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Daejin Lee

?? ?? ?? ?? Big Picture Bao Steel ? Wuhan Steel? ?? ?? ?? ?? ??? ??? ??? ??? ?? ? ??? ?? ?? ?? ?? ?? ? ?? ??? ???? ?? ???? ??? ??? ? ?? ?? ??? ??? ?? ?? ?? ??? ??? ?? ??

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??? ??? ???? - The Chinese Steel Market 2016.10 [Compliance Notice] This report has been produced for general information. Whilst care has been taken in the production of this report, no liability or responsibility can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. ¡ù Picture from Vale.com Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Presentation structure 1. ?? ?? ?? ? Big Picture ? Bao Steel ? Wuhan Steel? ?? ? ?? ?? ?? ??? ??? ??? ??? 2. ?? ? ??? ?? ?? ? ?? ?? ?? ? ?? ? ??? ???? ?? ???? ??? ??? ?? 3. ?? ?? ? ??? ??? ?? ?? ?? ? ??? ??? ?? ?? 2 Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(1) World GDP & Steel Production ? ??? GDP???? ?? ????? 2000? ??? ?? ??? ??? ?? ?? 0.7684 ? ????? ?? ?? ?? ??? ????? ??? ??? ??? ? ??? ??/?? 3? ?? ??? ?? ?? ??? ?? ???? ???? ??? ?? ? ????? ???? ?? ?? ??? ??? ?? ?? ?? ?? ??? ??? 3 ¡ù Source: Clarkson, HJS (1) 0 1 2 3 4 5 6 7 (10) (5) 0 5 10 15 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (GDP, %)(Steel, %) World Steel Production GDP World y = 3.4746x - 8.5896 R? = 0.7684 (20) (10) 0 10 20 (1) 0 1 2 3 4 5 6 Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(2) Top 20 Steel-Consuming Countries ? ??? ?? ???? ??? ???? ??? ???? ? 8????, 2?? ??? ? 7? ?? ??? ??? ???? 1?? ???? ?? 4*??: ???, 2013? ?? ¡ù Source: Ironorefacts Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(3) China¡¯s Steel production & Iron ore imports 50 200 400 600 800 1,000 1,200 -10% 0% 10% 20% 30% 40% 50% Milliontonnes Growth(Yr/Yr) China¡¯s Steel production & Iron ore imports Iron Ore Imports Growth YoY Steel Production Growth YoY Iron ore Imports Steel Production ? ??? ?? ?? ???? 2015? ???? ????? ??? ?? ?? ??? ??? ???????? ??? ?? ? ??? ???? ??? ???? ???? ? ?? ?? ?? ???? ???? ??? ???? ??? ???? ???? ??? ?? ???? ??? ?? ?? ???? ???? ??? ?? ?? ??? ???? ?? ¡ù Source: Clarkson, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(4) Chinese Steel Usage ? ?? ?? ??? ?? ??? ? ?? ??? ??? ? ?? ?? ??? ??? 6 Real Estate 22% Car 7% Others 19% Infrastructure Construction 33% Shipbuilding Machinery 19% ¡ù Source: Various, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(5) Chinese Steel location ? ?? ?? ??, ?? ?? ?? ??? ???? ?? ??? ??? ??. ? 2014? ? ??(???, ???, ??, ??, ??)? ???? ??? 53.4%? 4.39??? 7 ¡ù Source: MPI Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(6) Chinese New Silk Roads Project ? ?? ??? 15.3??? ??? ?? ??? 57??? ???? ?? ????? ???? ??? ?? ??? ??? ?? ?? ?? ??? ?? ??? ??? ? ??? 35? ?? ???? ???? ?? ?? ?? ??? ???? ???? ??? ??? 8 ¡ù Source: WSJ Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(7) ?? ?? ??? ?? ?? ? ??? ???? ???? ?? ???? ???/???, ?? ??? ??? ??/? ?? ??, ?? ??? ??? ?? ??? ?? ?? ?????? ?? ??? 9 ?? 6% ?? 5% ?? 20% ?? 12%?? 8% ??/?? 21% ?? 18% ?? 10% ASEAN US ME AFRICA KOREA EU ¡ù Source: Various, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(8) Steel & Iron ore prices ? Rebar??? ??? ??? ????? ??? ??? ??. ??? ?? Rebar??? 2? ? ?? ?? ?? ?? ?? ??? ???? ??????? ??? ??? ? ?? ?? ??? ?? ??. ?? ??? ??? ?? ??? 1??? ?????? ??? ???? ?? ??? ???? ?? ??? 10 -50 0 50 100 150 200 250 0 500 1000 1500 2000 2500 3000 3500 4000 '14.1 '14.4 '14.7 '14.10 '15.1 '15.4 '15.7 '15.10 '16.1 '16.4 '16.7 '16.10 '17.1 '17.4 '17.7 '17.10 '18.1 '18.4 '18.7 '18.10 (US$/t)(RMB/t) Rebar Iron Ore ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Big Picture(9) BREXIT ?? ?? - F/X ? 6? ? ???? ?? ?? ?? ??? ?? ??? ??? ??? ? ??? ?? ?? ? ? ??? ?? ????? ?? ??? ????? ?? ??? ??? ??? ??? ? ? ??? ??? ??? ??. ??? ??? ??? ????? ??? ??? ?? ?? ?? ?? ??. ? ?? ?? ??? ????? ?? ??? ??? ?? ???? ??? 11 ¡ù Source: Bloomberg, HJS 70 75 80 85 90 95 100 '14.3 '14.6 '14.9 '14.12 '15.3 '15.6 '15.9 '15.12 '16.3 '16.6 2016.6 ???? Dollar Index 5.9 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 '15.3 '15.6 '15.9 '15.12 '16.3 '16.6 China Yuan 2015.8.11 ??? 1.83% ?? 2016.6 ???? Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??(1) Top steel-producing companies ? ?? ??? ??? ?? 2? ????? ?? 6?? ????? ??? ??? ?? ?? ?? ?????? ?? ???? ? 6????? ?????? ??? ??? 1? ????? ??????? ?? 2?? ???? ? 12 0 20 40 60 80 100 120 ArcelorMittal Baosteel + Wuhan Hesteel Nippon Steel POSCO Shagang Ansteel JFE Shougang Tata Shandong Hyundai Million tons China Others ¡ù Source: WSA Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??(2) China¡¯s Steel Capacity (in million tons) ? ?? ???? ????? ??? ?? 5?? 1? 5??? CAP??, ???? 4500? ??? ????(4%)??, 18??? ????? ???(7%) ???? ?? ???. ? ????/????? ?? ???? ? 7??? ? ???? ? 85%? ??? ?? ? ???? ?? ?? ??? ??? ??? 13 ¡ù Source: Bloomberg Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??(3) Production of Cars in China ? ???? ??? ??? ????/????? ??? ??? ?? ??? ?? ?? ??(???? 9???, ???? 860??)? ???? ?? ?? ?? ? ?? ?? ??? ???? ???? ???? ??? ???? ???? ?? 14 0 5 10 15 20 25 30 0 5 10 15 20 25 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016.5 Commercial vehicles Passenger cars ¡ù Source: Statista Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??(4) Baosteel¡¯s location 15 ? ??? ??? ???? ???? ???? ?? ???/???? ??? ??? ? ??? ?? ??? ??? ?? ??? ?? ????? ??? ?? ??? ??? ??? ??? Xinjiang 4.4M Other 10M Shanghai 15M Guangdong 5.2M Hubei 15M Kunming 7M E¡¯cheng 3M Baosteel Wuhansteel ¡ù Source: Baosteel, Mysteel Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
China Macro(1) ¨C ??? ??? ? ?????? ???(Àî¿ËÇ¿) ?? ??? ??? ??? ????? ???? ?? ??? ?????(40%), ?????(25%), ?????(35%)? ???? ?? ?? ??? ??? ??, ???? ? ????, ?? ? ?? ??? ???? ? ???? 2015? 4??? ? ?? ?? ?? ???? ??? ??? ?? 16 ¡ù Source: Bloomberg, HJS 0 50 100 150 200 250 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Li Keqiang Index CNY New Loan Rail Traffic Volume Energy production 0 5 10 15 20 25 30 6 7 8 9 10 11 12 13 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 China GDP Growth Li Keqiang Index (right) Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
China Macro(2) ¨C ?? ?? ?? ? ?? ?? ?? ? ?? ??? ??? 2015? ?? ???? ???? ??? ?? ???? ?????. ? ? ???? ??? ???? ?? ??? ??? ??? ?? ?? ?? ??? ???? ? ?????. ?? ?? ?? ?? ?? ?? ??? ?? 3? ???? ??? ???? ???? ?? ?? ?? ?? ???? ????? ?? ?? ??? ?? ???? ?? 17 ¡ù Source: Bloomberg, HJS -40 -20 0 20 40 60 80 (%) Floor space of house newly started (cum) YoY Total Sales of Buildings YoY -10 -5 0 5 10 15 20 25 30 35 (%) China 70 cities prices YoY 3rd tier cities prices YoY 1st tier cities prices YoY Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
China Macro(3) ¨C ??? / ?? / ?? / ??? / ?? PMI ? ??? ??? ?? ???? ??? ?? ??? ??? ???? ??? PMI? ???? ?? ??? PMI? ????? ?? ??? ?????. ?? ?? ?? ??PMI? ??? ????? ?? ??? ??? ????? ??? ??? ?? ??. ?? ?? ???? ??? ?? ?? ???? ??? ??? ?? 18 ¡ù Source: Bloomberg, HJS 44 50 56 (%) Manufacturing PMI Service PMI 25 50 75 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 (%) Construction PMI Automobile PMI Steel PMI Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ?? ??(1) China¡¯s Steel Production Seasonality 50 55 60 65 70 75 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) 2013 2014 2015 2016 ? 2016? ??? ?? ?? ???? ??? ? 2% ??? 4? 180???? 2? ?? ??? ? ??? ??? ??? 1-2?? ??? ???? ?? 4 ???? ?? ??? ???? ??? ???? ??? ?? 19 1H16 Mt Annualized YoY 2014 412.6 817.4 2% 2015 407.8 800.5 -2% 2016 401.8 788.7 -2% ¡ù Source: Bloomberg, ClarksonContact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ?? ??(2) China¡¯s Steel Production & Exports ? 2015? ??? ?? ?? ?? ???? ???? ??? ??? ?? ?? ???? ?? ?? ???? ?? ???? ??? ???? ??? ? ???? ??? ?? ?? ?? ?? ??? ?? ??? ??? ?? ?? ?? ??? ? ? ???? ???? ?? ??? ????? 2???? ? ?? ??? ??? ??? 20 45 50 55 60 65 70 75 0 2 4 6 8 10 12 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Steel Export Steel Production (RHS) ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ?? ??(3) China¡¯s Steel stockpiles ? ???? ??? ?? ??? ??? ?? ?? ???? ?? ?? ?? ? 13% ??? 21 -60% -40% -20% 0% 20% 40% 0 500 1000 1500 2000 2500 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 cold rolled coil wire rod medium plate hot rolled coil rebar YoY ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ?? ??(1) China¡¯s Steel Exports Annually ? ??? ?? ?? ???? 2014? ??? 51% 2015??? 24%? ?????? ?? ?? ? ? ???? ?? ?? ? 480??(9%) ??? 5730??? ??? ? ??? ?? ??? ??? ??? ??? ?? ??? ?? ???? ?????? ??? ??? ?????? ???? ?? ??? ?? ??? ??? ??? ??? 22 0 20 40 60 80 100 120 140 2012 2013 2014 2015 2016 J-M Mt Anuualised Africa Mid East Others America Europe South Asia Norh Asia 1H Mt Annualized YoY 2014 38.3 90.6 51% 2015 52.5 112.6 24% 2016 57.3 122.7 9% ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ?? ??(2) China¡¯s Steel Exports Monthly ? 2015? ?? ?? ??? ?? ???? (1) ???? 13.5M(12%) (2) ??? 10.1M(9%) (3) ??? 5.6M(5%) (4) ????? 5.1M(5%) (5) ?? 4.8M(4%)? ??? ??? ??? ? ?? 2016? 1-5? ???? ?? ?? ???? 2015? ?? ? 45% ???? 5? ??? (1.14M,12%)????? ??? ??? 1?? ??? 23 ¡ù Source: Mysteel, HJS 0 2 4 6 8 10 12 0 1 2 3 4 5 6 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 MtMt US Indonesia India Europe Vietnam South Korea Total (RHS) Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ?? ??(3) China Steel Exports by destinations 0.0 0.5 1.0 1.5 2.0 2.5 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 (MillionTon) North Asia N.America Europe ? ??? ?? ???? ?? ?? ?? ??? ????? ?? ?? ??? ??? ??? ??? ? ?? ???? ???? ???? ???? ?? ? ??? ?? ?? ???? ???? ASEAN???? ???? ????? ???? ?? 24 Developed Emerging 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 (MillionTon) ASEAN South Asia Middle East Africa CS.America ¡ù Source: Mysteel, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ???(1) Domestic Iron ore production in China ? ??? 2015? ? 13? 2???? ????? ?????? ????? ?? ????? ????? 62% Fe?? ??? ??? ????? ? 3.5~4?? ???? ??? ? ??? ?? ?? ?? ??? ?? ??? ????? ??? ????? 3? ?? ?? ? ? ??? ???? ??? ? 6% ??? 25 105.1 104.1 117.7 128.5 126.2 123.8 131.6 125.4 117.5 119.7 80.9 80.9 98.2 102.6 107.5 0 20 40 60 80 100 120 140 3-15 4-15 5-15 6-15 7-15 8-15 9-15 10-15 11-15 12-15 1-16 2-16 3-16 4-16 5-16 Production ¡ù Source: Statista Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ???(2) China domestic iron ore¡¯s share ? ??? ? ?? ????? ??? ???? ? ???? ??? ??? ???(??+??) ??? ???(Domestic Share)? ?? ??? ???? ?? ?? ???? ?? 26 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0 10 20 30 40 50 60 70 80 1-13 3-13 5-13 7-13 9-13 11-13 1-14 3-14 5-14 7-14 9-14 11-14 1-15 3-15 5-15 7-15 9-15 11-15 1-16 3-16 5-16 (Mt) I'Ore Imports(Fe) I'Ore domestic(Fe) Domestic Share % ¡ù Source: HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ???(3) Chinese Iron Ore Inventory ? 2014? ?? ?? ??? ?? ??? ?? ??? ????? ?? ??? ?? ???? 2015? ??? ?? ???? 1??? ??? ? ??? ?? ??? ???? ??? 25? ??? 5? ??? ???? ? ??? ??? ?? ?? 27 0 10 20 30 40 50 60 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 64 Steel Mills¡¯ stock pile average Domestic Iron Ore Imported Iron Ore (Days) 6,000 7,000 8,000 9,000 10,000 11,000 12,000 0 20 40 60 80 100 120 140 160 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 ($/t) Chinese Port¡¯ Stockpiles Port stockpile Iron ore price (Mt) ¡ù Source: Bloomberg, Mysteel Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ??? ??(1) Iron ore Imports in China ? ??? ??? ???? 2014? ??? 13.8%? ??? ? 2015??? 2.1%? ????? ? ?? ?????? 2016?? ??? ? 9% ??, ?? ??? 10?? ?? ??. ? ?? ?? ?? ?? ?? ??? ???? ??? ???? ?????? ??? ???? ??? ??? ?? ?? ??? ?? ??? ??? ??? ???? ???? ???. 28 82 0 20 40 60 80 100 120 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 (Mt) China Iron ore imports 1Q Mt Annualized YoY 2014 457 933 13.8% 2015 453 953 2.1% 2016 494 1024 9.1% ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ??? ??(2) Iron ore Imports in China monthly ? ?? ???? 2016? ??? ? ???? ?? ?? ? 4,100??(9%) ??? 4?9400? ??? ??? ? 2? ??? ???? ???? ??? ?? ?? ?? 4??? ? 8??? ??? ?? ? ??? ???? ?? ??? ?? ???? ???? ?? 29 96 82 74 86 84 87 82 50 55 60 65 70 75 80 85 90 95 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) 2013 2014 2015 2016 ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
?? ??? ??(3) Origin of Chinese Iron ore imports ? 2011? ??/???/?? ???? 1/3? ???? ?? ??? ?? ??? ?? ?? ? ??? ???? ???? ??? ???? ????? ???? 60%? ???? ?? ? ???? ?? ?? ? 15-20???? ???? ???? ???? ???? ? 20%? ? ??? ?????? ?? ?? ??? ?????? ??? ???? ?? ?? ?? 30 25% 0% 5% 10% 15% 20% 25% 30% 0 20 40 60 80 100 120 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 (Mt) ?? From Others From Australia From Brazil Brazil % ¡ù Source: Bloomberg, Mysteel Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
??? ?? ??(1) Capesize Iron Ore Movement ? ?? ??? ??? ??? ?? ??? ???-??, ??-??? ???? ??? 31(Source: Platts, HJS)*Vessel Movement on June 2015 ¡ù Source: Platts cFlow, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
??? ?? ??(2) Top 4¡¯s Iron Ore Expansion 32 ¡ù Source: Bloomberg, HJS 0 200 400 600 800 1,000 1,200 1,400 2009 2010 2011 2012 2013 2014 2015 2016e 2017f 2018f (Mt) FMG BHP Billiton Rio Tinto Vale ? 4? ??? ??? ??? Vale, Rio Tinto, BHP, FMG? 2009? ? 5?????? 2015?? ? ? 10???? ???? 2? ??? ?????? ? ?? ??? ??? $100???? $50?? ?????. ?? ??? ?? ??? ??? ??? ????? Vale? S11D? ? ??? ??? ?? ???? ??? ??? ?? ??? 2018??? 12??? ??? ? Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
??? ?? ??(3) Iron Ore Production cost 33 ¡ù Source: Metalytics ? 2016? .BHP? Cash Cost? $15, Rio Tinto? $16 FMG? $22? ?? ???? ?? 2015 ?? ?? ? 20%? ?? ??? ???. ?? ?? ??? ??? ??? ?? Vale? 9? ?? ?? S11D ??? ?? ??? $11 ???? ??? ??? ??. ?? ??? ?? ? ? ?? ??(CFR) ??? $30~40???? ????? ??? ??? ?? ??? Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
??? ?? ??(4) Brazil and Aus Iron ore exports ? ?? ???? 2016? 1-5? ? ???? ?? ?? ? 1890??(6%) ??? 3?2100?? ?? ? ? ???? ???? ???? ?? ? ???? 2016? ??? ??? 6% ??? ? 1?7730??? ??????, ? ? ??? ? ??? 1,930??(24%) ??? 9,810??(?? 55%)? ??? 34 67 57 63 67 65 68 30 35 40 45 50 55 60 65 70 75 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) Australia Iron ore exports 2013 2014 2015 2016 40 25 30 30 29 34 29 10 15 20 25 30 35 40 45 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) Brazil Iron ore exports 2013 2014 2015 2016 ¡ù Source: Bloomberg, ClarksonContact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
??? ?? ??(5) Brazil and Aus Iron ore exports Weekly ? ??? Royhill??? ?????? ?? ??? ?? ???? ???? ?? ? ???? Samarco ? ?? ???? ?? ?? ?? ??? ??? ??? ?? 35 0 2 4 6 8 10 12 14 16 18 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Million tons) Aus Iron Ore 2016 Aus Iron Ore 2015 Brazil Iron ore 2016 Brazil Iron ore 2015 ¡ù Source: Thurlestone Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??? ??(1) Capesize earning & Brazil Fixtures ? ? ?? ??? ?? ?? 3? ?? ? ???¨C??? ?? ??? ???? Vale? S11D 9???? ??? ?? ??? ?? ??? ? ??? ?? ??. ? ?? ValeÉç? ?? ???? ? ??? ??? ??? Valemax 30?? ???? ?? ?? ? ??? ??? ?? ? ??? ???? 2018? ?? ?? ???? ?? ?? ??. 36 0 5 10 15 20 25 30 0 2 4 6 8 10 12 14 16 18 14-3 13 23 33 43 15-1 11 21 31 41 51 9 ? Brazil Fixture (3weeks av.) Fronthaul fixture C4TC ¡ù Source: HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??? ??(2) Fleet development & Earning ? ???? ?? ??? ??? ??? ???? ?? ??? ??? ??? ??? ???? ? ??? ??? ??? ?? ???? ???? ??. ??? ??? ?? ?? ??? 2 ?? ?? ??? -0.80? ?? ? ????? ??? ??. ??? ?? ?? ?? ??? ?? ?? ??? ?? ?? ?? ??? ??. Jul 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 (3) (2) (1) 0 1 2 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2015 2016 Capesize,$/day MillionDwt Fleet Change Cumulative C5TC 2M+ C5TC 37 Fleet ¡ù Source: HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??? ??(3) Capesize Outlook ? ??? ??? ??? ???? ?? ???? dwt?? ??? ??? ???? ???? 5 ?? ???? ?? ??? ?????. ?? ??? ?? ???? 2018??? 30?? Valemax? ???? ???? ?? ????? ?? ??? ??? ?? ??? ??? 5% 5% 3% 5% 9% 9% 9% 9% 9% 19% 23% 19% 12% 5% 5% 0% 0% 0% 3% -10% -5% 0% 5% 10% 15% 20% 25% (20) (10) 0 10 20 30 40 50 MilliondwtofVessels Cape Cape Deliveries Cape Demolition Orderbook Growth Removal Delivery 38 ¡ù Source: Clarkson, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
???? ??? ??(4) Capesize Earning Forecasts 39 ? ?? ?? ?? ?? ???? ???? ?? ??? ?? ??? ??? ??? ?? ? ? ?? ?? ??? ????? ????. ?? ?? ??? ??? ???? ?? ?? ?? ?? ?? ????? ??? ??? ?? ??? ???. ??? ?? ??? ? ???? ?? ???? ?? ??? ?? ???? ??? ??? ?? ??? ??? ¡ù Source: SSY, HJS 6,108 22,891 14,135 13,469 5,752 10,465 4,717 9,448 8,624 0 5,000 10,000 15,000 20,000 25,000 1H2013 2H2013 1H2014 2H2014 1H2015 2H2015 1H2016 2H2016 ($/day) Capesize Capesize earning & FFA Model Forecast FFA 16.7 Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
Previous Reports : includes freight forecasts (1) Bulk Supply : The Seeds of Recovery (Korean / English) (2) Tanker Supply : Oil Prices and Oversupply (Korean) (3) Coal Trade Market : The end of the coal era, soon or yet? (Korean / English) (4) Iron Ore Trade Market : Chinese steel market (Korean) (5) Understanding Bulk Shipping Market (Korean) We invite any comments and/or questions you may have. if you need bespoke reports & analysis, we would love to meet specific client needs. To discuss any individual requirements please contact below Daejin Lee / Commodity Research / Shipping / FFA Mob: +82-10-3462-5311 Email: daejin82@gmail.com Thank you Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com

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?? ? ??? ?? ?? ?? ?? ??? ????

  • 1. ??? ??? ???? - The Chinese Steel Market 2016.10 [Compliance Notice] This report has been produced for general information. Whilst care has been taken in the production of this report, no liability or responsibility can be accepted for any loss incurred in any way whatsoever by any person who may seek to rely on the information contained herein. ¡ù Picture from Vale.com Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 2. Presentation structure 1. ?? ?? ?? ? Big Picture ? Bao Steel ? Wuhan Steel? ?? ? ?? ?? ?? ??? ??? ??? ??? 2. ?? ? ??? ?? ?? ? ?? ?? ?? ? ?? ? ??? ???? ?? ???? ??? ??? ?? 3. ?? ?? ? ??? ??? ?? ?? ?? ? ??? ??? ?? ?? 2 Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 3. Big Picture(1) World GDP & Steel Production ? ??? GDP???? ?? ????? 2000? ??? ?? ??? ??? ?? ?? 0.7684 ? ????? ?? ?? ?? ??? ????? ??? ??? ??? ? ??? ??/?? 3? ?? ??? ?? ?? ??? ?? ???? ???? ??? ?? ? ????? ???? ?? ?? ??? ??? ?? ?? ?? ?? ??? ??? 3 ¡ù Source: Clarkson, HJS (1) 0 1 2 3 4 5 6 7 (10) (5) 0 5 10 15 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (GDP, %)(Steel, %) World Steel Production GDP World y = 3.4746x - 8.5896 R? = 0.7684 (20) (10) 0 10 20 (1) 0 1 2 3 4 5 6 Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 4. Big Picture(2) Top 20 Steel-Consuming Countries ? ??? ?? ???? ??? ???? ??? ???? ? 8????, 2?? ??? ? 7? ?? ??? ??? ???? 1?? ???? ?? 4*??: ???, 2013? ?? ¡ù Source: Ironorefacts Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 5. Big Picture(3) China¡¯s Steel production & Iron ore imports 50 200 400 600 800 1,000 1,200 -10% 0% 10% 20% 30% 40% 50% Milliontonnes Growth(Yr/Yr) China¡¯s Steel production & Iron ore imports Iron Ore Imports Growth YoY Steel Production Growth YoY Iron ore Imports Steel Production ? ??? ?? ?? ???? 2015? ???? ????? ??? ?? ?? ??? ??? ???????? ??? ?? ? ??? ???? ??? ???? ???? ? ?? ?? ?? ???? ???? ??? ???? ??? ???? ???? ??? ?? ???? ??? ?? ?? ???? ???? ??? ?? ?? ??? ???? ?? ¡ù Source: Clarkson, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 6. Big Picture(4) Chinese Steel Usage ? ?? ?? ??? ?? ??? ? ?? ??? ??? ? ?? ?? ??? ??? 6 Real Estate 22% Car 7% Others 19% Infrastructure Construction 33% Shipbuilding Machinery 19% ¡ù Source: Various, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 7. Big Picture(5) Chinese Steel location ? ?? ?? ??, ?? ?? ?? ??? ???? ?? ??? ??? ??. ? 2014? ? ??(???, ???, ??, ??, ??)? ???? ??? 53.4%? 4.39??? 7 ¡ù Source: MPI Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 8. Big Picture(6) Chinese New Silk Roads Project ? ?? ??? 15.3??? ??? ?? ??? 57??? ???? ?? ????? ???? ??? ?? ??? ??? ?? ?? ?? ??? ?? ??? ??? ? ??? 35? ?? ???? ???? ?? ?? ?? ??? ???? ???? ??? ??? 8 ¡ù Source: WSJ Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 9. Big Picture(7) ?? ?? ??? ?? ?? ? ??? ???? ???? ?? ???? ???/???, ?? ??? ??? ??/? ?? ??, ?? ??? ??? ?? ??? ?? ?? ?????? ?? ??? 9 ?? 6% ?? 5% ?? 20% ?? 12%?? 8% ??/?? 21% ?? 18% ?? 10% ASEAN US ME AFRICA KOREA EU ¡ù Source: Various, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 10. Big Picture(8) Steel & Iron ore prices ? Rebar??? ??? ??? ????? ??? ??? ??. ??? ?? Rebar??? 2? ? ?? ?? ?? ?? ?? ??? ???? ??????? ??? ??? ? ?? ?? ??? ?? ??. ?? ??? ??? ?? ??? 1??? ?????? ??? ???? ?? ??? ???? ?? ??? 10 -50 0 50 100 150 200 250 0 500 1000 1500 2000 2500 3000 3500 4000 '14.1 '14.4 '14.7 '14.10 '15.1 '15.4 '15.7 '15.10 '16.1 '16.4 '16.7 '16.10 '17.1 '17.4 '17.7 '17.10 '18.1 '18.4 '18.7 '18.10 (US$/t)(RMB/t) Rebar Iron Ore ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 11. Big Picture(9) BREXIT ?? ?? - F/X ? 6? ? ???? ?? ?? ?? ??? ?? ??? ??? ??? ? ??? ?? ?? ? ? ??? ?? ????? ?? ??? ????? ?? ??? ??? ??? ??? ? ? ??? ??? ??? ??. ??? ??? ??? ????? ??? ??? ?? ?? ?? ?? ??. ? ?? ?? ??? ????? ?? ??? ??? ?? ???? ??? 11 ¡ù Source: Bloomberg, HJS 70 75 80 85 90 95 100 '14.3 '14.6 '14.9 '14.12 '15.3 '15.6 '15.9 '15.12 '16.3 '16.6 2016.6 ???? Dollar Index 5.9 6 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 '15.3 '15.6 '15.9 '15.12 '16.3 '16.6 China Yuan 2015.8.11 ??? 1.83% ?? 2016.6 ???? Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 12. ???? ??(1) Top steel-producing companies ? ?? ??? ??? ?? 2? ????? ?? 6?? ????? ??? ??? ?? ?? ?? ?????? ?? ???? ? 6????? ?????? ??? ??? 1? ????? ??????? ?? 2?? ???? ? 12 0 20 40 60 80 100 120 ArcelorMittal Baosteel + Wuhan Hesteel Nippon Steel POSCO Shagang Ansteel JFE Shougang Tata Shandong Hyundai Million tons China Others ¡ù Source: WSA Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 13. ???? ??(2) China¡¯s Steel Capacity (in million tons) ? ?? ???? ????? ??? ?? 5?? 1? 5??? CAP??, ???? 4500? ??? ????(4%)??, 18??? ????? ???(7%) ???? ?? ???. ? ????/????? ?? ???? ? 7??? ? ???? ? 85%? ??? ?? ? ???? ?? ?? ??? ??? ??? 13 ¡ù Source: Bloomberg Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 14. ???? ??(3) Production of Cars in China ? ???? ??? ??? ????/????? ??? ??? ?? ??? ?? ?? ??(???? 9???, ???? 860??)? ???? ?? ?? ?? ? ?? ?? ??? ???? ???? ???? ??? ???? ???? ?? 14 0 5 10 15 20 25 30 0 5 10 15 20 25 30 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016.5 Commercial vehicles Passenger cars ¡ù Source: Statista Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 15. ???? ??(4) Baosteel¡¯s location 15 ? ??? ??? ???? ???? ???? ?? ???/???? ??? ??? ? ??? ?? ??? ??? ?? ??? ?? ????? ??? ?? ??? ??? ??? ??? Xinjiang 4.4M Other 10M Shanghai 15M Guangdong 5.2M Hubei 15M Kunming 7M E¡¯cheng 3M Baosteel Wuhansteel ¡ù Source: Baosteel, Mysteel Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 16. China Macro(1) ¨C ??? ??? ? ?????? ???(Àî¿ËÇ¿) ?? ??? ??? ??? ????? ???? ?? ??? ?????(40%), ?????(25%), ?????(35%)? ???? ?? ?? ??? ??? ??, ???? ? ????, ?? ? ?? ??? ???? ? ???? 2015? 4??? ? ?? ?? ?? ???? ??? ??? ?? 16 ¡ù Source: Bloomberg, HJS 0 50 100 150 200 250 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Li Keqiang Index CNY New Loan Rail Traffic Volume Energy production 0 5 10 15 20 25 30 6 7 8 9 10 11 12 13 1Q05 4Q05 3Q06 2Q07 1Q08 4Q08 3Q09 2Q10 1Q11 4Q11 3Q12 2Q13 1Q14 4Q14 3Q15 2Q16 China GDP Growth Li Keqiang Index (right) Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 17. China Macro(2) ¨C ?? ?? ?? ? ?? ?? ?? ? ?? ??? ??? 2015? ?? ???? ???? ??? ?? ???? ?????. ? ? ???? ??? ???? ?? ??? ??? ??? ?? ?? ?? ??? ???? ? ?????. ?? ?? ?? ?? ?? ?? ??? ?? 3? ???? ??? ???? ???? ?? ?? ?? ?? ???? ????? ?? ?? ??? ?? ???? ?? 17 ¡ù Source: Bloomberg, HJS -40 -20 0 20 40 60 80 (%) Floor space of house newly started (cum) YoY Total Sales of Buildings YoY -10 -5 0 5 10 15 20 25 30 35 (%) China 70 cities prices YoY 3rd tier cities prices YoY 1st tier cities prices YoY Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 18. China Macro(3) ¨C ??? / ?? / ?? / ??? / ?? PMI ? ??? ??? ?? ???? ??? ?? ??? ??? ???? ??? PMI? ???? ?? ??? PMI? ????? ?? ??? ?????. ?? ?? ?? ??PMI? ??? ????? ?? ??? ??? ????? ??? ??? ?? ??. ?? ?? ???? ??? ?? ?? ???? ??? ??? ?? 18 ¡ù Source: Bloomberg, HJS 44 50 56 (%) Manufacturing PMI Service PMI 25 50 75 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 (%) Construction PMI Automobile PMI Steel PMI Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 19. ?? ?? ??(1) China¡¯s Steel Production Seasonality 50 55 60 65 70 75 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) 2013 2014 2015 2016 ? 2016? ??? ?? ?? ???? ??? ? 2% ??? 4? 180???? 2? ?? ??? ? ??? ??? ??? 1-2?? ??? ???? ?? 4 ???? ?? ??? ???? ??? ???? ??? ?? 19 1H16 Mt Annualized YoY 2014 412.6 817.4 2% 2015 407.8 800.5 -2% 2016 401.8 788.7 -2% ¡ù Source: Bloomberg, ClarksonContact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 20. ?? ?? ??(2) China¡¯s Steel Production & Exports ? 2015? ??? ?? ?? ?? ???? ???? ??? ??? ?? ?? ???? ?? ?? ???? ?? ???? ??? ???? ??? ? ???? ??? ?? ?? ?? ?? ??? ?? ??? ??? ?? ?? ?? ??? ? ? ???? ???? ?? ??? ????? 2???? ? ?? ??? ??? ??? 20 45 50 55 60 65 70 75 0 2 4 6 8 10 12 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Steel Export Steel Production (RHS) ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 21. ?? ?? ??(3) China¡¯s Steel stockpiles ? ???? ??? ?? ??? ??? ?? ?? ???? ?? ?? ?? ? 13% ??? 21 -60% -40% -20% 0% 20% 40% 0 500 1000 1500 2000 2500 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 cold rolled coil wire rod medium plate hot rolled coil rebar YoY ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 22. ?? ?? ??(1) China¡¯s Steel Exports Annually ? ??? ?? ?? ???? 2014? ??? 51% 2015??? 24%? ?????? ?? ?? ? ? ???? ?? ?? ? 480??(9%) ??? 5730??? ??? ? ??? ?? ??? ??? ??? ??? ?? ??? ?? ???? ?????? ??? ??? ?????? ???? ?? ??? ?? ??? ??? ??? ??? 22 0 20 40 60 80 100 120 140 2012 2013 2014 2015 2016 J-M Mt Anuualised Africa Mid East Others America Europe South Asia Norh Asia 1H Mt Annualized YoY 2014 38.3 90.6 51% 2015 52.5 112.6 24% 2016 57.3 122.7 9% ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 23. ?? ?? ??(2) China¡¯s Steel Exports Monthly ? 2015? ?? ?? ??? ?? ???? (1) ???? 13.5M(12%) (2) ??? 10.1M(9%) (3) ??? 5.6M(5%) (4) ????? 5.1M(5%) (5) ?? 4.8M(4%)? ??? ??? ??? ? ?? 2016? 1-5? ???? ?? ?? ???? 2015? ?? ? 45% ???? 5? ??? (1.14M,12%)????? ??? ??? 1?? ??? 23 ¡ù Source: Mysteel, HJS 0 2 4 6 8 10 12 0 1 2 3 4 5 6 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 MtMt US Indonesia India Europe Vietnam South Korea Total (RHS) Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 24. ?? ?? ??(3) China Steel Exports by destinations 0.0 0.5 1.0 1.5 2.0 2.5 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 (MillionTon) North Asia N.America Europe ? ??? ?? ???? ?? ?? ?? ??? ????? ?? ?? ??? ??? ??? ??? ? ?? ???? ???? ???? ???? ?? ? ??? ?? ?? ???? ???? ASEAN???? ???? ????? ???? ?? 24 Developed Emerging 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 (MillionTon) ASEAN South Asia Middle East Africa CS.America ¡ù Source: Mysteel, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 25. ?? ???(1) Domestic Iron ore production in China ? ??? 2015? ? 13? 2???? ????? ?????? ????? ?? ????? ????? 62% Fe?? ??? ??? ????? ? 3.5~4?? ???? ??? ? ??? ?? ?? ?? ??? ?? ??? ????? ??? ????? 3? ?? ?? ? ? ??? ???? ??? ? 6% ??? 25 105.1 104.1 117.7 128.5 126.2 123.8 131.6 125.4 117.5 119.7 80.9 80.9 98.2 102.6 107.5 0 20 40 60 80 100 120 140 3-15 4-15 5-15 6-15 7-15 8-15 9-15 10-15 11-15 12-15 1-16 2-16 3-16 4-16 5-16 Production ¡ù Source: Statista Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 26. ?? ???(2) China domestic iron ore¡¯s share ? ??? ? ?? ????? ??? ???? ? ???? ??? ??? ???(??+??) ??? ???(Domestic Share)? ?? ??? ???? ?? ?? ???? ?? 26 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0 10 20 30 40 50 60 70 80 1-13 3-13 5-13 7-13 9-13 11-13 1-14 3-14 5-14 7-14 9-14 11-14 1-15 3-15 5-15 7-15 9-15 11-15 1-16 3-16 5-16 (Mt) I'Ore Imports(Fe) I'Ore domestic(Fe) Domestic Share % ¡ù Source: HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 27. ?? ???(3) Chinese Iron Ore Inventory ? 2014? ?? ?? ??? ?? ??? ?? ??? ????? ?? ??? ?? ???? 2015? ??? ?? ???? 1??? ??? ? ??? ?? ??? ???? ??? 25? ??? 5? ??? ???? ? ??? ??? ?? ?? 27 0 10 20 30 40 50 60 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 64 Steel Mills¡¯ stock pile average Domestic Iron Ore Imported Iron Ore (Days) 6,000 7,000 8,000 9,000 10,000 11,000 12,000 0 20 40 60 80 100 120 140 160 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 ($/t) Chinese Port¡¯ Stockpiles Port stockpile Iron ore price (Mt) ¡ù Source: Bloomberg, Mysteel Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 28. ?? ??? ??(1) Iron ore Imports in China ? ??? ??? ???? 2014? ??? 13.8%? ??? ? 2015??? 2.1%? ????? ? ?? ?????? 2016?? ??? ? 9% ??, ?? ??? 10?? ?? ??. ? ?? ?? ?? ?? ?? ??? ???? ??? ???? ?????? ??? ???? ??? ??? ?? ?? ??? ?? ??? ??? ??? ???? ???? ???. 28 82 0 20 40 60 80 100 120 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 (Mt) China Iron ore imports 1Q Mt Annualized YoY 2014 457 933 13.8% 2015 453 953 2.1% 2016 494 1024 9.1% ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 29. ?? ??? ??(2) Iron ore Imports in China monthly ? ?? ???? 2016? ??? ? ???? ?? ?? ? 4,100??(9%) ??? 4?9400? ??? ??? ? 2? ??? ???? ???? ??? ?? ?? ?? 4??? ? 8??? ??? ?? ? ??? ???? ?? ??? ?? ???? ???? ?? 29 96 82 74 86 84 87 82 50 55 60 65 70 75 80 85 90 95 100 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) 2013 2014 2015 2016 ¡ù Source: Bloomberg, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 30. ?? ??? ??(3) Origin of Chinese Iron ore imports ? 2011? ??/???/?? ???? 1/3? ???? ?? ??? ?? ??? ?? ?? ? ??? ???? ???? ??? ???? ????? ???? 60%? ???? ?? ? ???? ?? ?? ? 15-20???? ???? ???? ???? ???? ? 20%? ? ??? ?????? ?? ?? ??? ?????? ??? ???? ?? ?? ?? 30 25% 0% 5% 10% 15% 20% 25% 30% 0 20 40 60 80 100 120 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 (Mt) ?? From Others From Australia From Brazil Brazil % ¡ù Source: Bloomberg, Mysteel Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 31. ??? ?? ??(1) Capesize Iron Ore Movement ? ?? ??? ??? ??? ?? ??? ???-??, ??-??? ???? ??? 31(Source: Platts, HJS)*Vessel Movement on June 2015 ¡ù Source: Platts cFlow, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 32. ??? ?? ??(2) Top 4¡¯s Iron Ore Expansion 32 ¡ù Source: Bloomberg, HJS 0 200 400 600 800 1,000 1,200 1,400 2009 2010 2011 2012 2013 2014 2015 2016e 2017f 2018f (Mt) FMG BHP Billiton Rio Tinto Vale ? 4? ??? ??? ??? Vale, Rio Tinto, BHP, FMG? 2009? ? 5?????? 2015?? ? ? 10???? ???? 2? ??? ?????? ? ?? ??? ??? $100???? $50?? ?????. ?? ??? ?? ??? ??? ??? ????? Vale? S11D? ? ??? ??? ?? ???? ??? ??? ?? ??? 2018??? 12??? ??? ? Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 33. ??? ?? ??(3) Iron Ore Production cost 33 ¡ù Source: Metalytics ? 2016? .BHP? Cash Cost? $15, Rio Tinto? $16 FMG? $22? ?? ???? ?? 2015 ?? ?? ? 20%? ?? ??? ???. ?? ?? ??? ??? ??? ?? Vale? 9? ?? ?? S11D ??? ?? ??? $11 ???? ??? ??? ??. ?? ??? ?? ? ? ?? ??(CFR) ??? $30~40???? ????? ??? ??? ?? ??? Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 34. ??? ?? ??(4) Brazil and Aus Iron ore exports ? ?? ???? 2016? 1-5? ? ???? ?? ?? ? 1890??(6%) ??? 3?2100?? ?? ? ? ???? ???? ???? ?? ? ???? 2016? ??? ??? 6% ??? ? 1?7730??? ??????, ? ? ??? ? ??? 1,930??(24%) ??? 9,810??(?? 55%)? ??? 34 67 57 63 67 65 68 30 35 40 45 50 55 60 65 70 75 80 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) Australia Iron ore exports 2013 2014 2015 2016 40 25 30 30 29 34 29 10 15 20 25 30 35 40 45 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Mt) Brazil Iron ore exports 2013 2014 2015 2016 ¡ù Source: Bloomberg, ClarksonContact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 35. ??? ?? ??(5) Brazil and Aus Iron ore exports Weekly ? ??? Royhill??? ?????? ?? ??? ?? ???? ???? ?? ? ???? Samarco ? ?? ???? ?? ?? ?? ??? ??? ??? ?? 35 0 2 4 6 8 10 12 14 16 18 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Million tons) Aus Iron Ore 2016 Aus Iron Ore 2015 Brazil Iron ore 2016 Brazil Iron ore 2015 ¡ù Source: Thurlestone Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 36. ???? ??? ??(1) Capesize earning & Brazil Fixtures ? ? ?? ??? ?? ?? 3? ?? ? ???¨C??? ?? ??? ???? Vale? S11D 9???? ??? ?? ??? ?? ??? ? ??? ?? ??. ? ?? ValeÉç? ?? ???? ? ??? ??? ??? Valemax 30?? ???? ?? ?? ? ??? ??? ?? ? ??? ???? 2018? ?? ?? ???? ?? ?? ??. 36 0 5 10 15 20 25 30 0 2 4 6 8 10 12 14 16 18 14-3 13 23 33 43 15-1 11 21 31 41 51 9 ? Brazil Fixture (3weeks av.) Fronthaul fixture C4TC ¡ù Source: HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 37. ???? ??? ??(2) Fleet development & Earning ? ???? ?? ??? ??? ??? ???? ?? ??? ??? ??? ??? ???? ? ??? ??? ??? ?? ???? ???? ??. ??? ??? ?? ?? ??? 2 ?? ?? ??? -0.80? ?? ? ????? ??? ??. ??? ?? ?? ?? ??? ?? ?? ??? ?? ?? ?? ??? ??. Jul 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 (3) (2) (1) 0 1 2 3 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 2015 2016 Capesize,$/day MillionDwt Fleet Change Cumulative C5TC 2M+ C5TC 37 Fleet ¡ù Source: HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 38. ???? ??? ??(3) Capesize Outlook ? ??? ??? ??? ???? ?? ???? dwt?? ??? ??? ???? ???? 5 ?? ???? ?? ??? ?????. ?? ??? ?? ???? 2018??? 30?? Valemax? ???? ???? ?? ????? ?? ??? ??? ?? ??? ??? 5% 5% 3% 5% 9% 9% 9% 9% 9% 19% 23% 19% 12% 5% 5% 0% 0% 0% 3% -10% -5% 0% 5% 10% 15% 20% 25% (20) (10) 0 10 20 30 40 50 MilliondwtofVessels Cape Cape Deliveries Cape Demolition Orderbook Growth Removal Delivery 38 ¡ù Source: Clarkson, HJS Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 39. ???? ??? ??(4) Capesize Earning Forecasts 39 ? ?? ?? ?? ?? ???? ???? ?? ??? ?? ??? ??? ??? ?? ? ? ?? ?? ??? ????? ????. ?? ?? ??? ??? ???? ?? ?? ?? ?? ?? ????? ??? ??? ?? ??? ???. ??? ?? ??? ? ???? ?? ???? ?? ??? ?? ???? ??? ??? ?? ??? ??? ¡ù Source: SSY, HJS 6,108 22,891 14,135 13,469 5,752 10,465 4,717 9,448 8,624 0 5,000 10,000 15,000 20,000 25,000 1H2013 2H2013 1H2014 2H2014 1H2015 2H2015 1H2016 2H2016 ($/day) Capesize Capesize earning & FFA Model Forecast FFA 16.7 Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com
  • 40. Previous Reports : includes freight forecasts (1) Bulk Supply : The Seeds of Recovery (Korean / English) (2) Tanker Supply : Oil Prices and Oversupply (Korean) (3) Coal Trade Market : The end of the coal era, soon or yet? (Korean / English) (4) Iron Ore Trade Market : Chinese steel market (Korean) (5) Understanding Bulk Shipping Market (Korean) We invite any comments and/or questions you may have. if you need bespoke reports & analysis, we would love to meet specific client needs. To discuss any individual requirements please contact below Daejin Lee / Commodity Research / Shipping / FFA Mob: +82-10-3462-5311 Email: daejin82@gmail.com Thank you Contact : Daejin Lee / daejin@hanjin.com / www.Jinresearch.com