Not that anyone is particularly interested in billet steel at...

Not that anyone is particularly interested in billet steel at the moment. Certainly the risks didn't include CV19.

Economic & Market Outlook Highlights

The study evaluated a number of growth scenarios for Nigeria based on the following macro-economic forecasts:

· Economic growth in Nigeria is accelerating after the 2016-18 recession.

· Implementation of the Economic Recovery and Growth Plan 2017–2020 should accelerate after elections in early 2019.

· Economic growth is expected to recover to 2.8% in 2019 and 4-4.5% in medium term in line with historic levels1.

· Construction growth rates (the major market for long products made from billet) will rise at 5-7% per annum in the medium term.

· Billet demand expected to return to previous levels of 2.3m tonnes by 2022-23 and rise to 2.9m tonnes by 2030.

· Risks to economic growth include a downturn in Chinese demand and a shift to a more generalised protectionist environment (led by the USA).

Billet Pricing Forecast

Based on the above scenario analysis Fastmarkets were able to reach the following conclusions on long term pricing of steel products in Nigeria:

· Fastmarkets forecasts a long-term average billet price over the period from 2019 to 2030 of US$476/tonnewith a range of US$428/tonne to US$ 513/tonne ex-works Lokoja, Nigeria.

· This is based on:

o a long-term international price of US$441/tonne fob Black Sea (compared to 2018 average price of US$489/tonne) and a 5% billet import tariff (expected to be imposed from 2019).

o Nigerian demand outlook.

o Balance between forecast Nigerian supply and demand.

· This is conservative compared to current prices of:

o Lagos local rebar US$468/tonne and CARES rebar (International quality) US$620/tonne.

o Abuja local rebar US$509/tonne, and CARES rebarUS$708/tonne; and

o Port Harcourt local rebar US$468/tonne and CARES rebarUS$675/tonne.

· CARES is a United Kingdom based standards organization that provides impartial quality control review of rebar product. Kogi believes its billet will be of a quality which will assist future offtake partners in reaching CARES quality criteria.

https://www.kogiiron.com/sites/default/files/asx-announcements/6916456.pdf