Month: November 2018

ArcelorMittal Italia has confirmed that plate production at its former Ilva plant in Taranto, is set to restart at the beginning of next year, Kallanish learns from Carlo Malasomma, cmo of ArcelorMittal Italia. He was speaking at the Bilanci d’Acciaio event in Naples.

“The former Ilva has the potential to be very well integrated, we therefore want to bring this potential to its maximum level, by focusing also on the production lines downstream,” the executive said. “The plate line will restart to work at full capacity from the beginning of next year.”

Most of Taranto’s plate output was halted in August 2017. This year a brief restart of the lines was carried out, but output has remained sporadic and minimal.

“The Italian market is in first place in Europe in terms of apparent consumption of heavy-plates, according to Eurofer, with 1.5mt consumed in 2017,” Malasomma explains.

Work to turn around the fortunes of the former Italian integrated steelmaker Ilva by ArcelorMittal was officially begun at the beginning of November. ArcelorMittal is now targeting to push the plant’s production level to 6 million tonnes/year in the first half of 2019, Matthieu Jehl, ceo of ArcelorMittal Italia, told Kallanish during an interview in Naples.

The executive confirms that the result will be achieved by maximising the potential of the Taranto plant and by supplying some slab and coil to the Italian rolling lines from other group plants. As expected, the plant of Fos Sur Mer, for example, will supply coils to the finishing lines of Genova and Novi Ligure. The Genova unit will focus on tinplate and zinc-coating, while Novi Ligure will concentrate on the supply of automotive grades of product.

This year Ilva is expected to reach a production level of some 4.5m t/y (see Kallanish passim).

The environmental plan agreed with the local Italian authorities however will continue to be central to the company turnaround in 2019. At the Taranto plant, for example, the covering over of the raw material parks with a new structure should be completed next year. This represents the first example of such a solution in an integrated site in Europe.

“Our project is to produce Italian steel for the Italian market,” Matthieu Jehl said when asked about where the additional volumes produced will be sold. He nevertheless confirmed that Ilva will be included in the ArcelorMittal global network.

This view was echoed by Carlo Malasomma, chief marketing officer of ArcelorMittal Italia, who explained that the former Ilva will now have access to the global client portfolio of the entire group. He added nevertheless that Ilva had clearly lost share in the Italian market during the years that the company was in administration. The first target is to recover this share, as well as the leadership in the market.

In terms of the strategy for distribution, Jehl stressed that ArcelorMittal Italia will be a partner of the existing service centres network of ArcelorMittal CLN. It will also work closely however with other distributors and service centres in the country. On this topic Luigi Rapullino, head of service centre Sideralba, said during the event attended by Jehl that he is confident ArcelorMittal Italia will work to preserve the existing supply chain in Italy. There is an understanding that the local market needs a strong producer as well as its independent distribution facilities and service centres.

To conclude, Jehl confirmed that the group is actively working on the launch of a new research and development department in Taranto, to involve ArcelorMittal Italia in the development of new products with clients. The head of the new unit has been appointed and activities should start in 2019.

“One of our key messages is that we want to work with transparency and following our group’s compliance culture,” Jehl said.

French technology supplier Fives tells Kallanish that it has won an order from Lusosider, the sole Portuguese supplier of flat products, to revamp its continuous galvanizing line. With the upgrade, the steelmaker is expected to increase its operation reliability and facilitate the line`s maintenance. Ludosider is part of the Brazilian CSN group.

The revamp of the plant includes the installation of a new bridle rolls in the skin-pass section and new DMS burr masher. “Fives will replace the existing combination of the entry gearbox and exit bridle rolls of the skin-pass with newly designed bridle rolls and will provide individual motorisation for each motorised roll,” the plant supplier says. The existing zinc bath gauge will be relocated to fit the new configuration, Fives adds.

The line had previously been revamped by Fives in 2000. Two year ago the French technology supplier upgraded the horizontal furnace of the galvanizing line and installed an additional jet cooling unit.

The new equipment will be designed, delivered and commissioned by July 2019.

thyssenkrupp Materials Services enjoyed a positive market environment with appreciably higher volumes in the fiscal year that ended 30 September, Kallanish learned from its executives at thyssenkrupp AG’s annual press conference.

Order intake and sales of the major European steel distribution and trading company rose by 6% and 7%, to €14.5 billion ($16.5 billion) and €14.7 billion, respectively. There was a clearly positive trend in almost all areas, particularly in North America, Eastern Europe, and the auto-related service centres, the group notes. Adjusted Ebit rose by 2% to €317 million.

Shipments increased at all units, particularly in the important warehousing and service business with growth of 4.5%. In total 11.1 million tonnes of materials were sold. Shipments of stainless steel products at Acciai Speciali Terni, which is still temporarily included in this division, were stable at 0.9mt.

The division has stepped up its digitalisation processes and distribution channels in recent years. Information on its entire product range is being digitised and consolidated in what thyssenkrupp claims will be the world’s biggest virtual materials’ warehouse at 271 operating sites worldwide.

The division’s ceo, Joachim Limburg, will be retiring at the end of the year, with a yet-to-be-appointed successor taking the reins as from January.

German flat steel stocks at stockholders reached their highest level since 2014 last month, while seeing double-digit sales, according to data from German stockholder association, BDS.

Stocks of flat steel amounted to 1.6 million mt in October, an 18.72% year-on-year increase. Levels that high were last seen in June 2014, when they reached 1.61 million mt. In a month-on-month comparison, stocks saw a fairly stable development by gaining just 0.37%.

Sales volumes saw a sharp rise as well last month, to 597,646 mt, up 14.87% year on year.

While a price rally failed to materialize after the summer holidays, with flat steel prices dropping significantly in October, the numbers indicated a pick-up in buying activity nevertheless.

A German stockholder told S&P Global Platts that there have been a lot of buying opportunities for imports in September and October, while some deals had been done from European mills in September.

Stock levels for long steel saw a similar development in October, although they did not rise as sharply as flat products. Longs grew by 6.47% year on year to 847,169 mt and saw a drop of 2.52% from September to October.

Sales of longs increased by 11.31% year on year to 317,859 mt in October, seeing a similar rise month on month by 11.84%.

According to Platts’ most recent German sentiment survey conducted earlier this month, stock levels are expected to drop as well in the coming weeks, as the market is heading into the destocking phase ahead of year-end inventory positions.

The index dropped to 36.7 this month (50 denotes stability), down from stable expectations in October.

Laura Varriale

The World Trade Organization’s dispute settlement body on Wednesday agreed to establish panels to rule on whether the US Section 232 tariffs on steel and aluminum imports comply with WTO rules, according to a Geneva trade official.

The dispute settlement body approved the establishment of the panels at the second request of six WTO members: China, the EU, Canada, Mexico, Norway and Russia. A seventh request from Turkey for a panel on the same Section 232 metal tariffs was to be heard later in the day Wednesday, according to the Geneva official.

At the meeting the US said it would not agree to a request from the six respondents for the establishment of a single three-member panel to review the six complaints, which are nearly identical. In their complaints to the WTO, the members have alleged the US levies of 25% on steel imports and 10% on aluminum are inconsistent with provisions of the WTO’s General Agreement of Tariffs and Trade and with the WTO’s agreement on safeguards.

The WTO’s dispute settlement body on Wednesday also approved the establishment of three panels to rule on whether increased duties imposed by Canada, China and the EU on certain US imports in response to the Section 232 tariffs violate existing WTO rules. A fourth request from the US for a panel on retaliatory tariffs imposed by Mexico was to be heard later in the day.

Justine Coyne

Russian Steel has revised down to 1% its 2018 Russian steel consumption growth forecast from 2.6% in June. This is considerably down on the 5.1% confirmed growth in 2017, which brought to an end three consecutive years of contraction, the association says in a note seen by Kallanish.

Both 2016 and 2017 saw the heavy engineering industry driving consumption, with a 15% increase in 2016 and 26% increase in 2017. Steel consumption growth in the automotive, construction and metalware industries totalled 11%, 5% and 9% respectively, after a period of stagnation, while white goods and pipe industries’ consumption fell -4% and -8% respectively in 2017.

Russian Steel reckons the country’s steel exports for full-year 2018 will remain at the 2017 level, when South Korea became the world’s third-largest steel exporter, knocking Russia down to fourth. While Russian steel export volumes are likely to remain flat on 2017, growing global protectionism in the wake of US 25% tariffs will translate into fewer finished products and increased semi-finished products exports this year, Russian Steel says.

The association says high investment activity, of around RUB 2.4 trillion ($36.5 billion), in 2001-2018 will enable Russian steelmakers to keep a competitive edge in domestic and global markets.

Swiss Steel and building-services technology Trade Day, convened  federation in Pfäffikon SZ on last 15 November 2018, was attended by EUROMETAL.

The SSHV Trade Day gathered more than 100 participants from all corners of Switzerland. It was a unique occasion to assess the position of Swiss economy and Swiss steel market as well as a check up on challenges, chances and risks facing Swiss trade in steel and building-services technology.

During the last decade, Swiss economy has proved to be rather crisis resistant noting in each year a positive GDP growth rate.

For 2018, GDP growth is estimated to reach +2,9 %  and for 2019 a 2,0 % growth is forecasted – significantly higher than the forecast for Euro zone..

But there are risk factors which may limit growth: uncertainties regarding central bank policies, trade protectionism, Brexit, Eurozone-Italy dispute which directly and indirectly may impact on Swiss economy, besides the limits  induced by Swiss manufacturing running presently at full capacity and the limits imposed by a lack of qualified workforce.

The run of  Swiss economy is shaping the trend in Swiss steel market.

In 2018, the Swiss market for Commercial Steels improved in volume by a very satisfatory growth rate.  But for 2019  a lower growth is expected.

For Reinforcing Steels, a market stagnation at  high level is estimated for 2018 and 2019.

Regarding the structure of Swiss steel distribution, the meeting emphasized that trade in steel and building-services technology is in a  process of restructuring with strong consolidation trends on producer-, distributor-  and end user side.

But consolidations and mergers are no easy processes to implement economic and commercial success as one of the speakers to the conference underlined.

Boobytraps to consolidation and mergers might be represented by differing IT- and ERP-systems, workforce fluctuations, different business cultures, conflicting leadership philosophies, focus of resources on solving internal problems while neglecting customer and markets, etc.

New technologies and digitalization are becoming more and more game changers in the distribution  business, providing new tools like e-shops, innovating IDE-systems  condition monitoring, predictive maintenance, product information systems, visualization of processes and product flows, assessing the life cycle of products and services, etc.

It was highlighted, that Digitalization is a challenging chance to reshape business models in distribution.

Efforts have to be enhanced in Switzerland regarding the acceptance of building with steel, when comparing to the very positive perception of wood in  new buildings and building refitting.

It was outlined, that these efforts have to start in technical colleges and universities.

Turkey’s economy will contract every quarter through mid-2019, with Gdp growth in 2018 forecast at just 1.5%, followed by a -2% contraction in 2019, according to Moody’s. Persistent high inflation and the expected slowdown in lending will curtail growth, which should then rebound 3% in 2020.

Turkey’s economy began decelerating rapidly in the third quarter, in the wake of the currency crisis. “Double-digit inflation, a steep increase in borrowing costs and curtailed bank lending are likely to weigh on household purchasing power, private consumption as well as investment, causing a severe contraction in domestic private sector demand,” Moody’s says in a report seen by Kallanish.

Recently announced tax cuts will not halt inflation and will do little to boost consumption, particularly amid high interest rates that curtail borrowing.

Inflation has risen steadily from around 10% at the beginning of the year to 25.3% in October. Moody’s expects inflation will grow further in the coming months and remain at double-digit rates through 2020.

Coupled with a slower economy and higher inflation, a significantly weakened Turkish lira will worsen loan quality, profitability and capital at Turkish lenders. “Turkish banks’ heavy reliance on foreign currency funding also increases the risk that they could face a funding squeeze if already weak investor confidence worsened and limited their access to market funding,” Moody’s observes.

“High inflation and the weaker lira will raise corporates’ costs,” Moody’s continues. “Companies focused on the domestic market, and particularly those in discretionary and premium segments, will find it harder to pass these costs on in a slowing economy where consumers’ disposable income is falling. Fiscal tightening will lead to a reduction in infrastructure spending, which will affect the construction and industrial sectors and further reduce growth and consumers’ purchasing power.”

We are delighted to announce that Martin Maley will take over the role of Director General on 1 April 2019.  He brings over 40 years’ extensive steel service centre knowledge and experience to the trade association. Having been in the steel industry since 1977, Martin held a number of directorships within British Steel, Corus and Tata Steel until his retirement in September 2014.

Martin subsequently became Executive Chairman of Brown McFarlane Ltd., one of NASS’ longest standing Members and will relinquish that role at the end of November 2018.  Martin is well known within the NASS Membership, having been an active Member of National Council and, more recently, he held the position of President for the period 2016-2018.

Martin will be regularly liaising with the current Director General, Peter Corfield, who retires at the end of March 2019.  This will enable a smooth transition and ensure positive momentum for NASS as a trade association is maintained. Martin will seek to build on the solid foundation that has been developed in the last 10 years and, in conjunction with the President and National Council, will look to take NASS forward as it meets the challenges of the steel service sector including Brexit.

Commenting, Michael Horan, President of NASS, said: “The appointment of Martin Maley to take over the role of Director General from Peter Corfield is a great positive move and I look forward to working closely with him.  I have no doubt he will continue the good work undertaken by Peter and feel that NASS is in a safe pair of hands.

NASS Members supply steel to all facets of UK manufacturing.   They are a vital link in the supply chain from producer to customer, and continue to generate a robust supply base for the long term, whilst providing a crucial foundation for all metal using sectors of the UK economy”.