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Svetlana Delamure Editor Metal Expert Weekly / Metal Expert News

Eastern Europe – market & industry, direction & outlook. SBB Steel Markets Europe 2008 June 18-19 2008, London. Svetlana Delamure Editor Metal Expert Weekly / Metal Expert News. Metal Expert in brief:. Part of Information agency Metal Courier established in 1994

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Svetlana Delamure Editor Metal Expert Weekly / Metal Expert News

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  1. Eastern Europe – market & industry, direction & outlook SBB Steel Markets Europe 2008 June 18-19 2008, London Svetlana Delamure Editor Metal Expert Weekly / Metal Expert News

  2. Metal Expert in brief: • Part of Information agency Metal Courier established in 1994 • Reliable source of information on global steel and raw materials markets • Provider of daily news, weekly reviews, monthly analytical bulletins, quarterly forecasts, special reports and consulting services • Organizer of several international steel and raw materials conferences • Offices in Dnipropetrovsk (Ukraine), Moscow (Russia), and Houston (Texas, USA)

  3. 10.6mt 7.1mt 5.1mt 2.2mt 6.3mt 0.6mt 1.5mt 0.5mt 2.1mt Steel industry in Eastern Europe today 12countries with 37,6 mln tonnes crude steel production in 2007(IISI data)

  4. Pecularities of the regional steel industry Substantial share of foreign capitalas a result of mass privatizations in early 2000s Poland - ArcelorMittal, ISD, CMC, Celsa Group Czech Republic - ArcelorMittal, EvrazHolding Romania - ArcelorMittal, Mechel Slovakia - US Steel Bulgaria - Sidenor, Metinvest Hungary - ISD Serbia - US Steel Bosnia - ArcelorMittal Albania - Kurum Holding etc. And more to come…ongoing Kremikovtzi privatization, new projects of foreign investors (hot rolling mill by Vorskla Steel in Hungary, pipe works and coil service center by Marcegaglia in Poland etc.)

  5. Pecularities of the regional steel industry High consolidation rate (especially in terms of crude steel production) Poland: ArcelorMittal (67%), CMC (13%), Celsa Group (8%), ISD (7%),Zlomrex (4%) Czech Republic: ArcelorMittal (48%), Trinecke Zelezarny (36%), EvrazHolding (14%) Romania: ArcelorMittal controls 100% of flats and 40% of longs country output, Mechel controls 50% of longs output Bulgaria: Sidenor ~ 75% of longs output, Metinvest ~ 25% Hungary: ISD Dunafer (86%) Unbalanced output structure - excess of flat products in most countries and lack of longs Trade flows are determined by geographical location, though general trend is to export to ‘well paying’ Western European markets while import either from neighbouring countries or from CIS

  6. Slab exports grew 169% to 610,000t last year, but this year it wil go down again Rebar imports shot up 165% to 410,000t last year! Poland 20 steel mills, including 9 steelmakers Around 12 mln tpy crude steel capacities Major importer of HR coils • Rebar exports will grow this year due to market situation, and thus import will increase as well • Slab exports will hardly slow down until ArcelorMittal Krakow launches new 4m tpy HR mill in 2010 • In future, HR coils demand will grow with new pipe projects (e.g. by Marcegaglia)

  7. Plate imports grew 60% to 460,000t last year! 90,000t (27% of annual figure) went to Middle East! Czech Republic 8 steel mills, including 4 steelmakers Around 7 mln tpy crude steel capacity Major importer of HR coils • 65-70% of rebar exports go to Eastern Europe (incl. 35% to Poland) • Plate demand is reported to be strong due to large number of heavy machinery producing companies • Slab imports grew 90% in 2007 - supplies from Evraz to its subsidiary - Vitkovice Steel • Last year Czech Republic started exporting billet to Middle East (UAE, Oman, Saudi Arabia) having shipped around 90,000t, or 27% of total yearly figure. In 2008 the trend is likely to continue

  8. AM Galati AM Galati CIS Poland Turkey Romania 8 steel mills, including 5 steelmakers 6.5 mln tpy crude steel capacity • Rebar Turkey shipped 240,000t in 2007, 7 times up from 2006! • Billet Russia and Ukraine supply 80-90% of all imports • Slabs Polish AM shipped 275,000tpy in 2007 vs 0 in 2006. If necessary Polish mill can increase slab shipments

  9. Slovakia Mills: US Steel Kosice (4.5m tpy) and Zeleziarne Podbrezova (0.35m tpy) No longs producers In 2007, 75% (275,000t) went to USS mill in Serbia • Rebar imports grew 22% to 144,000tpy. Major suppliers are Poland (41%) and Czech Republic (40%) • Major plate export destination was Turkey with 43% in 2007. In 2008 high prices in Europe can change the picture. • Ukraine is the major HRC and HRP supplier

  10. Metinvest ships billet to its Promet Turkey increased shipments by 59% to 174,000t in 2007 Bulgaria Mills:Kremikovtzi (2.5mtpy), Sidenor Stomana (1.2mtpy), Promet (reroller, 400,000tpy) • Rebar imports grew 42% to 385,000t in 2007 because of the stopped for modernization bar rolling mill at Stomana. This year situation will change, as 800,000tpy mill started production in early June • As Kremikovtzi are on sale now, it affects production and shipments will be lower this year

  11. US Steel Kosice slabs Ukraine and Bosnia were major suppliers Serbia Mills: US Steel Serbia(2.2mtpy) and new rebar reroller Metalfer (250,000tpy) • Rebar imports grew 46% to 162,000t in 2007 • In 2008, as Metalfer has started production, rebar imports is expected to dry up • Instead, billet imports will emerge (preliminary, from Ukraine, Romania)

  12. Current market situation and nearest outlook • Prices in Poland should get in line with regional to attract necessary import • Eastern European countries could start paying more attention to Middle East • Low prices in Bulgaria are the result of Kremikovtzi being on sale • Ukraine accession to WTO could bring changes to the picture Hot-rolled coils, EUR/t Rebars, EUR/t exw • Low rebar price in Poland increases its export potential in both rebar and billet • Further price increases should be expected as there’s almost no threat from imports • Ukraine could substitute Turkey in Romania, as it got certificates to supply rebar to the market

  13. Products Market & industry news, analysis, statistics, price database • - Raw materials (scrap, pig iron, DRI / HBI, iron ore, coal, coke, ferro-alloys) • Steel Semis (slab, billet, pipe billet) • Finished steel products (flats, longs, pipes) • Freight Regions • Turkey • CIS (Russia, Ukraine, Kazakhstan) • Europe: South Europe (Italy, Spain), Central Europe (Poland, Romania, Czech, Slovakia), Balkans (Bulgaria, Serbia, Albania, Bosnia) • MiddleEast (Iran, UAE, Syria, Saudi Arabia, Jordan) & North Africa (Egypt, Algeria) • India • US • China • SoutheastAsia (Taiwan, Thailand, Vietnam, Philippines, Singapore)

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