In his presentation delivered at the SteelOrbis Spring '07 Conference and IREPAS 56th meeting, Eloy Sanchez of Grupo CELSA focused on the global steel market and on the macro economic factors which most affect it.
Through use of graphics, Mr. Sanchez showed his audience the extent of the steady rise in world finished steel
consumption since 1996, adding that the trend is expected to continue until at least 2010. The main reason for this trend is
China's steel
consumption, which has been sharply increasing since the year 2000.
South America,
India, and
Russia all show a trend of positive
consumption growth, with projected 2009 finished steel
consumption estimates of 41.6 million metric tons, 52.3 million metric tons, and 43 million tons respectively.
Next, Mr. Sanchez discussed the long products market, referring to the increase in world long product
consumption since 2001, and to the sharp rises observed in 2004, 2005, and 2006. Of the long products,
rebar consumption increased the most, followed by sections,
wire rod, and merchant bars. East and
Southeast Asia accounts for the majority of the
rebar consumption, with
China leading the pack at 78.6 million metric tons of
rebar consumed in 2006. In the same year,
China's
rebar production exceeded
consumption, at 82 million metric tons.
The next item discussed was cost and pricing. Using graphs, Mr. Sanchez pointed out that
scrap metal costs account for 62 percent of the standard melt shop and rolling mill costs, followed by energy at 11 percent, consumables at 9 percent, labor at 8 percent, other costs at 6 percent, and maintenance at 4 percent. Mr. Sanchez showed the audience that from 1993 until March 2007,
scrap prices have increased 157 percent, while
rebar prices have increased 132 percent. During the same period, the gap between
scrap pricing and finished product cost also increased dramatically - by 111 percent.
Finally, Mr. Sanchez gave CELSA's outlook for the near-future of the market. Strong demand for steel is evident all over the world, especially in developing markets like
China,
India and
Russia. In addition, the highest historical
scrap, energy and transportation costs are seen at the current time. Further concentration of the market and new mergers are expected in the future.