Market leader positioned for recovery...U.S. plate imports already decreased due to trade cases U.S....
Transcript of Market leader positioned for recovery...U.S. plate imports already decreased due to trade cases U.S....
Market leader positioned for recovery Chuck Schmitt EVP and Head of SSAB Americas
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Agenda
► Market situation and outlook
► Our position in the market
► Our focus going forward
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North American steel industry being impacted by several external forces
Government Demographics
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A volatile 12 months in U.S. plate market
Source – CRU
$400
$450
$500
$550
$600
$650
$700
$750
$800
Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17
CRU Plate Price
June 2016
Prices peak due to weak demand conditions
Nov 2016
DOC submits final and preliminary findings for
dumping of imports from several countries.
March 2017
Mobile outage extends lead times. Imports remain low
as DOC announces results of several cases
May 2017
Section 232 investigation of steel imports is launched with potential for broad scope of
remedies
DOC = U.S. Department of Commerce
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0
20
40
60
80
100
120
140
Ap
r 15
May
15
Jun
15
Jul 1
5
Au
g 15
Sep
15
Oct
15
No
v 15
Dec
15
Jan
16
Feb
16
Mar
16
Ap
r 16
May
16
Jun
16
Jul 1
6
Au
g 16
Sep
16
Oct
16
No
v 16
Dec
16
Jan
17
Feb
17
Mar
17
Ap
r 17
May
17
U.S. plate imports already decreased due to trade cases U.S. plate imports and trade case status,
top 5 countries
Total CTL imports 1,051 kt – of which top 5 account for >70%
364
152
131
96
30
2015
2016
ktonnes
U.S. imports of carbon & alloy cut-to-length products
ktonnes
No measures ongoing for Canada
Anti-dumping (AD) margin ranging 15%-49%
Source: U.S. Department of Commerce
Anti-dumping (AD) margin ranging 9%-148%
Anti-dumping (AD) margin ranging 5%-23%
Overall duty margin (both AD and CVD) 12%
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Favorable forecasts for North American plate
Source: CRU forecast
Apparent demand by country, million ton (s)
Apparent demand by plate type, million ton (s)
3.5
2.7 3.6
2.6
9.8
2.5
8.1
2.5
9.5
16.1
2020
15.8
2015 2016 2018
9.6
14.2 4.0
16.7
4.4
Canada Mexico USA
2020
16.7
8.3
8.4
2018
16.1
8.1
8.0
2016
14.2
7.3
6.8
2015
15.8
7.7
8.1
Coiled plate Reversing plate mill
Demand growth driven by quickly recovering US and higher growth rates in Mexico
Quicker recovery in reversing plate production products (SSAB core)
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Segments driving North American plate demand Segment short/medium-term outlook
► Wind Energy remains positive for 2017 due to production tax credit incentives. Long-term will be impacted by new policy
► Oil and gas investments turned into growth in late 2016
► Rig counts continue to grow and supporting equipment demand is recovering along with that activity
► Railcar build will continue to remain slow through 2017 with volume forecast to be off 80% or more from the peak.
► Demand for barge has softened
► Public infrastructure spend to increase with the new FAST Act – Projects continue to come forward as the much needed infrastructure rebuild continues to be a public policy focus
► Improving non-residential construction as absorption of inventory and pent-up demand continue to support increased investments
► Overall construction seen to grow 3-4% pa
Energy
Construction & infrastructure
Heavy transport
Long-term outlook (2017-20)
Heavy equipment ► Construction, Mining and Agriculture equipment OEMs continue to show modest recovery and
increasing volume requirements for H2/2017 and 2018
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Market conditions are improving
USD / ton
U.S. plate market prices minus spot cost of scrap U.S. plate and HRC spot price
USD / ton
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Source – CRU
0
100
200
300
400
500
600
700
800
900
1,000
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-1
4
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
Jul-
16
Sep
-16
No
v-1
6
Jan
-17
Mar
-17
May
-17
U.S. Plate U.S. HRC
0
50
100
150
200
250
300
350
400
450
500
Jan
-14
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-1
4
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
Jul-
16
Sep
-16
No
v-1
6
Jan
-17
Mar
-17
May
-17
U.S.plate market price minus spot cost of scrap
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Agenda
► Market situation and outlook
► Our position in the market
► Our focus going forward
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Market leader with ~30% market share
25% 32% 30%
61% 59% 62%
14% 9% 8% Imports
Q1/2017 Q1/2016 Q4/2016
SSAB Americas
Other domestic supply
SSAB Americas’ market share of the plate market
Source: AISI
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Strongly positioned in Americas’ manufacturing heartland
Montpelier, Iowa ► Established: 1997 ► Heavy plate mill ► Scrap-based EAF steel production ► R&D center ► Employees: 500
Mobile, Alabama ► Established: 2001 ► Heavy plate mill ► Scrap-based EAF steel production ► Employees: 600
Texas, Minnesota & Ontario ► Cut-to-length facilities ► Steel plate and coil processing ► Employees: 120
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Debottlenecking brings total steel production capacity to 2.7 mtonnes
Vs.
Mobile and Montpelier mills Increased capacity
2016
2.3
100
MILLION TONNES
Steel production capacity
2.7 MILLION TONNES
Steel production capacity
THOUSAND TONNES
Q&T production capacity
300 THOUSAND TONNES
Q&T production capacity
• Two planned outages completed in 2016-’17
• Combined with rigorous site maintenance means less frequent outages
• Next planned outage not scheduled until mid-2018 (Montpelier)
Maintenance outages: 2010
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Overall Satisfaction Quality Service On Time
Jacobson Report Q1/2017
SSAB Comp A Comp B Comp C Comp D
Preferred supplier We rank top in independent customer surveys
Customer Satisfaction Rating
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Customer recognition
►Achieved “Partner” status in John Deere’s Achieving Excellence supplier assessment program for the eighth consecutive year, highest attainable level under this program
►Awarded 2016 “Supplier of the Year” by Komatsu America
►Awarded “Premier Supplier Award” by Trinity Rail Group
►Attained recertification to “Gold Level” under Caterpillar’s Supplier Quality Excellence Process
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A commitment to customers and the environment
►Nearly 100% scrap-based steel production
► Increased use of renewable energy sources (wind)
►Numerous recycling projects:
− Scrap tire recycling program
− Electric arc furnace dust recycling
− Facility recycling/sorting areas
►Launched EcoSmart in 2016, a new customer awareness program to demonstrate commitment to environmental sustainability
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Agenda
► Market situation and outlook
► Our position in the market
► Our focus going forward
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SSAB Americas’ five key strategic cornerstones
Industry Leadership in Safety
Leading Home Market Position
Superior Customer Experience
Low Cost/High Flexibility Strategy
Market Diversification
The safest steelmaking operations in all of North America, striving for zero accidents
Number one in the American plate market in terms of EBITDA margin and market share
Number one in customer service against our peers based on quarterly third-party surveys
The best cost position versus our peer competitors and aggressively pursue continuous improvement projects
Increase our premium product offering and geographic footprint, both by expanding existing customers and winning new ones
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Strengthening our home market leadership
63%
Actions to strengthen plate market leadership
►Expand product mix
►Engage customer projects with technical support
►Leverage established relationships to optimize product mix and grow share
► Identify additional debottlenecking opportunities
Key focus ahead
►Number 1 supplier in our strategic segments
►Utilize CTL operations and Europe heavy plate to increase overall sales volume and broader product portfolio
►Grow new smart-segment products
►Utilize competitive advantage in energy applications
►Expand Premium products offer
Number one in North American plate market with 30% market share
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Recent programs and ongoing activities Planned coming years
Taking steps to further strengthen cost leadership position through continuous improvement
►Continuous Improvement
− Black Belt /Green Belt projects
− “Just Do It” Improvements
− Strategic Sourcing events
►Hot Briquetted Iron (HBI)
►Granulated Pig Iron (GPI)
► Raw Material flexibility
− Maintain scrap/Alternative Iron Unit (AIU) flexibility
► Longer term supply solutions
− For raw materials and key consumables
► Rolling mill productivity improvements
+
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Black Belt example: Energy Substitution & Burner Optimization
►Electric Arc Furnace melts scrap via
− Electrical energy via carbon electrode
− Chemical energy via oxy-fuel burners
►Project to increase use of natural gas and optimize burner usage
− Increase share of natural gas in burners by 5% on average (@ $11/MWH)
− Reduce electricity (@ $66/MWH)
− Burner optimization reduced EAF melting time by about 2 minutes/heat
► USD 7 million savings in 2016
− Lower energy cost
− Increased throughput
− Reduced electrode consumption
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Focus areas to grow sales
Bridge market Re-enter market with
infrastructure projects
Western Canada,
Mexico & U.S. West Coast
Fill in geographic “white spots”
Cut-to-Length lines
Formed new Value-Added business unit
New products Smart segments and
new technologies
Energy Increase
penetration with extension of Federal
Production Tax Credit
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►Leverage domestic melted and manufactured capabilities, i.e. “Buy American”
►Limited domestic competition in high-strength, low alloy production capabilities of wide coil and plate
►Key participant in the N.A. energy investment and expansion including 10,000+ miles of pipeline construction in the U.S. and Canada
► In wind energy, develop unique pricing solutions, leveraging EcoSmart concept, as well as our market position and quality
Energy segment – API line pipe and wind towers
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Re-entering the bridge segment
►Leveraging current push for infrastructure investment
►Commercial focus on key accounts identified and targeted in North America
►Actively participating in Short Span Steel Bridge Alliance, tech services product development & on-site mill training
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In summary
1. Market expected to recover with key indicators trending positively
2. We are strongly positioned
►As a preferred supplier and market leader in key segments with 30% market share
►With an industry-leading cost, quality and service position
3. Our strategic priorities for the future
► Focus on a profitable market share growth, operational flexibility and low-cost position to deliver strong results
►Optimize overall production model to meet increased plate demand
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