STEMCOR The world's largest independent steel trader
STEMCOR The world's largest independent steel trader
STEMCOR The world's largest independent steel trader
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<strong>STEMCOR</strong><br />
<strong>The</strong> world’s <strong>largest</strong> <strong>independent</strong> <strong>steel</strong> <strong>trader</strong><br />
(c) Stemcor Holdings Limited. No part of this presentation may be used without Stemcor's prior written consent.<br />
<strong>The</strong> presentation should not be relied on for any investment decisions or other commitments.
Stemcor at a glance<br />
London company founded in 1951 as a joint venture with Coutinho,<br />
Caro & Co Co, Hamburg (CCC)<br />
– In 1988 bought out CCC’s shareholding & changed name to Stemcor<br />
Retains independence p from <strong>steel</strong> pproducers<br />
Five 5 core competencies:<br />
– Finance, Raw Materials, Steel Trading, Distribution, Stockholding<br />
– Raw Materials trading supported by mining investments<br />
Handled 15m+ tonnes of <strong>steel</strong> and raw materials in 2009 (2008: 20m+)<br />
Turnover of £3.5bn in 2009 (2008: £6.3bn)<br />
Global network: 1,500 people, 80 offices, 40 countries<br />
TTwo thirds thi d owned d bby one ffamily, il a thi third d owned d bby staff<br />
t ff
Every step in the <strong>steel</strong> supply chain<br />
•Stand-alone S<br />
services<br />
•Integrated supply chain<br />
solutions
From minehead to factory floor
Our values<br />
Independence<br />
– By being objective, we get the best deals for our business partners<br />
Transparency<br />
– We foster open, collaborative relationships built on trust<br />
Integrity<br />
– Once we have made a commitment, we stand by it<br />
Competence<br />
– We deliver results and strive for continuous improvement
History
Stemcor history<br />
1951 Founded as a joint venture with Coutinho, Caro & Co. (CCC) of Germany<br />
1963 Created Euro<strong>steel</strong> to expand the UK import business.<br />
1984 Coutinho, Caro acquired by McDermott International.<br />
1988 Partners bought out Coutinho, Caro (London) and changed name to Stemcor.<br />
1990s Focus shifted to <strong>steel</strong> and raw materials trading, other interests divested.<br />
1998 Acquired Samac Steel Supplies in the UK.<br />
2004 Acquired WSK in Germany.<br />
2005 Acquired the Uldry <strong>steel</strong> trading business of IMS in Switzerland.<br />
2006<br />
2007<br />
2008<br />
2008<br />
2009<br />
Acquired S+B Flachstahl and OKS in Germany.<br />
Acquired Kenilworth Steel and the business of Global Marketing in the USA.<br />
Acquired Steel Plate & Sections (SPS) in the UK, specialising in the oil & gas sector.<br />
Acquired Barclay & Mathieson in the UK, a general <strong>steel</strong> stockholder.<br />
Acquired Ferrosource in the USA, a pig iron and scrap distributor.<br />
Expanded the engineering <strong>steel</strong>s business in Europe and Australia.<br />
Alliance with Deutsche Bank to trade <strong>steel</strong> derivatives derivatives.
millions)<br />
nes Invoiced (m<br />
Tonn<br />
Past performance – tonnes handled
Past performance – turnover £m
Past performance – pre-tax profits £m
About Stemcor
What we offer<br />
For producers of <strong>steel</strong><br />
– Cost-effective marketing, logistical and financial services to secure<br />
customer business in overseas markets. We also provide raw materials<br />
and trade finance arrangements to facilitate production<br />
For purchasers of <strong>steel</strong><br />
– A reliable and flexible sourcing channel with financial support. Our<br />
trading g and distribution activities serve customers who wish to ppurchase<br />
<strong>steel</strong> on a duty-paid basis delivered to their premises on open terms.<br />
Our stockholding facilities cater for the needs of customers who<br />
purchase in smaller quantities for prompt delivery<br />
For project promoters<br />
– Stemcor regularly invests in <strong>steel</strong> projects that complement our<br />
business, bus ess, offering o e g financial a c a bac backing g & international e a o a marketing a e g so solutions u o s
Our competitive strengths<br />
Track record - trusted, with reputation for contract fulfilment<br />
High calibre people - at every level, with low staff turnover<br />
Diverse base - long-standing producer & customer relationships<br />
One-stop shop - wide range of <strong>steel</strong> services<br />
Open culture - <strong>independent</strong> from <strong>steel</strong> mills<br />
Flexibility - quick reaction to market movements<br />
Financial backing - transactional finance facilities with 50+ world<br />
leading banks and substantial syndicated Revolving Credit Facility<br />
Rigorous risk management - controls controls, reporting reporting, insurance insurance,<br />
guarantees, hedging<br />
Advanced IT systems - close control of transactions, inventory and<br />
shipping activities
Board of Directors<br />
Ralph Oppenheimer – Executive Chairman<br />
Philip Edmonds – Deputy Chairman<br />
Julian Verden – Group Managing Director<br />
David Faktor – Group Managing Director<br />
David Paul – Director Director, Finance<br />
Steve Graf – Director, North America<br />
Michael Broom – Director, Group Treasury & Risk<br />
Gerry Craggs – Director Director, Far East<br />
Graham Donnell – Director, Group General Counsel<br />
Ron Harvey - Director, Engineering and Stainless Steels<br />
Colin Heritage – Director Director, Trade Finance<br />
Chris Rocker – Non-executive Director<br />
Matthew Stock – Middle East and South Asia<br />
Paul Whitehead – Director, Group Mining and Australasia<br />
Member of the<br />
Management Committee
Our locations
Stemcor trade flows 2009
5 core competencies<br />
Stockholding<br />
Di Distribution t ib ti<br />
Steel Trading<br />
Raw Materials<br />
Finance
Finance<br />
Financial engineering beyond guaranteeing payment to suppliers<br />
and extending credit to buyers<br />
Pre-production finance for <strong>steel</strong> mills<br />
Structured finance for <strong>steel</strong> mills’ working capital needs, including<br />
procurement of raw materials<br />
Project finance for <strong>steel</strong> industry capital expenditure requirements<br />
Finance for the mining of raw materials<br />
Consignment g stock and collateral management g agreements g<br />
Fulfilment of reciprocal ‘offset’ or ‘countertrade’ commitments
Projects<br />
St Stemcor’s ’ projects j t team t seeks k to t assist i t new ventures t in i<br />
businesses that complement the group’s trading operations<br />
Projects can take various forms, including turnkey equipment<br />
supply, raising of new equity and offtake agreements e.g.<br />
Georgian Manganese – Georgia<br />
– $112m project to consolidate three industrial assets including a<br />
manganese ore mine, ferroalloy plant and hydro-power station<br />
Advisory services – market analysis, research, project feasibility
Steel futures<br />
Price volatility is increasing<br />
Stemcor Risk Management uses the new <strong>steel</strong> futures<br />
exchanges to manage price risk for the Group<br />
Alli Alliance with ith DDeutsche t h BBank k tto offer ff hedging h d i services i tto clients li t<br />
– Solutions for mitigating risk exposures and protecting operating margins<br />
Offer long-term long term fixed price contracts to customers<br />
Hold unsold stocks in warehouses and hedge price risk<br />
Commit to long-term g purchase p contracts from <strong>steel</strong> pproducers<br />
Enable longer-term variable price contracts linked to an<br />
objective price index
5 core competencies<br />
Stockholding<br />
Di Distribution t ib ti<br />
Steel Trading<br />
Raw Materials<br />
Finance
Raw Materials<br />
Establish new trade flows<br />
Strengthen alliances with<br />
mills. Supply raw materials in<br />
return for finished <strong>steel</strong><br />
Raw materials tonnage linked<br />
to the provision of finance<br />
Make equity investments or<br />
offer structured finance<br />
packages to raw material<br />
producers<br />
RAW MATERIAL PRODUCTS<br />
Iron ore<br />
Pig iron<br />
HBI / DRI<br />
Coal / Coke<br />
Ferro alloys<br />
Scrap
Raw Materials investments<br />
Savage River in Tasmania was a great success<br />
Transfer investment to India<br />
– Large scale, high grade deposits<br />
– Projects located at the centre of India’s <strong>steel</strong> industry growth<br />
– High domestic demand, with Indian <strong>steel</strong> production planned to<br />
double to 100m mt by y 2020<br />
Three key ventures in India<br />
– Mideast Integrated Steel Ltd (MISL) – 10% equity + trading rights<br />
– Aryan Mining & Trading Corporation – 50% JV with local partner<br />
– Brahmani River Pellets Ltd (BRPL) – 100% owned pellet plant
5 core competencies<br />
Stockholding<br />
Di Distribution t ib ti<br />
Steel Trading<br />
Raw Materials<br />
Finance
Steel trading<br />
STEEL PRODUCTS<br />
Semi-finished products<br />
Flat products<br />
Long products<br />
Tubes<br />
Special <strong>steel</strong>s<br />
Engineering<br />
Stainless<br />
Global infrastructure brings g us<br />
close to producers & customers<br />
Ability to offer prepayments to<br />
suppliers & credit to customers<br />
Integral part of <strong>steel</strong><br />
purchasers’ supply chains<br />
Specialist global product<br />
management expertise<br />
Act as principal or on a<br />
commission basis<br />
Local market knowledge
Shipping & Logistics<br />
FFrom seller ll tto buyer: b cost-efficiently, t ffi i tl securely, l timely ti l<br />
Full service - loading, shipping, storage and inland distribution<br />
Ocean transportation transportation, from containers to capesize vessels<br />
– Short and deep sea charters (whole/part cargo or time charter)<br />
Shipping pp g centres in London, , New York, , Singapore g p and Zug g<br />
– Forwarding operations supervised by Stemcor’s local offices<br />
Break-bulk at port of arrival and onward distribution by road, rail<br />
or waterway<br />
Marine insurance and cargo inspection
5 core competencies<br />
Steel Trading<br />
Raw Materials<br />
Finance<br />
Stockholding<br />
Distribution
Distribution<br />
Serves customers who wish to purchase <strong>steel</strong> on a duty paid<br />
basis, delivered to their premises on open terms<br />
Orders taken usually for substantial quantities for forward<br />
delivery, with transport from overseas normally by ship<br />
Service must be at least as good as that of domestic<br />
producers, p , even though g delivery y is from further afield<br />
Pre-sold stock held for customers and delivered just in time<br />
Essential feeder service for stockholders, service centres and<br />
large end-users
5 core competencies<br />
Stockholding<br />
Di Distribution t ib ti<br />
Steel Trading<br />
Raw Materials<br />
Finance
Stockholding<br />
Wid Wide range of f products d t and d di diverse customer t bbase<br />
Close proximity and immediate availability<br />
Customers benefit from our purchasing strength<br />
Processing – can use capital equipment 24x7<br />
Several steps closer to actual end-user end user needs<br />
Shift towards virtual stockholding approach<br />
– Outsource warehousing and transportation<br />
– Concentrate on core competencies and customer care
OKS
Strategy and outlook
Our strategy
Emerging markets<br />
<strong>The</strong> urban population is forecast to reach 55% by 2014, driving<br />
demand for <strong>steel</strong> in emerging markets<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010F 2012F 2014F<br />
Rural population Urban population<br />
Economic Intelligence Unit
MTT<br />
million<br />
2,100<br />
1,800<br />
1,500<br />
1,200<br />
900<br />
600<br />
300<br />
Market outlook<br />
0<br />
1,310 1,314<br />
1,219<br />
1,325<br />
1,416<br />
2,000<br />
2007 2008 2009F 2010F 2011F 2020F<br />
Crude <strong>steel</strong> apparent consumption<br />
(World Steel Association)<br />
Many market observers expect global <strong>steel</strong> consumption to increase<br />
by more than 50% over the next decade to 2 billion tonnes per year
Stemcor outlook<br />
Retain our focus on <strong>steel</strong><br />
Sound business model, strong global network and solid platform<br />
for resuming growth<br />
Seize opportunities in emerging markets, both in international<br />
trading and domestic distribution<br />
Opportunistic investments in mining to support our raw materials<br />
trading business<br />
Ambition is to become the world’s most profitable <strong>steel</strong> trading,<br />
di distribution t ib ti and d stockholding t kh ldi group
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