2016 Results 30 May 2017
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Industry overview
Global steel, iron ore and coal markets • Global steel production increased by 0.8% y-o-y in Global steel industry China construction investments vs HRC price 2016, while global steel consumption rose by 0.9% y-o-y Investments in new construction (RHS) million tonnes • Global steel prices hit multi-year lows in 1Q 2016, HRC, Domestic China, US$/t (LHS) although recovered later during the year, mainly 1,670 1,615 1,630 1,545 1,515 HRC, FOB Black Sea, US$/t (LHS) 1,501 driven by: o 600 25% monetary stimulus measures introduced by China, which resulted in increased domestic 20% 500 infrastructure spending 15% o limited exports of Chinese steel products 400 following anti-dumping duties imposed 10% against them worldwide 2014 2015 2016 300 5% o restructuring of the Chinese steel industry 1 Crude steel production Rolled steel consumption aimed at increasing its efficiency by cutting 200 0% excess capacity Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Source: World Steel Association, Metinvest estimates 1. Apparent consumption of finished steel products o higher prices of raw materials, namely Source: Metal Expert, Bloomberg coking coal and iron ore Hard coking coal price 3 Iron ore price vs steel production in China • HRC FOB Black Sea generally followed the global steel price trend and increased by 12% y-o-y to an US$/t China crude steel production, MT (RHS) average of US$387/t in 2016 300 2 Iron ore price, US$/t (LHS) Quarterly contract Daily spot index 150 80 • Iron ore prices recovered from US$40/t in December 2015 to US$80/t in December 2016, 240 120 driven by stronger global demand, higher prices of coking coal and steel products, and delays in the 180 90 65 launch of new capacity • Hard coking coal spot price jumped from US$77/t 120 60 in December 2015 to US$267/t in December 2016, mainly due to supply restrictions implemented by 60 30 50 the Chinese government and increased demand Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 from steel producers Source: Bloomberg Source: Metal Bulletin, Bloomberg 2. 62% Fe iron ore fines CFR China 3. FOB Australia 4
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