Month: July 2016

Members of the European steel trading community were angered by the initiation of an anti-dumping investigation into imports of hot rolled coil from five countries with one warning that the current direction of travel will see the market develop into a mill-led monopoly.

For over a year the European Commission has been under huge pressure from steel producers to address what they consider to be dumping by certain countries. Last week Mattia Pellegrini of the European Commission outlined the situation telling the Platts Steel Markets Europe conference in Barcelona, “steel is the most vocal group. If they want to get access to [EC president] Junker, then the steel industry will get access to Junker”.

However, downstream players have become increasingly agitated with independent companies relying on imports to compete with domestic mills claiming that they are being squeezed out.

One trader said that while the EU “cannot be compared with the US” in terms of scale of trade barriers, “it is very clear that Eurofer is trying to close the European steel market for non-EU producers”.

In a statement reacting to the investigation, Eurofer told Platts, “we are pleased that the case has now been formally opened by the Commission, but we can only wait and see what the results will be months down the line if and when provisional duties are applied”.

Jeffrey Kabel, chairman of the International Steel Trade Association (ISTA) said the situation was becoming unfair, “this is beginning to look a tad like Fortress Europe – strange as the global market has been relatively buoyant. ISTA believes in free and fair trade. I would think both large and smaller steel buyers will begin to seriously challenge their potentially dwindling lack of choice”.

The trader concurred, “in the EU, more than 50% of the steel service sector is in the hands of the European steel mills. This is an increasing share. You will find the same tendency in building components and other sectors. Consequently, the mills have a direct influence on the market pricing of finished products and the competitiveness of independent (non-integrated) manufacturers”.

However, European producers claim that they support free and fair trade but that anti-dumping measures are required to create a level playing field for domestic suppliers.

— Peter Brennan

The first five months of the year showed a significant recovery in shipments for multi-product stockholding distributors and flat steel service centres, according to European association Eurometal.

EU flat SSC shipments recovered 10% year-on-year during the Jan-May period, with May marking a 13% y-o-y recovery compared with the same month in 2015.

Multi-product distributors on the other hand registered a 4% y-o-y recovery in shipments during the first five months of the year. The main driver in the recovery was long products, which saw shipments increasing 8% y-o-y during the period. The increase in shipments is usually associated to stronger end-user demand for steel.

Both SSC and multi-product distributors decreased their stock levels during the first five months of the year. At the end of May, SSC had 64 days of shipments at their plants, down two days y-o-y. Multi-product distributors held 70 days of shipments at the end of May, compared with 81 days a year before.

— Emanuele Norsa

Inventories at German steel stockholders have reached just over last year’s level at 2.4 million metric tons in May (up 0.6% year-on-year), after being below 2015 levels all year, according to latest figures from the stockholders’ association Bundesverband Deutscher Stahlhandel (BDS), which show a continuing uptick in restocking activity since January.

Whereas long products stocks fell by 1.8% year-on-year to 866,499 mt, flat products went up by 2% y-o-y to 1.5 million mt. Sales volume from distributors continued the upward trend, showing an increase compared to the same month last year of 8.5% to 883,471 mt, and a 7.4% drop in total in month-on-month comparison.

Flat product sales grew by 9.7% y-o-y to 507,701 mt, but fell in m-o-m comparison by 8.6%. Long products went up by 7.8% y-o-y, but fell by 6% m-o-m to 284,953 mt.

According to Platts’ monthly German steel sentiment survey, published Wednesday, traders, service centres and stockholders gave a bearish outlook for Q3 regarding buying demand as well as price stability.

— Laura Varriale

European steel distributors association EUROMETAL tells Kallanish that European Union (EU) distribution sector sales grew and inventories reduced for both flat and long products in May and over the first five months of 2016.

Flat steel service centres saw shipments grow year-on-year by 13% in May itself and by 10% over January-May. Stocks meanwhile, expressed in days of shipments, were at 64 days at the end of May 2016 compared to 66 days in May 2015.

EU Multi-Product & Proximity Stockholding distribution, mainly involving longs, tubular products and stainless steel, noted excellent seasonal activity in long steel products, Eurometal says.

Good sales of long products in May boosted growth over the first five months of the year to an average y-o-y increase of 8 %. During the same period, shipments of tubular products and of stainless steels averaged a growth rate of 4 %.

Stocks, expressed in days of shipments, were at 70 days at the end of May 2016 compared to 81 days in May 2015.

Offers of cold rolled coil from China into the European market have been withdrawn, according to sources, as traders react angrily to further European Commission trade measures.

While the euro has weakened against the dollar, sources in the north European market said Chinese offers had been made less competitive by the possibility of the absorption clause being triggered. This clause would allow the EC to double the current 22% duty. Chinese CRC offers had been reported at €458-460/mt CFR including the anti-dumping measure.

“There were some interesting offers from Chinese suppliers and traders for CR with the guarantee the AD duty would be included: these offers have disappeared, some offers were officially taken back because of the risk that the EC might increase the final dumping duty,” a German source said.

The official initiation of an investigation into hot rolled coil sourced from Serbia, Brazil, Russia, Ukraine and Iran has further angered traders and independent downstream manufacturers who import from outside of Europe.

“This is the way to kill the main industry in Europe, which is manufacturing. We shall see – instead of steel coming in – it will be refrigerators and washing machines,” said Alessandro Fossati, a senior steel trader.

Numerous trading sources have told Platts anti-dumping measures fail because they result in the imports occurring further along the value chain. But steelmakers argue that the measures are required to allow free and fair trade.

— Peter Brennan

A consortium has been established to represent the interests of European primary and secondary users of hot rolled coils, with “the aim of protecting their freedom to source these products from third countries”, according to a note sent to Platts by the Italian steel distribution association Assofermet.

For the first time in such a consortium, the group includes re-rollers, strip processors, traders and importers. About 15 companies are understood to have signed up so far, with more on the way.

The consortium in the note expressed “their firm opposition to the risk of foreclosing the European market to imports, which would have disastrous consequences for the European steel users and downstream industries”.

The group – so far un-named – has been established after the recently initiated anti-dumping case against imports of HRC from Brazil, Iran, Russia, Ukraine and Serbia, on top of the investigation already started against China in February.

“The consortium will gather the views and grounds of its members, which consist of undertakings of different sizes and active in different markets, with the aim of conveying them to the competent authorities. Moreover, the consortium will provide assistance to the undertakings concerned regarding the possible implications resulting from the ongoing anti-dumping proceeding”, the note explained.

The consortium is represented by the Brussels-based law firm Van Bael & Bellis.

— Annalisa Villa

Thyssenkrupp’s Steel-Service-Center group has expanded its capacity in Europe by adding German stainless steel specialist Edelstahl-Service-Center in Willich to its network, plus the planned integration of aluminium processor Metallcenter Wörth by the end of the fiscal year, Thyssenkrupp said on Friday. The Service-Center group will also start to operate under the new name of Materials Processing Europe.

The new service centers follow the recent acquisition of the steel center in Györ, Hungary, to target the automotive sector, as reported. The added locations have increased the annual production capacity of the network to more than 2 million metric tons, according to Thyssenkrupp. Around 40% of sales are now made outside Germany. The networks supply carbon steel, stainless steel and aluminium.

“We are confident that our international organisation and our product diversity represent unique selling points on the market and will enable us to meet rising customer requirements,” said Marcus Wöhl, CEO of Thyssenkrupp Materials Processing Europe.

— Laura Varriale