EUROMETAL Digital Forum in Zürich outlined the complexity of digital transformation in the EU Steel Distribution Sector

On last 13 September, EUROMETAL had invited to its second event having Digitalization as a main conference theme.

This major event, hosted by Swiss steel distribution federations SSHV/ASCA and VSEMH, noted a large success with professionals from the steel community attending the conference from all over Europe.

An outstanding speakers list was introduced by Daniel Guinabert, EUROMETAL Director General, and included Ruedi Noser, member of the Swiss Council of State, Reinhard Fromm, President of Fromm Packaging Systems, Ivica Kolaric from Fraunhofer IPA Institute, Felix Amberg from Swiss SCAUT organisation, Armin Stolzer, Managing Owner of KASTO Maschinenbau, Valentin Kaltenbach, CEO Kaltenbach Solutions, Christian Dyck, CEO kloeckner.i, Timo Rossi from Finnish JAKAMO, Amit Kumar from ArcelorMittal SSC West Europe, Stefan Grüll, Managing Director at Koenig Holding group and Tim Milde, COO XOM Materials.

The conference was concluded by an open forum animated by Andreas Steffes from SSHV/ASCA. Besides speakers the panel was completed by the participation of Norbert Thumfart, CEO Weyland, Christoph Weber, CEO Arthur Weber, President SSHV and Jan Moravec Executive Director Ferona.

Speakers and panelists outlined some of the challenges facing steel distribution and SSC in their pursuit of digital transformation.

Here are some key quotes from speakers or panelists: First of all analyse the problems of the customer, then design digital solutions and finally implement solutions.BIM is a highly interesting digital interface for steel suppliers.

Steel distribution is invited to establish digital catalogues of steel products to enter the BIM world, which opens new horizons for business models in steel distribution.

New combined ERP & Storage & Sawing digital solutions are now available from main processing equipment providersEcosystem economy will trigger the rise of vertical hollistic digital platforms as opposed to presently typical horizontal digital platforms Digital steel quality data will represent a new line of assets and new market opportunities.

Digital distribution of steel data might become as important as physical distribution of steel Digitalization is a tool to face missing skilled labor skills to run more and more digitalized equipment and will enable to cut lead time to fulfill customer demands Digital solutions will optimize the use of storage and processing capacities and reduce idle times Prominently for steel distribution, digitalization is considered to be an important tool to survive and to advantageously position steel distribution between producers and end users, Digitalization forces steel distribution to rethink and to improve internal material and information flows.

Importance to implicate company work force from the start in the digital transformation processDigitalization is sometimes considered to threaten personal contacts with customers.

On the other hand is was outlined that digitalization starts first with an in depth discussion with customers about their needs regarding products, services, communications, etc.

The conference was closed by conclusive remarks from Hans Kohler president of SWISS VSEMH association.

EC’s HRC safeguard revision to reduce Turkish supply

The European Commission’s latest proposal for the revision of safeguard measures specifically for hot rolled coil is set to impact trade from Turkey. This is because European buyers will need to further limit their intake from this supplier to meet the new, more stringent rules.

According to the proposal, expected to become effective from 1 October, no supplier will be able to use more than 30% of the available quota for any given period.

During the April-June 2019 period the assigned HRC import quotas were 2.8 million tonnes, of which only less than 50,000t remained unused at the end of period. While specific data on the allocation to each country of provenance are not yet available, Turkey appears to be the only HRC source to have surpassed the 30% market share for imports in recent years.

According to Eurofer data, in the first half of 2019 Turkey accounted for over 40% of total EU HRC imports. None of the other large suppliers, such as Russia, India, Serbia, South Korea and Taiwan, imported volumes accounting for more than 15% each of total imports.

The growing importance of Turkish HRC supply to Europe was visible already in 2018 when the country accounted for some 35% of total HRC imports into the continent. In 2017, on the other hand, Turkish HRC was just slightly more than 25% of total HRC imports.

From October onwards European importers will therefore need to limit somewhat their purchases of HRC from Turkey, potentially boosting imports from other large sources such as Russia, India, South Korea, Taiwan and Serbia, Kallanish notes.

ArcelorMittal to sell downstream construction business: report

ArcelorMittal is allegedly exploring a sale of downstream construction activities as it divests peripheral operations, according to a media report monitored by Kallanish.  

Bloomberg suggests that the steelmaker is apparently working with advisers to prepare an auction of the company’s downstream construction segment involved in the supply of steel building systems. The sale of these is estimated to fetch about €700-800 million ($776-887m) the report suggests, citing people familiar with the matter. An ArcelorMittal spokesman contacted by Kallanish said the company would not yet comment on the matter.  

A sale is likely to occur in the fourth quarter the report further suggests, and is likely to interest both building materials producers and private equity firms. It is intimated that the downstream construction activities are considered to be non-core assets of the group.   

The segment in question describes its programme as steel building systems & solutions and sandwich panels for roofing, cladding, composite floors, light gauge structures, and modular housing. It has activities in 18 European countries and in the West Indies.

Czech automotive output, exports rebound in July

Czech automotive output increased 1.48% on-year in January-July to 838,142 units, reversing from the -1.47% decline seen after six months, according to the latest Czech Automotive Industry Association (AIA) data seen by Kallanish.

The Czech Republic is Central and Eastern Europe (CEE)’s largest car manufacturer, sourcing automotive steel from US Steel Kosice (USSK) and ArcelorMittal among other suppliers, and producing most cars for export.

Production mainly consists of passenger and light commercial vehicles (M1+N1), whose output rose 1.44% in January-July to 834,247 vehicles. Skoda comprised 61.38% of output, Hyundai 22.51% and Toyota, Peugeot, Citroen (TPCA) 16.12%.

Passenger car exports returned to growth after slipping into negative territory after six months, rising 2% in January-July to 771,519 units, while local sales slumped -4.8% to 65,251 units.

Czech production of buses rose 7.6% in January-July to 2,971 units.

Eurofer said in July EU automotive production is forecast to fall by -1.4% on-year in 2019 and to rise by 2.2% in 2020 (see Kallanish passim).

USSK plans to idle one of its blast furnaces this year and lay off 2,500 workers by end-2021 due to increasing raw material costs and declining demand, coupled with elevated imports. ArcelorMittal said in May it was idling its Krakow steelworks’ hot-end from September due in part to reduced European automotive demand, but reversed this decision in July.

German steel stockholder sales fall to end-July

Germany’s stockholding distributors sold -4.5% less products this year from January through July than in the first seven months of 2018, according to their federation BDS. The total sales volume to end-July was 6.52 million tonnes. 

July turned out to be the best month of the year for sales, at 999,000t, Kallanish learns from BDS. However, chief economist Jörg Feger points out this was a balance effect after an “… unusually weak June”.  With a volume of 848,000t, June was the only month so far in 2019 with sales of less than 900,000t, partly due to holidays. Sales fell for most products with the exception of rebar, which saw higher volumes.  

Stockholders have become more cautious with regard to building inventories. At the end of July, these stood at 2.41mt, -6% lower than one year earlier. Stock based on days of sale came in at 72 in July, and 78 on average in the first seven months, slightly higher than in 2018.  

Prices have weakened since April, with the deterioration stronger for flat products and tubes than for long products, Feger notes.