Head of Business Area: Martin Pei
SSAB APAC focuses exclusively on niche products. In 2010, almost 90 percent of deliveries were niche products, and in the coming year it is anticipated that virtually all volume sold will be niche products. The niche products are sold directly to end customers, and in an effort to provide good service, SSAB APAC has stock locations with finished goods spread out across the region, as well as two processing centers located in Kunshan and Singapore.
The APAC market is characterized by strong growth in steel consumption, and unlike other geographical regions, did not see any significant drop in steel consumption in 2009. Instead the market showed continued growth. However, growth rates vary significantly between different countries covered by the Group. In order to capture growth opportunities, strong focus during the year has been on developing the organization within APAC, alongside internal competence and capabilities.
The main growth driver is China. Growth segments where SSAB has a strong position include yellow goods, mining and lifting industries. The automotive industry also has seen great increases during the year and China has become the world’s largest car producer.
The steel demand in China dropped somewhat in the third quarter from the high levels of the first and second quarters, but increased again in the fourth quarter. The positive trend is expected to continue in 2011.
Another important market for SSAB is Australia. The high raw material prices, for coal and iron ore, have led to a booming mining industry, which result in strong demand for SSAB’s high strength steel products. The main applications for the mining industry are buckets and tippers. The demand from the tipper market decreased somewhat in the third quarter, but has returned in the fourth quarter. During 2010, SSAB increased its activities within value added services, and these efforts will continue into 2011 and beyond.
Indonesia is another market where the mining industry continues to grow strongly, and demand for SSAB’s products increased in this market during 2010.
Korea and Japan are mature and stable markets. In Korea, the automotive industry showed an increase in production of approximately 22 percent in 2010, although the trend weakened during the latter part of the year. For SSAB, the lifting segment has continued to weaken, partly due to the slow development in the construction sector. In Japan, SSAB’s main segment is the tipper industry. This market has been stable, but growth opportunities are expected in other areas such as recycling and scrap shredding.
One market which is expected to grow significantly moving forward is India. As a result, SSAB increased its presence in this market. Automotive and yellow goods are examples of growing segments where SSAB’s products are attractive. Additionally, Thailand and Vietnam are other emerging markets where growth opportunities exist for SSAB’s high strength steels.
Main competitors for SSAB within APAC are both local and European steel producers. For example, local competitors include Japanese JFE and NSC, Posco from South Korea and Chinese Baosteel, Hebei and Wuhan, as well as Bisalloy in Australia. European producers competing with SSAB in APAC include ThyssenKrupp, Rautaruukki and Dillinger.
In February 2010, SSAB approved investment in a new finishing line in the plate center at Kunshan. Production is expected to begin in the fall of 2011, and investment amounts are estimated at SEK 300 million.
The finishing line will receive semi-finished plate material from Mobile, USA, and Oxelösund, Sweden, as well as perform finishing activities such as shot blasting, painting and cutting to customer sizes. The investment will improve services to customers through shorter lead times, better delivery performance and increased flexibility. Part of the investment approved in February 2010 was the establishment of an R&D facility in Kunshan. The facility will focus on application development of high strength steels, and customers will together with SSAB provide an opportunity to improve production efficiency and product structural design.
The existing plate center will be equipped as a Hardox Wearparts Company, offering value added service to the Chinese market.
During 2010, a decision also was made to implement a common IT platform for the APAC business area. This will enable better information sharing and service to our customers. Total capital expenditures in 2010 amounted to SEK 60 (6) million, of which SEK 58 (0) million related to the strategic investment programs.
Sales increased by SEK 743 million to SEK 2,326 (1,583) million. Earnings before depreciation/amortization amounted to SEK 238 (76) million. Operating profit increased by SEK 162 million to SEK 232 (70) million.
|Shipments, thousand tonnes||2010||2009|
|Shipments||- Quenched steels||100||62|
||- AHSS 1)||89||46|
||- Ordinary steels||27||1|
1) Advanced High Strength Steels