Steel plate consumption in the energy sector: … can it be increased? Michael Setterdahl

Steel is a basic ingredient in allowing goods to be moved How could TRADE work without movement? -cars, busses, trucks, trains, vessels, transmission towers, pipelines --- All made from steel. Indeed we can’t even make steel without moving its ingredients around in pulverized coal pipe lines, ocean vessels, conveyor belts..

I am optimistic The future contains increases in movement because of world growth which means DIRECTLY increased usage of steel. - just look at the populations that are located in areas that have less than 250kg/capita steel consumption! - new investments in steel capacity look to fall

Conveyance of energy Whether in pipes or in sea borne vessels it consumes steel. In less than one year we in the steel industry have faced a changed scenario. - more energy + lower prices which has radically changed the ‘economic’ picture for those in charge of long term investments

Less investments= less conveyance = less steel There are two ways to look at this. Positive: less investments in added steel plate capacity can mean better utilization at existing. Negative if overall investments shrink, i.e. globally

Negative 1/ logistic costs of moving energy has decreased, but the percentage of the delivered total cost that is from logistics is increasing. 2/ over-supply of in-efficient vessels has created a depressed maritime market plus less demand for new vessels. 3/ the supply of money into both types of conveyance is drying up…. risky business.

What could be “new drivers” for investments ? New pipelines from old sources to new markets. New pipelines from old sources to old markets ( infrastructure renewal and fracking) New pipelines from new sources to new markets ( investments for future generations) Old vessels being scrapped in favour of new more efficient ones. pro-active environmental investments.

other changes…. United Nations, EU, USA, etc. - all are supporting things such as MarPol, anti-beach scrapping, emission controls, etc. These are all business opportunities and the pace of these changes will increase and will ultimately lead to new destinations for steel plate.

Lastly: China vs R.O.U. China has indeed taken over the shipbuilding plate supply and even the most environmental friendly new buildings are being built in China But, the Chinese shipyards sit on prime real- estate ( maybe 800 of them!) Many of them will close over the next 10 years. The biggest shipyard is not in China, Hyundai.