Global Large Diameter Linepipe Presentation
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Transcript of Global Large Diameter Linepipe Presentation
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Hatch Beddows
The Global large diameter linepipe marketsMarket outlook to 2010
4th June 2007
James Ley - Consultant
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2 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate supply
Current global large-diameter pipe demand
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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3 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate supply
Current global large-diameter pipe demand
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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4 Hatch Associates Limited, 2006
Our organisation
Hatch supplies business, process and technology consulting, design and engineering
and construction, operations and project management to the mining and metals, energyand infrastructure industries worldwide
Established 1955 and employee owned
7300 highly skilled people serving clients worldwide
US$16BN of projects now under management in 60 countries
Our values
Safety
Quality
Innovation
Sustainable development
Effective risk management
We deliver unprecedented and sustained results for our clients
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HATCH
Global reach and resources
Canada Calgary, Alberta Hamilton, Ontario Montreal, Quebec Sorel-Tracy, Quebec Sudbury, Ontario Toronto, Ontario Vancouver, British Columbia
USA Boston, Massachusetts
Buffalo, New York Millburn, New Jersey Monroeville, Pennsylvania New York, New York Pittsburgh, Pennsylvania Pleasanton, California San Francisco, California Seattle, Washington
3400
South America Antofagasta, Chile Santiago, Chile Lima, Peru
So Paulo, Brazil Vitoria, Brazil
700
Europe London, England Moscow, Russia
170
South Africa Johannesburg Richards Bay
600
India
Delhi
China Beijing Shanghai
120
Australia
Brisbane Gladstone Mackay Melbourne Newcastle
Perth Sydney Townsville Whyalla Wollongong
2300(Yellow indicates regional hub)
7300 people Oct. 2006
Hatch Associates Limited, 2006 5
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6 Hatch Associates Limited, 2006
Hatch Consulting is the worlds leading management consultancy specialising in themining and metals industries and provides high level support services, ranging from
corporate and business strategy development through strategic market studies toimplementation of new technologies, management and operating practices
Hatch Consulting is organised into specialised practices by industry and service,combining to provide precise solutions, expertly delivered to the exact needs of eachindividual client
Hatch Beddows is the strategy and market development practice, specialising in steel andraw materials, and providing strategy development and implementation services
Investment and Business Planning (IBP) provides economic, environmental and
technical evaluations of minerals properties and processing facilities, due diligence, pre-feasibility and feasibility studies and related investment planning and appraisal services
HB Advisors (HBA), a FSA-regulated joint venture company, provides corporatefinancial advisory and transaction execution services
HATCH CONSULTING
Hatch Consulting is the leading management consultancy dedicated
to the mining and metals industries
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7 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate supply
Current global large-diameter pipe demand
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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8 Hatch Associates Limited, 2006
Total global API plate production for 2006 isestimated at = 10.6m tonnes
CURRENT GLOBAL API PLATE PRODUCTION
API plate production has historically been dominated by Western Europe and
Japan. China has recently emerged as a global producer
1.5-2.0m tonnes
1.0-1.5m tonnes
0.5-1.0m tonnes
0.0-0.5m tonnes
Major trade route
Minor trade route
Source: Hatch Beddows
Production
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9 Hatch Associates Limited, 2006
CURRENT GLOBAL API PLATE PRODUCTION
Some Western European and CIS heavy plate mills are heavily focused
towards API plate production
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%100%
Japa
nJapa
nKo
reaChina
China
China US
A
Ukraine
Wester
nEuro
pe
Wester
nEuro
pe
Wester
nEuro
pe
Wester
nEuro
pe
Wester
nEuro
pe
Wester
nEuro
pe
API production Remaining plate capacity
Selection of heavy plate mills around the world, with% of production dedicated to API plate
Some heavy plate mills inWestern Europe are almost100% dedicated to API plateproduction
Japanese, Korean and
Chinese plate mills are morefocused towards othermarkets such as shipbuilding
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10 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate supply
Current global large-diameter pipe demand
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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11 Hatch Associates Limited, 2006
CURRENT GLOBAL LSAW LINEPIPE PRODUCTION
With increasing LSAW pipe production in Russia, India and the Middle East,
pressure has been placed on API plate supplies
2-3m tonnes
1.5-2m tonnes
1-1.5m tonnes
0.5-1m tonnes
< 0.5m tonnes
Rest of Asia
EU 27
Iran
Rest ofMiddleEast
USA &Canada
Latin &South
America
Russia &Ukraine
Japan
Estimated Total LSAW global production in2006 = 10.8 m tonnes
Source: Hatch Beddows
Production
Global LSAW production in 2006 by region
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12 Hatch Associates Limited, 2006
CURRENT GLOBAL HSAW LINEPIPE PRODUCTION
Spiral pipe production is increasingly being accepted as an onshore application
for oil and gas projects, and is not reliant on the API heavy plate mills
1-1.5m tonnes
0.5-1m tonnes
< 0.5m tonnes
CIS
Canada& USA
TurkeyIran
Rest of
Middle East
SouthAmerica
EU 27
OtherAsia
Total global spiral pipe production in 2006 is estimated at = 6.3M tonnes
Source: Hatch Beddows
Production
Global HSAW production in 2006 by region
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13 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate demand
Current global large-diameter pipe supply
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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15 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate demand
Current global large-diameter pipe supply
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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16 Hatch Associates Limited, 2006
FORECAST GLOBAL LSAW PIPE POTENTIAL PRODUCTION IN 2010
LSAW pipe production is expanding, especially in Russia, but planned (API)
plate mills should be able to meet this demand
EU - 27CIS
With TMK planning to enter the LSAWmarket, and OMK and ChTPZ expected toincrease capacity. CIS LSAW pipe
production will likely rise above 3m tonnesby 2010
Japan
With Welspun adding500kt into the marketIndian LSAWproduction could
reach up to 2mtonnes
6 LSAW millsplanned in China.Production toapproach 3m tonnes.1.6m tonnes ofadditional API platerequired
2-3m tonnes
1.5-2m tonnes
1-1.5m tonnes
0.5-1m tonnes
< 0.5m tonnes
Latin &South
America
Europipe &Vallourec to enterthe Brazilian LSAWmarket with a JV
USA &Canada
Iran
3 new mills inthe MiddleEast & Iranwill increase
production
3-4m tonnes
Source: Hatch Beddows
Production
Forecast LSAW production by region in 2010
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17 Hatch Associates Limited, 2006
FORECAST GLOBAL HSAW LINEPIPE PRODUCTION IN 2010
The North American market is pushing ahead with a number of planned HSAW
pipe mills as onshore oil and gas pipeline demand rises
5 planned spiral mills inNorth America will addan additional 1m tonnesof capacity
Welspun/Lonestar (?)
Posco/SeAH/US Steel
Berg
Ipsco expansion
PSL
EU - 27
Borusannew mill inSpain
Man Industries expansion ofHSAW facilities will take Indianproduction over 1m tonnes
CIS
SouthAmerica
Turkey
1-1.5m tonnes
0.5-1m tonnes
< 0.5m tonnes
Source: Hatch Beddows
Forecast HSAW production by region in 2010
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18 Hatch Associates Limited, 2006
THE GLOBAL LARGE-DIAMETER LINEPIPE MARKETS
Contents
Hatch, Hatch Consulting and Hatch Beddows
Current global API plate demand
Current global large-diameter pipe supply
Forecast global API plate new mills & expansions
Forecasts global linepipe production in 2010
Forecast large-diameter linepipe demand Summary
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19 Hatch Associates Limited, 2006
FORECAST LARGE DIAMETER LINEPIPE DEMAND
Energy prices are unlikely to crash in the next couple of years making large-
diameter linepipe projects still financially viable
50
55
60
65
70
75
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008
5
5.5
6
6.5
7
7.5
8
8.5
9
9.5
(LHS) Crude oil prices ($/barrel) Natural gas ($/mcf)
US energy prices: Base case scenario
Oil prices are forecast to remain above$60/barrel out through to 2008
Source: EIA, Hatch Beddows
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20 Hatch Associates Limited, 2006
FORECAST LARGE DIAMETER LINEPIPE DEMAND
North America is set to lead the charge for large-diameter linepipe through the
next couple of years, but Russia and Asia will also be close behind
By 2010 Indiaspipelineinfrastructure is
forecast to havedoubled to32,000km
North America forecastfor the largest share of
global pipeline additions:-USA will need to replaceand refurbish obsoletefacilities
- Greenfield project will berequired such asMackenzie pipeline (?)
and expanding capacityfrom the Rocky mountainsto relieve systembottlenecks
Source: Hatch Beddows
Transnefts East-Siberian pipelineis helping to keep domesticproducers busy.
Nordstream is also likely to create
opportunities (pos. not just inRussia)
New pipelines will be needed after2010 as regions other than WesternSiberia are explored
The Middle East offershuge potential for newpipelines to Europe,Pakistan, India etc. butgeopolitical tensions causeproblems
As well as latterstages of the West-East pipeline, potentialpipelines from Russia,
Central Asia and theCaspian could keepChinese LSAW/HSAWproducers busy
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21 Hatch Associates Limited, 2006
FORECAST LARGE DIAMETER LINEPIPE DEMAND
The large diameter linepipe markets are set to see a tight supply/demand
balance remain until 2009
Average of just under 19m tonnes of large-diameter pipe required between 2007 2009
2006 supply of large diameter linepipe = 17.1mtonnes
However, some large-diameter ERW pipe couldbe used in some of these projects
Based on current mill start dates just under2.5M tonnes of further large-diameter linepipewill come on stream by the end of 2008
Note:
There are limitations with linepipe demandforecasts: Rapidly rising input costs could seeprojects shelved:
E.g. Mackenzie in just two years the cost ofthe proposed pipeline has risen from $7.5bn to$16.2bn. Investors such as Conoco, Imperialand Shell are now looking at ways of letting theCanadian government take ownership of thepipeline to prevent it from not being built
1
2
3
4
5
6
7
8
9
10
North
America
Latin America Europe Africa Middle East
and Asia
Australasia
2007 2008 2009
Forecast demand for linepipe (>20 OD) based onknown projects
Source: Simdex, Hatch Beddows
M tonnes
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23 Hatch Associates Limited, 2006
THE GLOBAL LARGE DIAMETER LINEPIPE MARKET
Summary
Forecast API LSAW and HSAW pipe production capacity expected to rise by around 5.2mtonnes by 2010
Based on planned API plate mills, there should not be a bottleneck in API plate supplies While the supply/demand balance is set to remain tight for LSAW and HSAW pipe in the
next couple of years, new pipe mills coming on stream will help to prevent supply shortages
Pipe demand growth beyond 2008 will have to keep consistent with current growth in orderto prevent an over-surplus of linepipe capacity
New plate mills capable of producing API plate will open in regions very short of supply e.g.Russia and India, helping to reduce pipe mill input costs making them more competitive onthe international market
China, which has seen linepipe imports drop from around 295,000 tonnes (2003) down to12,000 tonnes (2006) could have an increasing presence on the LSAW export market oncethe West-East pipeline development is complete
Western European and Japanese producers will have to increasingly compete againstthese emerging producers in regions such as the Middle East and Southeast Asia
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24 Hatch Associates Limited, 2006
THE GLOBAL LARGE DIAMETER LINEPIPE MARKETS
Thank you for your attention
For further information please contact:
James LeyConsultantHatch Beddows9th Floor, Portland House, Bressenden PlaceLondon. SW1E 5BHUK
Tel: +44 20 7906 5127
Fax: +44 20 7963 0972