Month: July 2018

European distributors saw shipments decrease during the first six months of the year, EUROMETAL explains in a release sent to Kallanish.

Flat steel service centre shipments moved down -2% year-on-year in January-June, while multi-products distributors saw shipments increase a mere 0.1% y-o-y.

June was particularly slow for flat service centres as their shipments dropped over -5% y-o-y. After quite some destocking the level of stocks at flat service centres was calculated to be equal to 69 days of shipments, equal to the level reached at the end of June 2017.

Spain’s Gestamp is on course to meet 2018 financial performance targets following the first half of the year, the company says in its quarterly report monitored by Kallanish. Gestamp is a major supplier of components to the global automotive sector.

Rising revenue and Ebitda in H1 were mainly driven by higher sales in the Eastern European and Mercosur markets.

“Our positive performance was supported by the start-up of new projects in North America, Europe and Mercosur,” Gestamp confirms. “Nevertheless, revenues were partially offset by greater fluctuations in exchange rates. The H1 results are in line with our expectations and full year target.”

Gestamp has extended its production facilities, adding three new plants to its business. The company acquired a plant in Sorocaba, in the Brazilian state of São Paulo, and has started up operations at its Tianjin project in China. The Spanish supplier also signed a joint venture agreement with China’s Beijing Hainachuan Automotive Parts (BHAP) for hot stamping, as well as for automotive components and chassis production. The transaction is subject to approval from competition authorities.

During H1, Western European revenue decreased by -0.4% on-year to €2.13 billion ($2.48 billion), while in Eastern Europe it grew by 18.4% to €572.4 million. Mercosur sales rose 19.7% to to €306m. North America and Asia market sales were up by 0.8% and 2% respectively y-o-y to €757.6m and €506.5m.

Six-month net profit was up 16.5% to €135.6m. Ebitda was up 7.8% to €487.9m.

Tata Steel Europe has signed an agreement to sell its German aluminum roofing and cladding business Kalzip to German steel construction group Donges SteelTec in order to focus more on core businesses at its Dutch and UK sites, the steelmaker said Thursday.

“This sale will enable Tata Steel in Europe to focus investment and management resource on its core strip products business and strategic markets,” said Hans Fischer, Tata Steel European Operations CEO.

According to Mutares Group, the German parent company of Donges, the transaction is expected to be completed by the end of September, following regulatory approval.

Tata Steel said in May it would offload five business units. Apart from Kalzip, the sales will include UK electrical steel producer Cogent; UK steel coater Firsteel; Turkey-based coil-coating group Tata Steel Istanbul Metals, and UK stockholder Engineering Steels Service Centre.

“The signing of this agreement follows the successful sale of other non-core businesses in recent years, such as Long Products Europe and Speciality Steels,” said Fischer.

Tata Steel Europe signed an agreement with German industrial group Thyssenkrupp in late June to combine their steel divisions. The merger is expected to be concluded early next year following approval by European competition authorities.

Laura Varriale, PLATTS

• USA, from advocate of free trade to figurehead of protectionism. Commodity markets are not indifferent to this either. Aluminium, copper and nickel begin to fall. Recovery follows.
• Goldman Sachs thinks the influence of the trade war on commodity markets, with few exceptions, is exaggerated and recommends buying commodities. The US Senate is becoming increasingly nervous.
• The columnist of Metal Bulletin criticises the roll-back of the Dodd-Frank Act in the USA, and especially the Volcker Rule. Some banks are already preparing themselves for it. Sad.
• Sustainability moves share prices, both upwards and downwards. Nothing works without compliance. The London Metal Exchange has announced several new contracts for January 2019.

  oryx_commodity_news_12.07.2018

The European Commission has imposed provisional safeguard measures for 200 days on imports of 23 steel product categories, it says in its official gazette. These mean a 25% tariff will be levied on EU imports that exceed a global quota based on the average tonnage from 2015-2017.

The decision follows an investigation initiated due to a complaint made by European steelmakers association Eurofer. It aims to shield the European market from an increase in imports resulting from the 25% tariff imposed on steel imports by the US in March.

“It was preliminarily concluded that the Union steel industry is in a situation of threat of serious injury for the 23 product categories under assessment and that this situation is likely to develop into actual serious injury in the foreseeable future,” the Commission explains in the notice seen by Kallanish. “Given the critical circumstances, it is considered that provisional safeguard measures should be taken in order to prevent damage to the EU steel industry which would be difficult to repair before the conclusion of the current investigation.”

The import quota will be allocated chronologically on the base of the date on which declarations of release for free circulation are accepted. All countries of origin will be included in the quota system, excluding EEA members and developing countries that do not supply into the EU more than 3% of a given product category. “This means that economies such as China and Turkey provisionally escape safeguards on some products,” Eurofer explains.

In the case of products already covered by anti-dumping and anti-subsidy measures, the EC says these duties will continue to apply. Nevertheless, if the quota is surpassed, in order to avoid the imposition of double remedies, the level of existing duties will be suspended or reduced to ensure they do not exceed the highest level of safeguard or duties in place.

As reported, Eurofer previously requested individual quotas by country of origin, but authorities decided otherwise. “The remainder of the investigation will determine whether an allocation of quota by exporting country is desirable in order to ensure traditional trade flows from these countries and having regard to the impact of the provisional measures,” the Commission observes. “In particular, the Commission will have to consider the potential effect of the anti-dumping and anti-subsidy measures currently in force on the allocation and usage of a per-country quota.”

The European Commission on Wednesday announced provisional safeguard measures on 23 categories of imported steel products, in order to curb the diversion of steel into the EU as a result of US import tariffs implemented earlier this year.

The safeguard measures will come into effect on Thursday and can remain in place for a maximum of 200 days, the EC said in an official statement.

According to the EC note, they will take the form of a tariff rate quota. For each of the 23 categories, tariffs of 25% will only be imposed once imports exceed the average of imports over the last three years. The quota is allocated on a first-come, first- serve basis, and at this stage not allocated by individual country.

The measures will be imposed against all countries, with the exception of some developing nations with limited exports to the EU. Norway, Iceland and Liechtenstein also are exempted, given the close economic links between the EU and the European Economic Area. The exclusions are compatible with both the EU’s bilateral and multilateral Word Trade Organization obligations.

According to the EC statement, all interested parties will now have the opportunity to comment on the findings of the investigation so far, with the EC taking the comments into account in reaching its final conclusion by early 2019 at the latest. If all the conditions are met, definitive safeguard measures may be imposed.

“The US tariffs on steel products are causing trade diversion, which may result in serious harm to EU steelmakers and workers in this industry. We are left with no other choice than to introduce provisional safeguard measures to protect our domestic industry against a surge of imports. These measures nevertheless ensure that the EU market remains open, and will maintain traditional trade flows,” Commissioner for Trade Cecilia Malmstrom said.

According to the statement, the EC received overwhelming support for the measures from the EU member states. The measures follow the initiation of an investigation on March 26 that covered 28 product categories.

Imports of 23 steel categories of steel were found to have increased in the last few years. The 25% tariff has been calculated by using a so-called partial-equilibrium economic model, which is a standard tool for trade policy analysis by investigating authorities, including the EC.

Annalisa Villa, PLATTS

With serious changes currently seen in the European steel sector, it is very important for all businesses of the supply chain, and particularly for distribution, to adapt to the new reality, enhance the value chain of steel and remain competitive and cost-efficient. This issue was discussed at EUROMETAL’s Southern Europe Regional meeting of steel distributors on June 27-28 in Barcelona. The meeting was attended by more than 40 industry representatives from Southern Europe and Turkey, including the producers and independent steel service centres (SSC) and distributors.

Participants mentioned that one of the main concerns for South European steel distributors in terms of procurement today is growing protectionism both globally and in the EU that gradually restricts their access to imported products. Particularly, distributors are concerned that the additional safeguard measures, with AD and CVD duties already in place, will significantly reduce import availability in the EU. According to rumours, the EC will impose a quota on imports equal to 75% of the total average annual import volume registered over the last 3 years. “That would mean that around 7 million t of imports of all steel products will disappear from European market. Around 70% will be for flats and 22% for longs,” EUROMETAL director general Georges Kirps said during his speech. And that is the threat for both steel distribution and downstream industries.

Having an example of the US, where protective measures have led to a sharp increase of local prices, European distributors fear the same situation may be seen in the EU “unless we have a vision of the European industry which is based upon $960/t for HRC and god knows what for galvanized steel,” a steel distributor said. Participants believe that potential risks for the downstream industrial base are extremely high. “I only hope that those measures of protectionism are not going to hit these businesses and we will not come to a point where we will have to close them because they are not competitive anymore. And of course this will make a lot of harm to the steel service centers,” a representative of a Southern European SSC added.

Speaking of the necessity of imports for the distribution, the sector participants mention difficulties to get the products from the European mills. This is partially because European suppliers are unable to produce certain specifications, particularly those of flat steel products. Besides, independent distributors say that they are in a disadvantage over those who partially belong to steel mills when it comes to procurement. In conditions of limited availability of certain product types, the material will most likely be sold to a mill-related distributor rather than to an independent one, participants say. Therefore, import becomes essential for effective operations of SSC.

This problem is more pronounced for the Iberian flat steel market rather than for Italy. In Italy, there are four local mills, and coils are also supplied by other European producers, whereas in the Iberian Peninsula there is “only ArcelorMittal and no one else in 2000 km around ArcelorMittal,” said Fernando Espada, managing director of Tata Steel Layde.

Lower competition in the European coils market, which might be caused by lower imports, will also be magnified by the consolidation of the European steel mills. The integration process might also become an important leverage for producers and enhance their power in the market. “Form alliances, chase the mills,” EUROMETAL president and Tata Steel Distribution Europe CEO Jens Lauber pushes distributors for action. Considering high fragmentation of the Southern European distribution sector, consolidation may become a solution, especially since European SSC and stockholders distribute 60% of all finished steel products in the EU.

However, EUROMETAL vice-president and managing director of AMCLN Cesare Vigano believes that the real problems of the Southern European steel distributors are not only external, but rather internal, with several challenges needed to be overcome. One of them is again a necessity of consolidation of local steel distributors. “The problem is that there are too many actors with different business models in the Italian SSC distribution market, where additional services to the customers are “free of charge” and the relative costs are not recovered on the sale’s price,” he said. Yet, there are not many supporters of this initiative today. “Everybody confirms that this process of consolidation should be done but there is no real movement in this direction because there is more individualistic approach [in the industry],” Cesare Vigano said in an interview to Metal Expert in the frame of the conference. The same attitude prevails in Spain and Portugal, participants said.

Another challenge for the local distributors, which they are not really eager to accept though, is digitalization of the steel industry. Jens Lauber mentioned the main elements of the digitalization: new approaches to analysis, such us Big Data and Advanced Analytics, in order to predict customer behaviour, online connection of producing sites, online and offline sales and new technologies in production process. Implementation of those components will allow steel distributors to achieve some main elements that will enhance the steel value chain, Metal Expert understands. One of such elements is flexibility of SSC in fulfilling the needs of their customers by using new technologies and improvement of their cost-efficiency, Tommaso Sandrini, President of Assofermet Acciai and managing director of San Polo Lamiere, said during the panel discussion.

Today, Southern European distributors are quite reluctantly getting involved in the digitalization process for some reasons. Firstly, “the steel industry is too old fashioned,” Fernando Espada said. “Most of the SSC are today working the way they were working many years ago. Not many things have changed. So in most of cases people are just reluctant to even think about it,” another participant said.

Another reason why the digitalization process is advancing slowly not only in the distribution sector, but also in the whole steel industry, is that people don’t really know how to do that. A wide variety of steel applications is making this task even harder. “This is a great [consuming] area we are entering. But there is not a book of how to get into the industry 4.0, internet of things and advanced analytics,” Fernando Espada added.

The development of the automotive sector, one of the most important steel consumers, requires new quality of steel. The growing competition with aluminium and other materials must push modern SSC to develop high-strength solutions for “further processing of this new kind of steel,” Jens Lauber said in his speech. That requires new attitude to the value generation for both a customer and a SSC.

And finally, a challenge that may become an opportunity for Southern European distribution is the fact that local mills are getting increasingly involved in direct distribution. “We are really concerned with the competition coming from the direct distribution. We need to be more efficient than the direct distribution. We need extremely to be capable of processing steel with lower cost, with maximum flexibility and capability to listen to our customers,” Tommaso Sandrini said.

“Wind of change is not calming down. It becomes a storm, a storm of all of the time. We need to prepare to this way of sailing, to those market conditions and to navigate our business to the future.” With these words, Jens Lauber finished his speech at the conference. Solving the above-mentioned issues and adapting to the conditions that are beyond their control is the only way how the Southern European steel distributors and service centres can enhance the value chain of steel, Metal Expert understands.

Apart from the Southern European representatives, the conference was also attended by Ahmed Soybas, vice-president of YISAD, Turkey’s Flat Steel Import, Export and Industry Association, which joined EUROMETAL in February 2018. Speaking of Turkish steel distribution industry, he said that it is also highly fragmented and includes more than 100 players. Currently, one of the main concerns for Turkish SSC is currency fluctuations in the domestic market and financial risks connected with them. “We have to finance our customers may be at lower cost than they can find themselves if they go to the banks,” Soybas said during panel discussion.

The upcoming event organized by EUROMETAL is Steel Net Forum & International Steel Trade Day in Hamburg on October 8-9. The conference will address key topics like industry 4.0 strategies, internet of things, digitalisation, steel logistics and the role of independent steel distribution in European steel industry as well as the latest developments in the field of steel trade policy.

Lilit Papoian, Metal Expert

Salzgitter says it is investing €6 million ($7m) in its multi-blanking facility at Mannesmann Stahlservice in Schwerte, Kallanish learns from the German firm.

The new blanking line will be operational in the second quarter of 2019, and will be able to realise individual shapes and geometries like trapeze and bow shapes, as well as multi-cuts from big widths up to 2,100mm, Salzgitter says. It can handle thicknesses of 0.35-3.00mm for aluminium as well as steel. The existing multi-blanking line No 7 at Schwerte is a highly specialised device for car bodies and housings of household appliances, the company notes.

Meanwhile, Salzgitter has invested a one-digit million euro amount at its subsidiary Salzgitter Europlatinen for tailor-welded blanks. The expansion covers cutting as well as welding capacities, and an optimisation of processes. A new straightening line is able to handle material strengths of up to 1,400 MPa. The company notes that state-of-the art technology allows for ever smaller structural parts to be made as tailor-welded blanks.

Salzgitter Europlatinen was established 20 years ago and produces some 10 million blanks per year. Input material comes from Salzgitter Flachstahl.

Sources in the Belgian press have named NLMK, SSAB and Salzgitter as the three bidders for ArcelorMittal’s Belgian finishing lines that are up for sale as a pre-condition for the acquisition of Ilva.

Parties had until the beginning of this week to express their interest in the two galvanising lines in Flemalle and the tinning unit of Tilleurs, as reported by Kallanish.

Salzgitter has confirmed the bid for the Belgian assets, together with a bid for the finishing lines in Dudelange, Luxembourg, which are also being disposed of by ArcelorMittal. “The facilities in question are essentially two cold rolling lines, as well as facilities for tinning, hot-dip galvanizing and the electrolytic galvanization of steel strip,” Salzgitter explains.

The Luxembourg press has reported that another company prepared a bid for the Dudelange lines.

It is understood the north-western European assets’ sale to new owners is set to be concluded by the end of this year. The process is progressing despite the confirmed delay in the completion of the acquisition by ArcelorMittal of Ilva.