Takeaways and Insights - 34th IFA Conference Lisbon 2018

Between the 11th - 13th of November, the Metalshub team was in Lisbon for the 34th International Ferroalloys Conference. It was a great opportunity to get insights and updates on the latest market dynamics. We attended different presentations and learned from the industry's leading companies. The following are some of the key insights of this year’s conference.


Our team’s insights:

  • Ferroalloys annual contract negotiations are dragging on this year (much longer than last year) - buyers are not in a hurry to conclude deals. Some buyers will leave a larger portion of their book for spot purchases
  • Expectations about the ferroalloys market for 2019 differ widely but there is a consensus that growth will be slower in 2019 vs 2018
  • Politics and trade policies are more important to watch than ever in the ferroalloys business
  • As many players in the industry confirm: the digital age for commodities has started

Michel Van Hoey (McKinsey & Company): “Capturing the Digital Opportunity in Ferroalloys”

  • The digital opportunity for ferroalloy producers is significant, with an estimated total potential EBITDA margin uplift of 3-5% points
  • Machine learning, process digitization, data and connectivity, and automation are the 4 major developments driving the introduction of digital tools in the ferroalloy industry

Amy Bennett (Fastmarkets): “Carbon Steel Overview”

  • Chinese steel exports have fallen in recent years with impressive growth in domestic steel consumption
  • 30% of the US steel imports come from Canada and Mexico combined, while 2% come from China
  • In 2018 there was strong growth in US crude steel production, with output to rise around 4% YoY
  • In 2019 crude steel output forecast will rise ~2.5-3.0% in US, and ~2.0-2.5% in EU

Dr. Danko Koncar (AFARAK group): “Chrome in the Spotlight”

  • Since 2010 South Africa increased three times exports of chrome ore to China
  • China is the main importing country – it imports ~86% of all chrome ore in the world
  • Because of increased production of FeCr China's imports of ferrochrome have declined since 2016
  • More than half of China's imports of FeCr still comes from South Africa

Arnoud Willems (SIDLEY AUSTIN LLP): “War over Steel – Is there a New Global Trade Landscape?”

  • No sector is as effective at import protection as the steel sector – there are ~74 initiations of anti-dumping measures per year
  • Most of the trade protective actions target China, followed by Korea, India, and Vietnam
  • The global production of steel increased while exports decreased by 5% in 2018 when compared with 2017

Kevin Fowkes (AlloyConsult): “Developments in the Manganese Industry”

  • Since 2017 the Mn ore market appears to have entered a state of surplus/oversupply
  • Mn ore index prices have remained elevated despite the increased supply
  • South African Mn ore grew production fourfold over the past decade
  • China has stopped releasing detailed trade data since March 2018, creating a big transparency problem
  • The growth of EU industrial production & steel consumption has slowed heavily in 2018 (critical topics: Brexit, blowback from US trade war, auto production slowdown)

Dr. Frank Jackel (Metalshub): “Digitalisation - The Future of Metals Trading”

  • Commodity trading has started the age of digitalisation
  • The key benefits of the digital transformation are: lower cost (higher efficiency over entire sales/purchasing process), better analytics and compliance (transparent trade and business data), increased business attractiveness (higher business visibility)
  • Metalshub is one of the pioneers of the digital revolution in the world of metals trading. It was founded with the vision to increase liquidity and reduce transaction costs for commodities which are not traded over an exchange

In conclusion, the 34th International Ferroalloys Conference in Lisbon this year was certainly a great event. The Metalshub team perceived a strong interest in how digital platforms can help with the digital transformation of the commodities industry.

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