Mill Rolls Industry Research 080701 - Boston Strategies...

Mill Rolls Industry Research ReportIndustry Research Report

May 2008

www bostonstrategies com

© Boston Strategies International, Inc

www.bostonstrategies.com(1) (781) 250‐8150

This report has been prepared by Boston Strategies International at the request of CLIENT for the purpose of establishing its operating strategies. It may not be appropriate for other purposes or audiences. This report contains forward-looking statements andprojections with respect to anticipated future performance of CLIENT, suppliers, customers, and/or general or specific economic conditions and factors that are based on Boston Strategies International’s analysis of market trends and external data. Forward-lookingstatements and projections are not guarantees of future performance and involve significant business, economic and competitive risks, contingencies and uncertainties, which are difficult to predict. Accordingly, these projections and forward-looking statements may

not be realized and actual results may vary up or down. This report may not be reproduced or distributed without express written approval from Boston Strategies International.

Contents

• Highlights• Demand

T S li• Top Suppliers


HighlightsHighlights


Mill roll suppliers had record sales in 2007

• The major suppliers posted strong sale increases in 2007: • Sinosteel Xingtai Machinery& Mill Roll Co., up 35%

Ak 20%• Akers, up 20%• ESW, up 21%• Aços Villares up 20%

• The top five suppliers for mill rolls continue to account for over 50% of• The top five suppliers for mill rolls continue to account for over 50% of the market.

• Akers remains the leader with an estimated 15% market share.• Sinosteel Xingtai Machinery replaced Union Electric/Davy as #2.g y p y• Backlogs are high in the industry – 2-3 years.

Top Suppliers and Market SharesMill RollRank Name Mill Roll

Market Share

1 AKERS National Roll Co. 15%2 Sinosteel Xingtai Machinery& Mill Roll Co., Ltd 11%3 Union Electric Steel / Davy Roll Company 10%4 Sidenor / Acos Villares SA 8%


4 Sidenor / Acos Villares SA 8%5 WHEMCO 7%

DemandDemand


Steel production will increase, but at a slower rate of growth

• Mill Roll demand is driven by the steel industry.• Global steel consumption is set to increase in 2008 and 2009, but the

rate of increase will decline from 8% in 2007 to 6% for 2008 2010 andrate of increase will decline from 8% in 2007 to 6% for 2008-2010, and 4% until 2014.

• Demand for steel would have stagnated if not for demand in China and emerging markets.g g

Iron & Steel Production

2.5

1.0

1.5

2.0

Billions ofMetric Tonnes

0.0

0.5

2007 2008 2009 2010 2011 2012 2013 2014


YearSource: Boston Logistics analysis of IISI data

Asian markets will continue to drive demand for steel

• Chinese steel consumption is expected to grow by 11.5% in 2008 and 10.0% in 2009, accounting for 35% and 37% of world total by in 2008 and 2009 respectively driven primarily by infrastructure projects in thisand 2009, respectively, driven primarily by infrastructure projects in this region.

• Actual steel production in the US is forecast to be flat from 2008-2010, primarily due to a slowdown in auto and construction.

Iron and Steel Production Index (Index, 1997=100))

9001,000

300400500600700800

Production Index

(1997=100))

0100200300

2008 2009 2010 2011 2012 2013 2014Years


Source: Boston Logistics analysis of Global Insight and IISI data

US China

Suppliers will nearly double investments in iron and steel production capacity in Asia by 2012

• In 2008, Asia comprises nearly three quarters of the total capital expenditures for the global Iron & Steel industry and will grow at nearly 20% during 2008 while North America does not grow at all20% during 2008 while North America does not grow at all.

• Chinese investment is over 40% of GDP and will remain at about that level for the next five years.

Iron and Steel Capital Investment Trend

500

600

700

200

300

400

500Iron & Steel

Capital Formation Index(Europe

2008 =100)

0

100

2008 2009 2010 2011 2012 2013 2014

Asia Latin & Central America North America Europe


Source: Boston Logistics analysis of Global Insight data

Demand for mill rolls continues strong

• For all types of rolls, Asia leads the demand for rolls, followed by Europe, CIS and the Americas.

• New mills coming out in China and India will keep demand for new rolls• New mills coming out in China and India will keep demand for new rolls high. Demand for mill rolls demand will increase at 12-15% per year through 2012.

• This represents an increase in demand from our previous forecast of 10-p p12% due primarily to higher forecasts for capital expenditures for the iron and steel industry

Demand for Mill Rolls Worldwide

$4,000

$5,000

$6,000

$7,000

Millions of US Dollars

Americas

CIS

$0

$1,000

$2,000

$3,000

2008 2009 2010 2011 2012 2013 2014

per Year Europe

Asia


Source: Boston Logistics analysis

Year

Asian demand for cast and forged rolls will triple by 2014

Demand for Cast Work Rolls Demand for Forged Work Rolls

800

1,000

1,200

1,400


Americas

Europe800

1,000

1,200

1,400

1,600


AmericasEurope

-

200

400

600

2008 2009 2010 2011 2012 2013 2014

US Dollars CIS

Asia

-

200

400

600

2008 2009 2010 2011 2012 2013 2014

US Dollars CISAsia


2008 2009 2010 2011 2012 2013 2014Year Year



As for work rolls, demand for backup rolls in Asia will drive the market

Demand for Backup Rolls

2,000

2,500

1,500

Millions of

AmericasEuropeCIS

500

1,000 US Dollars CISAsia

-2008 2009 2010 2011 2012 2013 2014

Year



Top SuppliersTop Suppliers


Top Mill Roll Suppliers

Rank Name Home Country Sales (2007)(000's $US)

Rolls as a % of Sales

2007 Mill Rolls

Revenues (M$US)

Mill Roll Market Share

Tons of Mil Roll

Capacity (000)

1 AKERS National Roll Co. Sweden, Slovenia 477,802 83% 398 15% 92

2 Sinosteel Xingtai Machinery& Mill Roll Co., Ltd China 330,000 90% 297 11% 140

3 Union Electric Steel / Davy Roll Company USA 277,000 100% 277 10% 55

4 Sidenor / Acos Villares SA Brazil, Spain 1,023,781 21% 215 8% 455 WHEMCO USA 330,625 60% 198 7% 65

6NKMZ - Novokramatorsky Mashinostroitelny Zavod Joint Stock Company

Ukraine 230,260 50% 115 4% 29

7 ESW Austria 98,109 100% 98 4% 24

8 Gontermann-Peipers Gmbh Germany 146,200 50% 73 3% 22

9 Sheffield Forgemasters UK 276,516 25% 69 3% 16

10 Nippon Steel & Sumikin Rolls Corp Japan 67,903 100% 68 2% 15

11 Bao Steel Hitachi Rolls Japan 57,143 100% 57 2% 1812 Smorgon Steel Australia 2,620,970 2% 52 2% 13

13 Heavy Engineering Corporation (HEC) India 50,500 100% 51 2% 15

14 Steinhoff GmbH & Cie OHG Germany 49 600 100% 50 2% 1514 Steinhoff GmbH & Cie. OHG Germany 49,600 100% 50 2% 15

15 Superior Forge and Steel USA 38,800 100% 39 1% 816 Xtek Inc USA 74,500 50% 37 1% 9

17 Gontermann-Peipers India Limited India 36,600 100% 37 1% 11

18 Tayo Rolls Limited India 39,122 72% 28 1% 11

19 U it d F d i / SARCO USA S Af i 27 965 100% 28 1% 9


19 United Foundries / SARCO USA + S. Africa 27,965 100% 28 1% 9

20 Others 547 20% 153Total 2,734 100% 763

Global Supply Chain EconomistsBoston Strategies International, a global supply chain economic research firm founded in 1998, helps executives make strategic supply chain decisions that involve investment and risk by providing industry research, commodity analysis, and supply chain consulting. The firm helps investors, policy makers, financial analysts, and operations decision-makers to establish competitive advantage and strategically valuable revenue growth through dynamic global supply chains. Our products and services include:• Industry Research that helps investors and policy makers identify emerging issues that affect their supply chains, and

quantify the impact that they will have• Cost and Price Analysis that helps financial and operational managers plan and budget by providing benchmark, best

practice, and forecast data tailored to their companies' supply chainsp p pp y• Supply Chain Consulting services that help supply chain leaders make high-stakes decisions related to mergers &

acquisitions, market entry, capital investments, outsourcing, off-shoring, and make-or-buy

Boston, MA, USA445 Washington St

Wellesley, MA 02482 USA

Dubai, UAEExecutive Suite

P.O. Box 121601Sharjah United Arab Emirates (U A E )

Shanghai, China31F Jin Mao Tower88 Shi Ji Avenue

Shanghai 200120 China


USA Sharjah, United Arab Emirates (U.A.E.) Shanghai 200120, China

Mill Rolls Industry Research 080701 - Boston Strategies...

Documents

Transcript of Mill Rolls Industry Research 080701 - Boston Strategies...