Specialist
C-Level Director, Spain at Tata Steel Ltd
Agenda
- Automotive exposure across flat steel producers
- Demand outlook including longer term trends in automotive lightweighting and electric vehicles (EV)
- Supply reductions in European flat steel
- US tariff impacts on Turkish and Chinese exports to Europe
Questions
1.
How have you observed the relative demand and supply tonnage for flat steel change over the last 6-12 months, and what is your outlook there?
2.
Could you break down supply and demand dynamics between the plate and the sheet steel separately?
3.
How much demand is coming from automotive and what YoY decreases are you observing as a result of the WLTP legislation [worldwide harmonised light vehicle test procedure] and lightweighting for sheet tonnage? Has that fully fed through or are you expecting further tonnage decreases?
4.
To what extent might you be able to mitigate the 5% reduction in Spain simply by increasing the penetration of the high-quality steel?
5.
What percentage of flat steel or sheet steel currently demanded by consumers in Europe can only be supplied by European mills?
6.
What YoY growth rate in percentage points are you noticing for steel that can only be provided by European players?
7.
What percentage tonnage of high-grade steel would new car launches have compared to percentage tonnage of high-grade steel in the previous model?
8.
Which European players have the most concentration in this higher-grade steel that other players can’t produce?
9.
What is the risk of Turkish and Chinese importers developing this speciality technology?
10.
What EBITDA margin would you get on higher-quality steels used for new cars compared to the commodity-based steel?
11.
What proportion of ArcelorMittal’s total sales would you expect to be in these higher grades?
12.
How long do you think the steel players can continue to keep margins supported by developing new products?
13.
You mentioned the WLTP impact causing a 5% drop in tonnage in Spain, but 15% in other regions. Why is there so much variation?
14.
How much spare capacity are you observing in Europe, and what tonnage reductions are there in capacity, specifically again in the sheet steel?
15.
What is the total cash cost of servicing Europe for a domestic European player vs a Turkish player or vs a Chinese player?
16.
Considering the total cost, including the cost of production, how much more cost-effective is it for the Turkish players to serve Europe than European players?
17.
At what point would you imagine the scrap and the blast furnace might reach parity in cost?
18.
What happens to Turkish imports to the EU when the cost of producing steel through scrap increases relative to blast furnace? Do you expect significant reductions?
19.
When do you think that discounted scrap from yesterday might feed through into the European market, and what impacts would you expect on pricing for other European players?
20.
What is the tonnage of Turkish imports? Is it around six million tonnes?
21.
What are the knock-on effects and which countries do you think will come to fill in the gap left by Turkey in Europe? Will India ramp up?
22.
What potential do you think Russia, Ukraine, Taiwan and Serbia – which are also listed as top 10 countries of imports to Europe – have to ramp up imports?
23.
The massive iron ore price spikes has led to quite steep declines in the last couple of weeks. At what point do you think that price spike feeds through to the steel prices, and when do you expect that impending drop in steel prices to feed through to that final product price?
24.
Given the imminent slight short-term margin expansion as a result of this steep drop in iron ore, what delay do you think there will be before companies have to start aligning prices more with the USD 80-90 price point on the iron ore?
25.
Do you think there are many players that managed to get through that price increase on the steel price when the iron ore went up to USD 120, or do you think there are any significant volumes that managed to increase that pricing that could be at risk of unwinding?
26.
How would you assess inventory levels for flat steel at customers, and when will you expect restocking to come in?
27.
We outlined the restocking element that could put upward pressure on the pricing. How difficult do you think it will be to have those conversations on pricing when the iron ore price is so subdued compared to a couple of months ago?
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