DERICHEBOURG - Universal registration document 2019-2020
1
CSR report (serving as statement of extra-financial performance) Overview of businesses and business model
The share of steel fromelectricmills in other countriesis detailedin the followinggraph:
In million tons
1,200
1,000
China
800
Production from recycling
600
400
200
Other
India
Japan
USA
Russia
South Korea
Germany
Brazil
Turkey
Italy
Iran
Taïwan
Ukraine
Mexico
Canada
France
Spain
Poland
0
5.8%
38.1%
56.2%
33.6%
53.6%
31.8%
45.1%
10.4%
30.4%
39.4%
67.8%
30.0%
24.5%
69.7%
22.2%
68.8%
77.2%
90.4%
81.9%
Country in which the Group delivered ferrous scrap metals in 2019/2020
Source:Worldsteel Association.
Steel and ferrous scrapmetal trade flows p The ferrous scrap metal market is also sensitive to international steel and ferrous scrapmetal trade flows. The intensity of Chinese steel exports significantly influences the European steel market and consequently its need for ferrous scrap metal. Starting in mid-2016,China has sharply reduced its steel exports to Europe due to its strong domestic demand, which has allowed European and Turkish steelmakers to improve their production and sales in their local market. The Group's European customers, and indirectly the Group, benefited from this situation from mid-2016 to end-2018.Since then, exportsof Turkishsteel to Europehave increased sharply, becauseof the weak Turkishdomesticmarket as a result of the economic crisis affecting the country. These exports compete with European steelmakers,and, therefore, the Group's main customers by volume. Turkey is the world’s largest importer of ferrous scrap metal. It produces34 MT of steel, 68%of which comes from electricmills, with insufficient local raw materials, and imports about 19 MT/year of
ferrous scrap metal (19% of the global trade). Unlike domestic markets, where price negotiationswith steel mills occur monthly, the Turkish market buys ships on the spot market (up to 40,000 t). This means that changes in Turkish prices have an effect on the supply regions of the United States and Europe, which have a surplus of ferrous scrap metals. The economic situation in Turkey is also a factor that influencesthe ferrous scrapmetal market. In recent decades, globalizationand the liberalizationof international trade resulted in the virtual disappearance of customs tariffs. Consequently, it was marginal demand that influenced world prices. Since the spring of 2018, the situation has changed, with the introductionof customs tariffs by the United States on the majority of steel imports. The ferrous scrap metal recycling market is perceived as relatively volatile, insomuch as price and volume trends often compound: increased ferrous scrap metal demand by steelmakers will result in scarcity of the additional tons sought and put upward pressure on prices. If demandfalls, the oppositehappens.
DERICHEBOURG p 2019/2020 Universal Registration Document 17
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