ThyssenKrupp Steel Prof. Dr.-Ing. Dieter Ameling Senior Counselor ThyssenKrupp Steel former President German Steel Federation former Chairman Steel Institute

ThyssenKrupp Steel

Prof. Dr.-Ing. Dieter AmelingSenior Counselor ThyssenKrupp Steel

former President German Steel Federationformer Chairman Steel Institute VDEh

European Steel in a Globalized MarketEuropean Steel in a Globalized Market

ABM’s 63rd Annual Congress

July 28 – August 1, 2008Santos – SP - Brazil

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Steel in a globalized environment

Raw materials – short and expensive

European steel industry – sustainable, innovative and competitive

Steel and the energy and climate policy of the EU

EUROFER‘s proposal to reduce the steel industries CO2-emissions worldwide

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Stahl-Zentrum

Explosion of World Crude Steel Production and Continuous CastingExplosion of World Crude Steel Production and Continuous Casting

11.07.2008

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Stahl-Zentrum 11.07.2008

The European Union – 27 Member StatesThe European Union – 27 Member States

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The Ranking of Gross Domestic Product (GDP) by Actual Prices 2006The Ranking of Gross Domestic Product (GDP) by Actual Prices 2006

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11.07.2008

EU 27: No. 2 in World Crude Steel ProductionEU 27: No. 2 in World Crude Steel Production

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The Top 10 Steel Producers in the EU 27, 2007The Top 10 Steel Producers in the EU 27, 2007

11.07.2008

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Stahl-Zentrum, 11.07.2008

World Trade in SteelWorld Trade in Steel

Excludes internal trade within the EU 25 Source: ISSB

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Stahl-Zentrum, 11.07.2008Source: ISSB

Main Regional Steel Trade Flows (2007)Main Regional Steel Trade Flows (2007)

China No. 1 Steel ExporterEU 27 No. 1 Steel Importer

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China: Imports and Exports

China: Imports and Exports

Steel Mill Products

up to May 2008and forecast 2008

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Total export volume : 68,3 Mill. t

Asia total: 52,7 %

EU 27: Chinas Export Target No. 1 outside Asia in 2007EU 27: Chinas Export Target No. 1 outside Asia in 2007

Source: Trade Statistic German Steel Federation

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178

1.753

750

0

500

1.000

1.500

2.000

2005 2006 2007

Actual Antidumping Complaints of EUROFERNo. 1 against EU 27 hot dipped coated sheet imports from China

and No. 2 EU 27 stainless cold rolled sheet imports from China, Korea, TaiwanNo. 3 EU 27 wire rod imports from China and Turkey

Source: official EU trade statistic (Eurostat) with own calculations

Str 28Mrch08

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Fiscal development aid

Preferential Loans

and Direct Credit

Governmental regulation

of production andexternal trade

Support of

individual companies

Free or cheapened

electric power supply

Land grantsGovernmental support of

developments

of raw material sources

Disregarding of environmental

and occupational safety standards

Subsidized

freight rates

The Influence of the Chinese Government on the IndustryThe Influence of the Chinese Government on the Industry

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Blast Furnace in ChinaBlast Furnace in China

Source: GEO 11/2007

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Stahl-Zentrum 11.07.2008Source: GEO 11/2007

Coking Plant in ChinaCoking Plant in China

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11.07.2008

Price Development of Iron Ore and CoalPrice Development of Iron Ore and Coal

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11.07.2008

Overseas Iron Ore Exportsof the 10 Largest Exporting Companies in 2006

Overseas Iron Ore Exportsof the 10 Largest Exporting Companies in 2006

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a. Worldwide turnover of all joining companies with more than 5 Billion EUR and

Rio Tinto: 22 Billion $ (2006), BHP: 39 Billion $ (2007)

b. turnover in the EU of at least two joining companies withmore than 250 Million EUR each and

Rio Tinto: 3,9 Billion $ (2006), BHP: 11 Billion $ (2007)

c. the joining companies shouldn‘t have a share of more than 2/3 of their turnover within the same member state. ()

We require an intervention of Brussels to stop the mergerof BHP and Rio Tinto!

Conditions for the Application of the EC Merger RegulationConditions for the Application of the EC Merger Regulation

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11.07.2008

Prices for Hot Metal, DRI and Scrap again on a Record HighPrices for Hot Metal, DRI and Scrap again on a Record High

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Indicators ofSustainable

Steel

Indicators ofSustainable

Steel

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Reducing Agents Consumption of Blast Furnacesin the World, 2006

Reducing Agents Consumption of Blast Furnacesin the World, 2006

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Energy Efficiencyand

CO2-Emissionsof the

German Steel Industry

Energy Efficiencyand

CO2-Emissionsof the

German Steel Industry

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Innovations for the FutureInnovations for the Future

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Climate Change – Steel is the best ChoiceSteel – driver of innovations to increase efficiency of resources


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The plan calls for a:

„These targets are very ambitious: today 8.5% of energy is renewable. To achieve a 20% share by 2020 will require major efforts across all sectors of the economy and by all Member States.“

2005 is the new basis for all calculations within the framework of this package.

20% increase in energy efficiency20% reduction in greenhouse gas (GHG) emissions20% share of renewables in overall EU energy consumption by 202010% biofuel component in vehicle fuel by 2020

Renewable Energy and Climate Change Packageof the European Commission of 23.01.08:

Renewable Energy and Climate Change Packageof the European Commission of 23.01.08:

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11.07.2008

GHG Target:

-20% compared to 1990

-14% compared to 2005

EU ETS-21% compared

to 2005

Non ETS sectors -10% compared to 2005

27 Member State targets, stretching from -20% to +20%

Source: European Commission, DG Environment

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The Energy and Climate Package drastically Reducesthe Crude Steel Production within the EU

1. -21 % CO2 reduction from 2005 to 2020

2. Specific CO2-emissions could decrease from 1.7 to 1.56 t CO2/t steel

3. Compared to expected steel production in 2020 of 236 Mt this would only allow a reduced steel production of 168.3 Mt

= -67.7 Mt = -28.7 % Steel

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For the energy-intensive industries sufficient allowances are indispensable to prevent relocation to outside Europe:

1. The needed certificates have to be allocated free of charge. The foreseen auctioning would lead to a massive loss in international competitiveness.

2. A general sectoral CO2 reduction target of 21 % cannot be fulfilled by the steel industry. The energy-intensive industries are characterised by process related emissions. Today, they are working at the

minimum level.

3. Further electricity price increases through auctioning obligation for power producers cannot be borne in the international competition.

4. Industry needs investment certainty. Clear decisions must be made. Otherwise investments would be stopped, which would result in a lack of competitiveness as well.

The Energy and Climate Package of the European Commissionof 23.01.08 Drives the Industry Away

The Energy and Climate Package of the European Commissionof 23.01.08 Drives the Industry Away

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The Global Energy Related CO2 Emissions are further IncreasingThe Measures of EU 27 without any realistic Effect

The Global Energy Related CO2 Emissions are further IncreasingThe Measures of EU 27 without any realistic Effect

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CO2 Emissions Trading in the European Union –Does it make Sense?

CO2 Emissions Trading in the European Union –Does it make Sense?

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Disadvantages of the Existing Emissions Trading SystemDisadvantages of the Existing Emissions Trading System

Absolute caps are equivalent to caps on production and lead to relocations to outside the EU.

The reduction targets are set „top down“ and are not consistent with technological reduction potentials.

Because the emissions trading directive does only refer to direct emissions the reduction potentials of the steel industry are not addressed adequately.

The pricing-in of allowances which were allocated free of charge as well as auctioning lead to inadequate increases of electricity prices.

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Main Characteristics of the Baseline and Credit SystemMain Characteristics of the Baseline and Credit System

An ETS tailor-made for the steel industry.

• Emissions are determined in an integrated way taking into consideration all stages of production. Inputs like coke or electricity or credits resulting from using by-products do also count.

• The average amount of European emissions serves as a basis for the allocation of allowances.

The scheme brings about continuous improvement in terms of efficiency: The average amount of European emissions serving as a reference for allocation, incentives for emission cuts are created what directly impacts on the average emissions amount ("moving target").

Ex-post-allocation taking account of the production quantity instead of absolute emissions ceilings.

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Facts about the Emissions Trading System for SteelFacts about the Emissions Trading System for Steel

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Advantages of the Baseline and Credit SystemAdvantages of the Baseline and Credit System

Existing technological reduction potentials, but also the limits concerning process emissions are regarded.

The system results in continuing efficiency improvements because the orientation to the emission average gives incentives to reduce emissions. This influences the emission baseline („moving target“).

Production growth is not constrained. The baseline and credit emissions trading system targets only at efficiency.

No incentives for relocations of production to outside the EU.

The system is more attractive for states outside the EU and their steel industry.

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European Steel in a Globalized MarketSummary

European Steel in a Globalized MarketSummary

The world steel production continuous to grow.

EU 27: No. 2 in world crude steel production

China became the No. 1 steel exporter in 2007.

Raw materials remain short and expensive.


The Energy and climate package of the European Commission of 23.01.08 drives the industry out of Europe.

The only solution is a sectoral approach.

Documents

ThyssenKrupp Steel Prof. Dr.-Ing. Dieter Ameling Senior Counselor ThyssenKrupp Steel former President German Steel Federation former Chairman Steel Institute