Month: October 2017

ASSOFERMET presents “Chinese Steel in Milan to meet the European Distribution”

20th november 2017 at 9:30am

Grand Hotel Villa Torretta – Sesto S. Giovanni

Milano, Italia

Event will be attended by some of the most important Chinese Steelmakers among Top 10 in the World Ranking 2016 together with their National Association CISA (China Iron and Steel Association).

 Conference Program

Both EU flat steel and multi-product service centers increased shipments in August despite fewer overall deliveries so far in 2017 compared with last year, according to steel and metals distribution federation EUROMETAL.

In a year-on-year comparison, EU flat steel service centers (SSC) saw sales up 7.2% in August, reflecting improved demand from end-users. However, shipments of flat products remained slightly subdued on a year-to-date basis due to weak sales at the beginning of the year.

This year’s high inventory levels among flat steel service centers persisted throughout the month with the index of stock volumes at 111, compared with 105 in August 2016 (average 2015=100).

Multi-product stockholders faced similar developments. While sales of longs, tubular products and stainless steel rose 5.6% in August year-on-year, total shipments between January and August were down 2%, compared to the same period last year.

Contrary to flat steel service centers, multi-product distributors saw inventory levels falling slightly in August. “Expressed in days of shipments, stocks of August 2017 levelled at 75 days, to be compared with 80 days in August 2017,” EUROMETAL said.

Pascal Dick, S&P Global

1. Trump is not the US steel industry savior

President Trump’s ascent to the White House was largely lauded by the US steel industry. But worldsteel has forecast US steel demand growth of just 1.1% in 2018, down from 4.8% this year. Nucor chief executive John Ferriola said the industry was “a little bit concerned” that the Section 232 investigation into imports was dragging on, but he insisted confidence remained that 232 would be positive for the local industry. As for the much-mooted $1 trillion infrastructure spend, Ferriola said new infrastructure was sorely needed but the bill had yet to pass and therefore that demand had not been included in the outlook for next year.

2. China’s steel consumption has been drastically underestimated

Worldsteel surprised with its 12.4% increase for Chinese steel demand this year, due to the removal of induction furnace capacity. Much like shadow banking, China’s true steel capacity situation has always been hard to accurately estimate given the size and fragmentation of the industry. Using local, poor quality scrap rather than iron ore meant the demand could not be worked out by calculating Fe units. How long had China harbored ‘ghost’ capacity roughly equivalent to annual US steel production?

3. Emerging nations start to dominate leading consumers table

Next year sees Vietnam take its place for the first time among worldsteel’s Top 10 steel consuming countries, with 27 million metric tons. Along with the Philippines – which could one day join its Southeast Asian compatriot on the list – Vietnam is the major driver of steel demand in the region. Mexico is one place ahead of Vietnam in 9th position, with worldsteel predicting steel demand of 27.6 million mt. Back in 2007, Italy and Spain were both on the list but Germany is the sole European representative in 2018.

4. Technical improvements contribute to subdued demand outlook

Next year all global regions will show positive demand growth, even though the overall outlook is subdued at just 1.6% growth. In coming decades some 1.5 billion people will move from the countryside to cities, generating demand for apartments, cars and appliances. However, steel demand growth will be slower than previously due to stronger and lighter materials, meaning less steel will be needed to do what it did in the past, worldsteel director general Edwin Basson explained.

5. Trade disputes unlikely to fade anytime soon

With one in every three tons of steel produced crossing borders in a world where there is enough installed capacity to supply steel demand for the next 20 years, it is inevitable that trade disputes will remain rife. That trade has to be protected and therefore trade cases are a “natural part” of international business, was the prevailing view at worldsteel. However, unilateral action on trade taken by the US could lead to complaints to the WTO, a ratcheting up of “tit for tat” reprisals and a loss of trade security, one speaker said.

Paul Bartholomew, S&P Global

The recent investigation into imports of hot rolled coil from Russia, Brazil, Ukraine, Iran and Serbia was the first to receive substantial input from traders, according to the European Commission.

Speaking at the EUROMETAL International Steel Trade Day event in Belgium, Aleksandra Kozlowska, policy officer at the European Commission, said the response to the investigation was “huge” with trade associations, traders and manufacturers providing more of a counterweight against producer lobbying than had previously been seen.

“We take a very balanced approach, but it’s true that in the past the mills had more weight because the traders were not vocal… This was the first case I saw that you were so active. We took it on board,” Kozlowska said.

The case developed unusually with Brazilian and Russian HRC made subject to registration in January only for the EC to later find there were no provisional duties required. A later proposition to impose a Minimum Import Duty was also scrapped following feedback before a fixed tariff per metric ton was agreed.

Stemcor’s Julian Verden, who was heavily involved with a consortium lobbying on behalf of traders, end users and independent distributors, told the audience in Ghent he was in favor of some protection as long as the European industry remains efficient. “We should not make the EU industry inefficient and dependent on subsidies whether that is through direct subsidies or higher prices for consumers.”

Simone Jordan, chairwoman of trade association ISTA, said the group was disappointed the MIP was not enforced as a fixed duty is likely to rule out all of the mills involved in the case except Severstal, which received a duty of €17.60/mt, significantly below the €56.70/mt average.

Peter Brennan, S&P Global

The timing of two major mergers in the European flat steel market was “not helpful” to the European Commission’s attempts to defend the industry, a policy officer for steel at the EC said Wednesday.

Speaking at the EUROMETAL International Steel Trade Day in Ghent, Aleksandra Kozlowska said the combination of ArcelorMittal’s takeover of Ilva and ThyssenKrupp’s joint venture with Tata Steel will “cause us a couple of sleepless nights.”

A number of participants at the event expressed nervousness that domestic consolidation combined with broadening anti-dumping duties will make it harder for independent distributors to compete with mill-tied stockholders and service centers.

Kozlowska said the EC had sent out questionnaires to affected parties in the wake of the Ilva takeover announcement and a deadline for the first phase of the EC’s investigation will be October 26. After this the EC will either clear the sale or make a statement of any objections, which the actors involved in the process would have to address.

A similar process will occur for the ThyssenKrupp and Tata Steel joint venture, which is expected to attract debate on the prominence of the potential combined downstream operation.

A service center buyer said he is concerned not only that a more consolidated industry will reduce competition on prices, but also stifle research and development. “Now I can go to both Tata and ThyssenKrupp and talk about developing a certain grade, now there will just be one and I will have to pay whatever they say.”

Peter Brennan, S&P Global

At the recent Stahlhandelstag organised by German steel distributors’ association BDS in Darmstadt and attended by Kallanish, the evolution of workable online platforms for steel purchasing was a central topic. In his presentation Heinz Jürgen Büchner of IKB Bank asked the question, ‘… who will stay on top as this development unfolds, and how?’

According to a study by the Cologne Institute of Economic Research (IW) cited by Büchner, one quarter of steel buyers are now using online platforms, “… and in five years it will be half,” he added. This development will be accompanied by a shift to more direct sales from the mills, which is why “… distributors need to apply digitalisation to secure a piece of the action,“ he said

Big companies, like Klöckner, with global sourcing potential, are in a good position to drive digitalisation, Büchner said. “There will always be the small and regional players, as mills have no interest in [… selling] standard products’ lots which are too small,” he added. However, it is the wide range of the middle rank of steel distributors which will be the group most at risk from digitalisation, “… unless you have some unique selling point, you are a supplier for (large infrastructure projects like) Stuttgart 21 central station, or you are the extended workbench of Daimler,” he continued.

In this scenario, the future fate of distributors could resemble that of travel agencies in earlier times. The more standardised the products, the more they will be traded online, “… while products that need a lot of consultation will remain the job of ‘brick-and mortar’ stockists.”