Day: 19 December 2016

The two big mills in the German state of Saarland have become partners in the steel trading platform Mapudo, which was founded in 2014.

Engineering steel maker Saarstahl and plate maker Dillinger Hütte have invested a one-digit million euro amount through their joint capital venture unit SHS Ventures. Their contribution is shared by two further investors, NRW.Bank and HR Ventures, Kallanishnotes.

With its investment, the SHS group wants to extent its value-added chain, but also give a boost to its internal and external digitalisation. “We want to use the know-how of Mapudo to offer our customers the ideal mix of distribution channels,” says Saarstahl sales chief Klaus Richter, commenting on the ongoing diversification of sales processes.

Mapudo will use the money to improve and expand its platform, and to boost marketing to become more popular, says its managing director Sebastian Grethe, formerly of thyssenkrupp Materials.

Mapudo works like a virtual warehouse in which distributors list their products (see Kallanish passim). Buyers looking for a product will be linked with sellers, and can place their order immediately online. The fee, paid by the stockist, is a one-digit percentage of the transaction price, with a maximum and a minimum cap.

With minimal fanfare for such an important undertaking, the newly-formed Global Forum on Steel Excess Capacity held its first meeting in Berlin on 16 December.

The initiative was agreed to by the G20 leaders at the Hangzhou Summit in September 2016 and further discussed at the OECD steel committee meeting in the same month (see Kallanish passim).

The Forum is chaired by Germany with China and the US as co-chairs. Over thirty steel producing countries are participating, representing over 90% of global steel production.

In its latest monthly report on global crude steel output, the World Steel Association calculates current worldwide crude steel capacity utilisation ratio of its 65 reporting countries in October 2016 at 69.6%. It was 68.2% in October 2015. This already implies more than 30% overcapacity.

China, with currently 50.2% of global crude steel output, has been following its own steelmaking capacity reduction programme throughout 2016. A key element in this is the closing down of unofficial and therefore ‘illegal’ induction furnaces. The Catch-22 here is that, because the production is unofficial, it is unlikely to be recorded in government statistics.

This is probably why, according to worldsteel data, Chinese crude steel output at the end of October was actually up by 4% year-on-year.

Automotive grade hot-dip galvanized sheet is included in the European Commission’s investigation of Chinese coated material, according to a source at an association that received a clarification.

Numerous market players noted confusion over the official notice of the investigation, announced Friday December 9, and whether it excluded automotive grades. Many explained the omission by making comparisons to a previous investigation into Chinese HDG, launched in 2007, that ended without a duty following feedback from the automotive sector.

“An anti-dumping investigation into hot dipped galvanized coil from China will not have a negative impact on the EU automotive industry as the anti-dumping probe will not cover the HDG for the automotive sector”, Axel Eggert, Eurofer general director, told S&P Global Platts.

A lawyer based in Brussels concurred based on the guidelines in the notice. “Looking at the specification market players confirmed to me that the HDG for the automotive is excluded, as was demanded by the strong automotive industry lobby. They lobbied very hard as they needed materials and they have open contracts.”

However, the association source said he had met representatives from the EC earlier this week and they had clarified there was a mistake in the official notice and automotive grades are included. “We do know for a fact that it is included. That was just a mistake in the original specification,” he said.

Another senior market figure agreed the automotive sector had not been excluded. He said the definition “makes no reference to a specific automotive grade HDG. References to an end use destination of steel imports are unknown in the CN codes governing customs definitions of imported steels.”

The distinction is important as, while imported Chinese HDG is generally not used in the automotive sector, there are implications for other suppliers. For instance, Korean producer POSCO (which does sell auto grade to Europe) is said to be reluctant to send big volumes to Europe to avoid being named in an investigation.

It is understood the EC has set a deadline of December 23 for objections to be filed. The European Commission could not be reached for comment.

Peter Brennan and Annalisa Villa