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Agenda
• Economic Overview- Global- Asia/Pacific (APAC)- Europe /Middle East/Africa (EMEA)- North America/South America
• Critical Economic Indicators
• Regional Foundry Projections
May 17 2017 SFSA Spring Meeting Global Overview
Projected GDP Growth – Global/Region (Source: IMF Jan 2017)
3.2
3.1
3.4
3.6
6.7
6.3
6.4
6.3
2.0
1.7
1.61.6
2.6
1.6
2.32.5
0
1
2
3
4
5
6
7
8
15 16 17 18 15 16 17 18 15 16 17 18 15 16 17 18
GLOBAL APAC (WO/Japan) Europe Dev North America
WORLD ECONOMIC OUTLOOK %- Source: IMF
3.7
2.9
3.2
3.2
-3.8 -3.50.2
1.2
2.3
3.5
2.93.2
-3.7 -0.6
1.1 1.2
0
1
2
3
4
5
6
7
8
15 16 17 18 15 16 17 18 15 16 17 18 15 16 17 18
Europe New Brazil MEA Russia
WORLD ECONOMIC OUTLOOK %_ SOURCE: IMF
Projected GDP Growth – Perspective (Source: IMF Jan 2017)
May 17 2017 SFSA Spring Meeting Global Overview
May 17 2017 SFSA Spring Meeting Global Overview
Economic activity slowed in 2016 but expected to increase 2017 – 2018
Increased expectations for developed nations (US, Germany, France, ..etc)
Large factors in this upward projection are expectations of fiscal stimulus within the United States, probable overflows outside the U.S. and policy stimulus within China.
Slightly lower expectations for Emerging Markets and Developing Nations due to stress of current financial conditions
A noted negative risk factor to global activity if “inward looking platforms”, “protectionism” and sharper than expected tightening of global financial conditions
A noted potential positive factor is mentioned if stimulus is larger than expected (US)
• APAC continues to grow at a significant rate and primarily driven by China and India. However, growth in these 2 countries will have an impact on others in the APAC Region. Auto manufacture in particular will be increasing in China / India but volume reductions in S. Korea / Japan.
• EMEA the recovery of Automotive production is most significant as it is primary economic driver of EU . Initial boost from BREXIT move in UK is additive to the region. If NA economy over delivers on forecast there is hope of over flow into the EU.
• Americas is a “mixed bag” but overall positive. Brazil still facing significant challenges but have made significant progress in righting their economy. Reduced NAFTA implosion concerns but actual impact yet to be identified. Question remains of what level of economic success will be realized ‘17 –’18 ?
Significant Points
Critical Foundry Market Segments
AUTO / Light Truck AGR / Construction Mining/Hvy. Const Aerospace
Heavy Truck (C5-8) Energy Railroad Military
Automotive Light Vehicle - Americas Source: OICA
29109373192998 3387522 3457204 3600000 3750000
10815629 11371386 11784050 11930041 11727230 11727230
4316320 3605042 2911966 2608755 2728150 2806920
20412847 20551644 20352534 20353846 20415380 20644150
0
5000000
10000000
15000000
20000000
25000000
2013 2014 2015 2016 2017P 2018P
America's LV Production - Source HIS Automotive
Can Mex US SA TOTAL
AGRICULTURE / CONSTRUCTION EQUIPMENT –
1.) The excess crop yields are keeping prices low but have stabilized over last quarters 2.) However volumes are expected to maintain at current rates3.) Expected upside for construction equipment depending on the size of infrastructure spend $4.) Concerns about foreign markets due to strength of currency5.) Significant recovery of Ag Equipment not expected until 2019.6.) Mix equates to stable demand for ‘17 & ‘18 .
Source: Nasdaq
CONSTRUCTION EQUIPMENT –
CONSTRUCTION EQUIPMENT DEMAND GLOBAL
$72 B
$89 B
Source: Off Highway Research 8/25/16
ENERGY SOURCES (Oil, Nat Gas, Coal) - Source: Nasdaq
COAL
10485141002948889185 924442 917731
798115729457
0
200000
400000
600000
800000
1000000
1200000
2010 2011 2012 2013 2014 2015 2016
US COAL Production - US Tons -Source: EIA
Rest of WorldAsia PacificEurope & EurasiaNorth America
350 BCM
100 BCM
100 BCM
75 BCM
75 BCM
ENERGY SOURCES (Oil, Nat Gas, Coal) - Source: Nasdaq
COAL
1.) Global Oil capacity exceeds Global demand. $100 Oil will not return barring a cataclysmic event 2.) North American ‘frack” producers continue to innovate to lower costs and improve efficiency3.) OPEC nations utilizing the “valve” as their form of innovation.4.) Longer term threats from electric vehicles fuel efficient vehicles5.) Shorter term looks positive for Americas production
Heavy Truck – Class 8 Source: OICA
195923182922
289316
321938
268096
211000
265000
0
50000
100000
150000
200000
250000
300000
350000
2012 2013 2014 2015 2016 2017P 2018P
Class 8 Production US- Source: OICA
Significant Inventory will dampen 2017 Production
Increased Military Spendingwill have a positive impacton this segment
Rail Car Deliveries Source: Progressive Railroading 12/16
85000
56669
45200 4200047800
54600
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
2015 2016 2017 2018 2019 2020
Rail Car Deliveries
~ 350,000 Cars in Storage
Aerospace products & partsElectronic computer equipment
AcceleratingGrowth
DeceleratingGrowth
AcceleratingDecline
DeceleratingDecline
+
-
Metalworking machineryFabricated metal productsConstruction machinerySemiconductorsElectric lighting equipment
Communications equipment
Motor vehicles and partsIndustrial machineryNavigational, measuring, electromedical, &control instruments
Household appliancesMedical equipment & supplies
Electrical equipmentBasic chemicalsPublic works constructionMaterial handling equipment
Ventilation, heating, air conditioning, & commercial refrigeration equipment
Pharmaceuticals & medicinesAlumina & aluminum
Oil & gas well drillingMining and oil and gas field machinery
Iron & steel productsEngine, turbine, & power transmission equipment
Paper
Private nonresidential constructionHousing starts
Figure 1 – Industrial Sector by Phase of Cycle, February 2016
Industrial Phase Cycle – Source: MAPI Foundation
Source(s): MAPI Foundation
May 17 2017 SFSA Spring Meeting Global Overview
• Market Segments that have “bottomed out” and could be additive to NA volume: Mining Equipment – Agriculture Equipment - Energy Generation
• Market Segments that project continued downward volume and could be negative to NA volume: Class 5 -8 Trucks – Railroad Car Builds
• Market Segment that expect to stay near recent production levels and be neutral to NA volume: Automotive & Light Vehicles
Significant Points For 2017
May 17 2017 SFSA Spring Meeting Global Overview
Casting Production Actual/Projection - Global/Region – MT
May 17 2017 SFSA Spring Meeting Global OverviewMay 17 2017 SFSA Spring Meeting Global Overview
46,739
25,576
16,053
10,888
3,988
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
GI DI AL STEEL NF
METAL EVOLUTION 2005 - 2015
2005 Global 2010 Global 2015 Global
SIGNIFICANT CHANGE
AUTOMOTIVE ENGINES
5,817
4,310 2,728
2,158 1,118
9,610
5,047 4,427
2,314 681
31,311
16,219
8,898
6,416
2,187
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
GI DI ALUM STEEL NF
2015 MT METAL BY REGION
AMERICAS EMEA APAC
Global Tonnage /Region – Metric Tons
May 17 2017 SFSA Spring Meeting Global OverviewMay 17 2017 SFSA Spring Meeting Global Overview
90.198.5 100.8 103.2 104.4 104.1 105.4 109.0 112.0 117.0 121.1
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2010 2011 2012 2013 2014 2015 2016P 2017P 2018P 2019P 2020P
Global Tonnage - 2015 Census Modern Castings
AMERICAS EMEA APAC TOTAL
APAC Market Segment Expectations 2016 thru 2018
End Markets Current TrendsCyclicality
Heavy Truck Class 3 thru 8
Mining Heavy Equipment
CarsLight Trucks
Energy GenerationOil – NG - ALT
Agriculture&
Construction
High
High
High
Medium
Low
Medium
• China Auto production running strong• India Auto increase could be 10%• Significant energy being invested in electric vehicle technology• Increased production in C/I will result in lower production J/K
+2 %
+3%
+3%
+2%
• Mining industry has been the epi-center of over build* Mining cycle is similar around the world. Point of difference is China continues to use significant amounts of coal for power generation
• Growth in 2017 to be close to 5% but 2017 -2018 to be -8%. • Changes to the Chinese economic focus more related to
construction and driving demand for large trucks
• The impetus of environmental programmes has accelerated the Chinese Wind Energy business both domestially and for expot.
• Coal production important part of power grid.
• Steady production and increase in railway track• Over $200 Bn investment in HSR• Smaller but substancial HSR in Japan and India
• Agriculture sector is producing crops at a high rate for domestic consumption and export.
• Construction Equipment segment is surging due to focus in China for population housing and Inidai for industrial development
Growth Trend
+3%
RailroadCars
May 17 2017 SFSA Spring Meeting Global Overview
Aerospace&
Other +2% Medium• China striving to build passenger airliners through COMAC .• To date projects have been in extended delays to deadlines .• Currently engaged in possible JV with Russia to build Regional jets.
-4 %
EMEA Market Segment Expectations 2016 thru 2018
End Markets Current TrendsCyclicality
Heavy Truck Class 3 thru 8
Mining Heavy Equipment
CarsLight Trucks
Energy GenerationOil – NG - ALT
Agriculture&
Construction
High
High
High
Medium
Low
Medium
• European Auto Production continues strong recovery • High expectations for domestic and export volumes
+3 %
+3%
+3%
+3%
• Heavy Equipment segment continues decline but slower pace* Some expectation of turn upward going into 2018
• Expectations of continued demand based on freight movement within the EU as economies pick up.momentum
• Continued growth of Wnd Energy power generation. • Coal fired and Nuclear replacement technology
• Steady production and increase in railway track• Recognition of the use of rail for trade and personal transport.• Modernization and integration of European lines element of growth• Export possibilities with growth of market in South Africa
• Slow but consistent volume • Additional projects on the docket but require available funding
Growth Trend
1%
RailroadCars
May 17 2017 SFSA Spring Meeting Global Overview
Aerospace&
Other +1% Medium
• Modest Growth anticipated as significant fleet build up over the last 10 years• The reality impact of available financing is becoming evident as nations are
having difficulty paying for these planes.• Lastly the future entrance of COMAC will have a dampening effect eventually
-2 %
S America Market Segment Expectations 2016 thru 2018
End Markets Current TrendsCyclicality
Heavy Truck Class 3 thru 8
Mining Heavy Equipment
CarsLight Trucks
Energy GenerationOil – NG - ALT
Agriculture&
Construction
High
High
High
Medium
Low
Medium
• Brazil has been working hard to come back from devastating economic situation• The situation has stabilized and production is reurning to a more normal state• The increase is important but also based off lower than normal numbers
+29 %
+7%
+8%
+5%
• As global demand increases so does Mining in Brazil• Stability of the currency and import/export policies are having a positive impact
• During the worst of the economic difficulties production of vehicles was sharply curtailed• Materials previously difficult to afford or obtain are now available
• Backlog of Wind Energy components demand is now being produced
• Current Rail Car fleet is an average of 30 yrs old• Considerable investment is focused onincreasing the railroad footprint in Brazil
• Investments in both sectors has been miniscule over the last 4 years• Expectations that the economic recovery will drive need for additional Construction /
Farm equipment
Growth Trend
+5%
RailroadCars
May 17 2017 SFSA Spring Meeting Global Overview
Aerospace&
Other +4% Medium• Embraer is a global supplier of aircraft and continues to participate in the small /
private jest marlket. .• Orders have been steady and competitive with Bombardier of Canada
+8%
NA Market Segment Expectations 2016 thru 2018
End Markets Current TrendsCyclicality
Heavy Truck Class 3 thru 8
Mining Heavy Equipment
CarsLight Trucks
Energy GenerationOil – NG - ALT
Agriculture&
Construction
High
High
High
Medium
Low
Medium
• Only 1 year removed from a production record sales continue to relatively stable• Existing fleet remains just below record high for age of vehicles• Demand for Light vehicles remains strong
0%
• Mining industry oks as though it has bottomed out• Increased industrial production would have impact on commodity pricing and demand• Still do not significant upward movement until 2019
• Significant drop in expected orders for 2017 but improvement in 2018 • Plus side is that Oil tanker new regulations are helping to side step inventory issue• 350k cars on the sidelines due to lreduced freight activity.
• The decline oif the industry has appeared to hit bottom.• Efforts to compete at lower oil pricing is bearing fruit• If increased economic activity develops isegment could become a positive vs 2016.
• New customer segments helping to mute decline (Chemicals Ind – Plastic pellets)• Needs improvemnt from the energy sector to change dynamic• Plus side is that Oil tanker new regulations are helping to side step inventory issue• 350k cars on the sidelines due to lreduced freight activity.
• Agriculture sector has appeared to bottom out and pricing stable• Construction Equipment has upside with current environment• Additional stimulus would accelerate the demand for the CE segment.
Growth Trend
+3%
RailroadCars
May 17 2017 SFSA Spring Meeting Global Overview
Aerospace&
Other +2% Medium• Significant orders on the books for Boeing and Bombardier• Increased Military spending will be additive to the mix• Storm clouds on the near horizon is financial challenges of many of the customers
-2 %
-5 %
0%
-10%
South America Almir Gozzi – Managing Director SA
• Significant improvement in Economy• Concerns as new President & others
under investigation could reverse gains• Due to recent difficulties no
investments in the foundries.• Survival mode has negated any
technology improvements to date• Steel Foundries ~ 9% of all tonnage but
several have closed. Increased demand would generate a capacity issue
EMEAAris Chatziparaskevas Managing Director APAC
• Steel and Iron still drive the APAC foundry production.
• Aluminum remains at a lower level • Electric vehicles will have a negative
impact on tonnage 2017 – 2022• 3D Printing is a significant program
throughout APAC• Demand for cleaner foundry systems
is driving Inorganic implementation and decline of organics such as Furan
• Government plans for infrastructure investments in China SE Asia and India will continue drive production
Significant Foundry Market Trends - Regionally
North America Joe Muniza – Commercial Director - Americas
• 3D Printing continues to gain acceptance. Utilized primarily for prototyping but some serial production
• Inorganic binders continue to grow for Aluminum production. Solutions for application for Iron / Steel being developed.
• Significant investment being applied for use of robotics throughout the industry.
EMEAJörg Brotzki - MD EMEA / Katharina Schutze –M/C
• Reduction of weight through design • Transition to Aluminum, especially
auto, replacing Iron castings. Over capacity of Iron – consolidation
• Increased applications of Steel and HP Die Casting
• Work continues on developing more environmentally friendly Organic systems where Inorganic fails.
• Significant efforts being put into Innovations across foundry process.
• Volume transfer back from Asia due to quality issues and supply reliability.
Significant Foundry Market Trends - Regionally
Thank You !
• Ryan Moore – Steel Founders’ Society of America• Katharina Schütze – ASK Chemicals Hilden GmbH• Charlie Hoertz – ASK Chemicals Dublin OH• Joe Muniza – ASK Chemicals - Americas• Almir Gozzi – ASK Chemicals - South America• Aris Chatziparaskevas – ASK Chemicals APAC• Jörg Brotzki – ASK Chemicals – EMEA• Luiz Totti – ASK Chemicals - Americas
May 17 2017 SFSA Spring Meeting Global Overview
May 17 2017 SFSA Spring Meeting Global Overview