Steel: faced with global overcapacity APRIL 2016
METALS INDUSTRIES, the world’s riskiest sector
OVER-CAPACITIES REMAIN CHINESE EXPORTS INCREASE IMBALANCE SUPPLY/DEMAND
SOLVENCY OF SECTOR IS THREATENED
CHINA: STRUCTURAL CHANGES
China in 2014 of global steel consumption
Decline of industry, move towards services
production lines 33.8% of stopped
Softening demand
Renewed growth: steel exports
China’s price competitiveness weakens businesses worldwide, including Europe
45%
-2.2%
-2.5% (f)
2015
+20% in 2015
2016
In February 2016, the government announced a first reduction in production capacity
World production in 2015
-1.8%
The sector is one of the least profitable th sectors
Only India
+3.5%
90 /94
Increase in corporate debt of the equity in China
Exp orts
50.7%
Con sum ptio n
Metals assessed «very high risk» in Western Europe, emerging Asia, Middle East and Latin America
The world market is flooded
OUTLOOK: RETURN TO NORMAL FOR 2018
Emerging economies: Less dynamic but growth continues
Increased demand
Improved growth of the
3 main steel-consuming sectors
Recovery in global growth
78% of world demand 52% Construction
14% Mechanical
12%
Automotive
High potential for urbanisation in India, Sub-Saharan Africa and emerging Asia
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Rebalancing of supply / demand but credit risks
Many growth drivers: - Emerging: increasing industrialisation - Advanced: improvement of the productive apparatus
Significant opportunity for progress in emerging countries India: 100 cars / 1000 inhabitants USA: 808 cars / 1000 inhabitants
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Cyclical industry
Pressure on supply
Slowdown in global growth Overcapacites