thyssenkrupp plans separation into two independent units


In an extraordinary meeting of the supervisory board on 30 September, the executives of thyssenkrupp AG will propose a separation of the group into two separately stock-market listed companies, Kallanish learns. That date is coincidentally the last day of the company’s fiscal year.

The split will be made between materials’ activities, which include steel production and steel distribution, and industrial-technological services. Both units are to keep the traditional name, then figuring as thyssenkrupp Materials AG and thyssenkrupp Industrials AG.

“Over the past weeks, there were many strategic options discussed for thyssenkrupp,” says interim ceo Guido Kerkhoff, alluding to proposals for reorganising the group. “However, the world is not black and white. There is not only a ‘keep on’ or a ‘dismantling’, but other alternatives which do justice to both the responsibility for the workforce and the sustainability of the company,” he continues. He adds that the solution now presented will create value for shareholders as well as improve the prospects for the development of business.

Shareholders will hold 100% in tk Materials AG, and a majority in tk Industrials AG, with the former keeping a stake in the latter. Industrials will encompass the elevators, automotive supply and plant-building businesses. Materials will include the steel/metals distribution activities, the 50% in the future joint venture with Tata Steel Europe, plus the marine technology business.

Both companies would be of a comparable size. The activities of the future tk Industrials achieved a revenue of €16 billion ($18.7 billion) with 90,000 employees in the past fiscal year, while the Materials business turned over €18 billion with some 40,000 employees. The latter’s figures do not include the joint venture with Tata, which will be accounted “… at equity”.

The separation process is projected to take 12 to 18 months. A separate listing would reduce the complexity of the thyssenkrupp share, the company notes. tk Industrials would be attractive for investors interested in stable cash flows and attractive growth prospects, while Materials would address investors that bank on cyclical business, the company says.

Stalprofil foresees further pipeline business after sales soar

Stalprofil reported a 3.6% on-year rise in steel product sales in the first half of 2018 to 107,424 tonnes, while steel structures sales surged 53.7% to 1,514t. Sales of anti-corrosion coated pipe soared 138% to over 1 million m2. Pipeline service sales ballooned 263.1% to PLN 14.63m.

Consolidated revenue increased 9% on-year in H1 to PLN 667.22 million ($183.2m). Sales in the domestic market grew 8.5% to PLN 608.5m and exports surged 19.5% to PLN 58.77m. The EU took a 89.7% share in exports, unchanged on-year, while European countries outside the EU increased their share to 10.1% from 5.3% at the expense of non-European countries. Net profit surged 73% to PLN 14.92m.

ArcelorMittal Poland accounted for 35.1% of Stalprofil’s product procurement in H1, and Gaz-System took a 38.3% share of the firm’s sales.

The firm’s oil & gas pipeline-related business benefited from the acceleration of Polish pipeline project activity that had previously stalled. “Following a long-term stagnation in the pipeline construction market observed until 2016, Stalprofil’s unit in Zabrze is gradually rebuilding its order-book, and the realised contracts are stabilising the unit’s financial situation,” distributor Stalprofil says in a report seen by Kallanish.

Polish steel consumption should grow faster than the EU average in the second half of 2018 thanks to EU-funded infrastructure investments, Stalprofil says. Investments will continue into gas pipelines, and road and rail infrastructure, this helping to support steel prices, it adds.

The firm says it has observed in recent months a significant increase in demand for medium-diameter coated pipe used to modernise and build new low-pressure gas pipelines. The firm also foresees positive developments in export sales.

Northern German rebar stockist relocates

Willi Krohn Handelsgesellschaft, a German stockholding distributor specialising in rebar, has recently completed the move to a new location, Kallanish learns from a company spokeswoman.

For 133 years the company was located in Itzehoe, northwest of Hamburg, and has now moved to nearby Breitenburg. Krohn has been benefitting from the construction boom in northern Germany, and in the past three years has upped its personnel count from 20 to 30. At an investment of €5 million ($6m), the new location encompasses a storage and a bending workshop along with new administrative buildings, on an area of 20,000m².

The new site allows for a better connection with local motorways as well as better in-house logistics and synchronisation of the machinery – bending and cutting devices, and cranes. An additional reserved area of 10,000m² allows for potential future expansion.

Besides rebar, Willi Krohn also sells sections, merchant bar and tubes.

German steel stockholders enjoy a fruitful summer

For Germany’s stockholding distributors, the summer months June and July have gone “… extraordinarily well”, according to their federation, Bundesverband Deutscher Stahlhandel (BDS).

In BDS’ latest market review, chief economist Jörg Feger says that both months accounted for sales of slightly more than 1 million tonnes, a stronger performance than in May, which saw sales of 948,000t.  All in all, sales from January to the end of July were 2.7% above those of the first seven months of 2017, Kallanish hears.

The products which saw the highest sales growth were strip products, and especially surface-coated strip and sheet. July also saw a major restocking by distributors, with 130,000t of products taken into inventories. This correlates with the flat or even increasing prices from mills that characterised this summer versus the traditionally weaker summer market trend.

Feger notes that enhanced price levels by distributors were most pronounced for long products and tubes. At the end of July, total inventories stood at 2.56 million tonnes, which was 8% above the figure at the end of the same month in 2017.

German stocks see double-digit y-o-y rise in August

Flat and long steel stocks at German stockists and distributors in August remained well above year-ago figures, according to data from German stockholder association BDS.

Inventories of long steel amounted to 888,522 mt in August, up 11.8% year on year, while flat steel stocks increased 12.4% to 1.57 million mt.

Stocks of both long and flat steel saw some slight month-on-month drops — 2.6% for longs and 0.8% for flats — due to high figures in July as buyers restocked ahead of summer.

Sales of both long and flat steel dropped in August, mainly due to the summer holidays, which usually reduces activity. Long steel sales fell 7.4% year on year to 302,391 mt, while flat steel sales fell 1.7% to 557,073 mt.

Sales also dropped month on month, by 7.4% in long steel and 3.5% in flat steel.

According to S&P Global Platts’ latest German sentiment survey, steel distributors earlier this month predicted prices would rise in September, but the bullishness has since eased.

Market participants told Platts the market has not significantly picked up since August, contrary to expectations, in particular during the slower summer period.

While September activity saw a brief uptick at the beginning of the month, sources have seen the current market reverting to hand-to-mouth buying.

Laura Varriale, PLATTS

Bowim posts strong sales growth, readies warehouse opening

Bowim plans to open its new 4,000-tonne capacity high-bay warehouse at Sosnowiec at the start of the fourth quarter. The Polish distributor increased consolidated steel sales 18% on-year in the first half of 2018 to 256,905 tonnes.

Flat product sales rose 16% in H1 to 81,612t and pipe and hollow sections sales increased 15% to 55,217t. Rebar sales surged 55% to 51,151t and sales of sections rose 29% to 29,415t, but reinforcement construction deliveries declined -18% to 20,633t.

Consolidated revenue rose 28% to PLN 679.27 million ($186.5m) but net profit slumped -25% to PLN 7.5m due to higher cost of goods sold resulting from higher steel prices. The firm generated 21% of revenue each in the steel structures and construction sectors, while trading took a 19% share.

The increased sales were the result of continued favourable trends in the Polish distribution sector, spurred by investments. Bowim also benefited from increased steel processing activity stemming from the construction of the new Sosnowiec warehouse and its distribution centre near Rzeszow. The Sosnowiec unit will also install a cut-to-length line and railway siding at a later stage.

“The global economy is beginning to feel the consequences of the US-China conflict in the form of steel oversupply, which producers levied with duties are trying to relocate to other countries (mainly in the EU),” Bowim says in a report seen by Kallanish. “This situation could impact the level of prices, also in the Polish market.”

Breuer Stahlhandel upgrades rebar processing kit

German stockholder Breuer Stahlhandel has purchased new machinery to improve its processing of rebar products.

The group operates two sites in North Rhine Westphalia on the western border, in Goch and further south in Korschenbroich near Aachen. For its main site in Goch, it has installed two new multi-rotor straighteners for the straightening, bending and cutting of rebar. Breuer spent €800,000 ($940,000), on the machines supplied by Progress Maschinen & Automation, Kallanish learns from managing director Manfred Schenke.

The new equipment enables a wider range of sizes, up to diameters of 20mm from coil, rather than 16mm as was formerly the case. The addition of lateral displacement platforms between the straighteners enables a smoother handling of the rebar that formerly was transported by crane, causing production machinery to be stood idle. “The machine handling is fully automated now, which allows us to save 20% of downtime,” Schenke says.

The site has an area of 32,000m², with a workshop area of 11,500m², and a staff of 50 employees.

NLMK renames trading arm

Russian vertically-integrated steel producer NLMK has renamed its Swiss-based trading arm Novex Trading S.A. to NLMK Trading. The change of the name is to align the name and corporate identity of the trading company with NLMK Group’s brand, the company tells Kallanish.

NLMK is one of the world’s largest merchant slab suppliers, but its extensive re-rolling facilities in Russia, Europe and the United States process a large share of the semi-finished output, depending on market conditions. NLMK’s flat rolled steel production ranges from thin-gauge dynamo steel to heavy plate used in offshore power generation.

The company has been undergoing significant reorganisation of the management in the past two years. The Swiss trading arm is also preparing to welcome a new head, whose appointment is in the final stages of administration.

The company’s revenue totalled $5.9 billion and its Ebitda amounted to $1.7 billion in the first half of 2018.

Switzerland intervenes with Brussels in EU duties case

A group from Switzerland has sought dialogue with the European Commission to reach a decision over safeguard duties imposed by the EC on non-EU steel imports. The party is concerned that Switzerland is being treated in the same way as other third countries and consider this to be contrary to the arrangements of the European Free Trade Agreement (EFTA) arrangement.

The meeting took place on Monday in Brussels as an extraordinary meeting of the ‘Mixed Working Group of the Free Trade Agreement between the EU and Switzerland from 1972’. The Swiss side is asking for the measures to be implemented in a way that it does not impair trade between Switzerland and its neighbours.

The Swiss State Secretariat for Economic Affairs (Seco) says that 95% of Switzerland’s steel exports go to the EU, while 98% of the country’s steel imports come from within the Union. The safeguard measures will be further discussed at the next ordinary meeting of the Free Trade Agreement group on 17 November.

Switzerland’s largest mill, especially with regard to exports, is Swiss Steel and its associated bright bar unit SteelTec. There is also Stahl Gerlafingen, producing rebar and merchant bar, arguably with a lower export share.

“The engineering steels made in Emmenbrücke would be affected, definitely,” a Swiss Steel spokeswoman tells Kallanish. She criticises the fact that the EU measures in their current form treats Switzerland the same way as third countries such as Russia or China, “… which now divert their import flows, which we don’t do,” she notes. Also, she argues that Swiss imports have not risen much in the period 2013-2017, which is taken as a basis for calculation of the EU’s import quotas.

She indicates the peculiar position of the Schmolz+Bickenbach group which operates in both Switzerland and the EU and highlights a paradox arising from the situation. “Like this, if we send steel from Emmenbrücke to Düsseldorf for further processing, we would be charged on our own products.”