Japan : Export by product
2009.1~10 Weight % 2008 2007 yoy %('08/07)
Semi- finished Steel 4,735 17.3 4,371 5,027 - 13.1
Long steel product 1,715 6.3 2,352 2,821 - 16.6
Heavy Plate 2,894 10.6 3,423 3,385 1.1
HRC 5,631 20.6 5,968 7,388 - 19.2
CRC 2,231 8.2 2,783 3,107 - 10.4
Galvanized sheet 2,725 10.0 4,652 5,307 - 12.4
Total 27,327 100.0 34,153 38,448 - 11.2
Source: JISF, DBS Vickers
Japan : Korea is the biggest export market
Japan : Export by region
Total China Korea S.E AsiaMiddle East EuropeN. America ow2006 35,913 6,401 8,920 13,575 1,553 783 2,381 2,2992007 38,448 6,524 10,140 15,264 1,439 835 1,928 2,3172008 34,153 6,131 8,512 13,615 1,015 784 1,756 2,3412009.1~9 27,327 5,319 7,964 9,900 899 463 1,124 1,658Weight %2008 100 18.0 24.9 39.9 3.0 2.3 5.1 6.9 2009.1~9 100 19.5 29.1 36.2 3.3 1.7 4.1 6.1
Source: JISF, DBS Vickers
33
China, Flat steel are major export/import products
Source: CEIC, DBS Vickers
China : Export/Import by products
Export by product Import by product(m ton) 2009.1~10 Weight % 2008 Weight % 2009.1~10 Weight % 2008 Weight %steel products 18.40 100.0 59.18 100.0 14.86 100.0 15.39 100.01 bar and rod 1.84 10.0 12.62 21.3 0.67 4.5 0.96 6.22 angle and shapes 0.91 4.9 3.56 6.0 0.33 2.2 0.31 2.03 flat products 8.13 44.2 28.79 48.7 12.92 86.9 12.73 82.7Heavy and medium plate 2.54 13.8 7.95 13.4 1.02 6.8 1.27 8.3HRC 2.31 12.5 10.90 18.4 4.07 27.4 1.92 12.5CRC 0.74 4.0 3.49 5.9 4.24 28.6 4.12 26.8Coated and color sheet 2.46 13.3 6.26 10.6 2.91 19.6 4.37 28.44 pipe products 5.22 28.3 10.64 18.0 0.54 3.6 1.06 6.95 railway steel products 0.48 2.6 0.55 0.9 0.23 1.6 0.07 0.56 other steel products 1.82 9.9 3.02 5.1 0.17 1.2 0.25 1.67 special steel 3.04 16.5 15.75 26.6 2.53 17.0 3.24 21.1billet/slab 0.01 1.29 4.19 0.25
34
China, Korea is #1 export market
Source: CEIC, DBS Vickers
China : Export by products
(m ton) 2008 Weight % 2009.1~9 Weight %
South Korea 3.11 20.2 3.44 23.2
Japan 6.04 39.3 4.39 29.5
Honkong 2.85 18.5 1.96 13.2
Taiwan 1.65 10.7 1.53 10.3
Russia 0.15 1.0 1.36 9.1
Total 15.38 100.0 14.86 100.0
2008 Weight % 2009.1~9 Weight %South Korea 13.95 23.6 4.30 23.4Japan 0.83 1.4 0.32 1.8India 1.95 3.3 0.64 3.5US 5.02 8.5 0.92 5.0S.E Asia 11.96 20.2 3.89 21.2Middle East 5.84 9.9 1.57 8.5Europe 7.50 12.7 0.94 5.1Total 59.18 100.0 18.40 100.0
China : Import by products
JapanKorea
China
S.E Asia
S.E Asia would become most competitive export market
China : Export/Import by products
E: 2.7mI : 9.6
I: 0.8mE : 6.1m
E : 3.7mI : 14.3
E :13.6m
E : 4.6m
E:12m
Source: CEIC,JISF,KOSA DBS Vickers
Content & Summary
Source: DBS Vickers
1. Overview on steel industry of 3 Asian Countries
2. Korea Steel Industry – Net exporter but importing huge tonnes of steel
3. Japan Steel Industry – Export is main supporter for steel industry
4. China Steel Industry – Dynamic but volatile or growing but problematic
5. Implication of steel trade of 3 countries
6.6. New challenge : The New challenge : The operation of new facilities in Korea going operation of new facilities in Korea going forward. forward.
7. What should be required strategy for increasing competition?
37
Capacity development in Korea
Source: Company, DBS Vickers
Korea : New facilities to be completed in 2009~2011
Plant (m ton) Completion
2009 POSCO Gangyang #4 BF Revamping 3.3 → 4.3 09.2~7
Dongbu Steel EAF Steel making plant(160t x2) 2.5 09.7
HRC plant 3
Dongkuk Steel Dangjin Heavy plate plant 1.5 09.10
Hyundai Steel Dangjin Heavy plate plant 1.5 09.12
2010 POSCO Gyaning steel making plant 2.8 10.7
Gangyang Heavy Plate plant 2 10.8
Pohang New Steel making plant 4.6 10.9
(Replaces 3.1m tons at #1 steel making plant)
Hyundai steel Dangjin #1 BF and steel making 4 10.1
2011 Hyundai steel Dangjin #2 BF and steel making 4 11.1
Dangjin C HRC Plant 3 11.1
38
Heavy Plate, to switch surplus from shortage
Source: CEIC, DBS Vickers
Korea : Heavy Plate’s demand/supply forecast
Capacity Export Import(m ton) 08 10F △ 10/08 08 08Korea 7.7 13.2 6 1.3 7.2Japan 15.3 17.2 2 3.4 0.2China 65.9 115.9 50 7.95 1.3Total 88.9 146.3 57 12.65 8.7
-10
-5
-
5
10
15
08 09F 10F 11F 12F
(m ton)
CapaDemandProductionProduction-demand
39
HRC, expect surplus in 2011
Source: CEIC, DBS Vickers
Korea : HRC demand/supply forecast
08 09 10F 11FDemand 3,050 2,595 3,100 3,180 For rerolling 2,130 1,800 2,220 2,230 For piping 470 400 440 470 For logistic channel 220 200 220 240 Others 230 195 220 240 Supply 2,500 2,500 2,920 3,310 POSCO 2,220 1,900 2300 2,450 Hyundai 280 250 380 610 Dongbu 50 240 250 Surplus(shortage) (550) (95) (180) 130
Capacity Export Import(m ton) 08 10F 11F △ 11/08 08 08Korea 29.5 32.0 37.0 8 3.8 7.7Japan - - - - 6 1.4China 192.5 290.0 305.0 113 10.9 1.2Total 20.7 10.3
40
CR Products retain burden for export but..
Source: CEIC, DBS Vickers
Korea : CRC/Galvanized sheet demand/supply forecast
-
1
2
3
4
5
6
7
8
08 09 10F 11F
(m ton)
40
45
50
55
60
65
(%)DemandProductionSurplus(shortage)weight of surplus to prouction
-
1
2
3
4
5
6
7
08 09 10F 11F
(m ton)
30
31
32
33
34
35
36
37
38
(%)DemandProductionSurplus(shortage)weight of surplus to prouction
CRC Galvanized sheetExport Import Export Import
(m ton) 08 08 08 08Korea 3.6 0.3 5.3 0.5Japan 2.8 0.8 4.7 0.3China 3.5 4.2 3.7 4.1Total 9.9 5.3 13.7 4.9
Capacity expansion in China(’08~10)• CRC : + 32m ( + 40%)• GAL : + 9m (+ 25%)
41
Growing Chinese automobile demand to trigger better demand of CR products
China Automobile; production and sales
Source: CEIC, DBS Vickers
0.0
0.2
0.4
0.6
0.8
1.0
1.2
05.1 06.1 07.1 08.1 09.1
(m unit)Automobile production
Sales of passenger car
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
1Q95 1Q97 1Q99 1Q01 1Q03 1Q05 1Q07 1Q09
(k unit)
Washing machinesHousehold RefrigheratorsColor TV setsAir Conditioners
China Home appliance; sales unit
Content & Summary
Source: DBS Vickers
1. Overview on steel industry of 3 Asian Countries
2. Korea Steel Industry – Net exporter but importing huge tonnes of steel
3. Japan Steel Industry – Export is main supporter for steel industry
4. China Steel Industry – Dynamic but volatile or growing but problematic
5. Implication of steel trade of 3 countries
6. New challenge : The operation of new facilities in Korea going forward.
7.7. What should be required strategy for increasing competition? What should be required strategy for increasing competition?
43
Our Steel Demand Forecasts is bearish compared to IISI
2009 2010 IISI & DBSV(2010)
-30
-25
-20
-15
-10
-5
0
5
10
Oct '08 'Apr 09 J uly '09 Oct. 09
(%) World
World w/o China
7
8
9
10
11
12
13
14
Oct '08 'Apr 09 J uly '09
(%) World
World w/o China
0
2
4
6
8
10
12
14
World China World excl. China
(%)
IISI DBSV
Source: IISI, DBS Vickers
44
Over capacity up along with expansion
World: Steel demand and capacity
Source: IISI, DBS Vickers
0
500
1,000
1,500
2,000
2,500
00 01 02 03 04 05 06 07 08 09F 10F 11F
(m ton)
-
100
200
300
400
500
600
700(m ton)
Over CapacityCrude Steel DemandCapactiy
Source: IISI, BCG, Mirae Asset Research Estimates
Anticipate intensifying competition in Asia market
Competition intensity by product
Heavy PlateHeavy Plate HRCHRC CRCCRC GAL GAL
Intensity of competition
The most competitive year
2010 ~ 2011 2011 2011 ~ 2012 2011~ 2012
The most competitive market
Korea Korea
S.E Asia
China
S.E Asia
China
S.E Asia
Chief rival Domestic mills, China,
Japan
China, Japan Japan Japan
Source: IISI, BCG, Mirae Asset Research Estimates
Required Strategy
For the government
• Monitor closely domestic and oversea steel markets • Reshuffling measures and system to support fair competition• Recruit and breed expert on trade relationship
400
500600
700
800
9001,000
1,100
1,2001,300
1,400
07.1 07.4 07.7 07.10 08.1 08.4 08.7 08.10 09.1 09.4 09.7 09.10
Korea
Japan
China
Chinese in Korea
(US$/ton)
Source: IISI, BCG, Mirae Asset Research Estimates
Required Strategy
For the companies
• Financial Healthiness
• Competitiveness in Quality
• Competitiveness in Cost
• A marketing scheme for oversupplied market.
• Carry on self-restructuring and encourage industry restructuring
• Strengthen monitoring in the export markets, secure the talented in trade matters.
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Vickers Research and DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.
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