Day: 21 February 2020

Last year was unsatisfactory for the German mechanical engineering industry, which saw order intake go down by -9% year-on-year, according to its federation, VDMA.

“Overall, 2019 was a disappointing year for mechanical engineering companies in Germany,” VDMA says in a statement seen by Kallanish. Companies recorded a -9% drop each in domestic and foreign orders.

“In summary, 2019 was an economically-gloomy year for the mechanical and plant engineering industry in Germany,” says VDMA economist Olaf Wortmann. International trade disputes, increasing protectionism, Brexit, as well as the far-reaching structural change in the automotive industry have led to uncertainty and a reluctance to invest. “This has left a clear mark on order books,” Wortmann says.

The end of the year was no exception. In December 2019, orders fell short of the previous year’s level by -7%. Domestic orders in the final month were down -5%, with -7% fewer orders coming from abroad. In October to December 2019, orders were down -11% y-o-y, with domestic and foreign orders trending relatively equally.

ArcelorMittal Italia has announced to unions this week that the hot strip mill no.1 will be restarted on 10-13 March. Unions welcome the move but nevertheless note that uncertainty remains over future industrial plans.

The hot strip mill no.1 at the site has been idled for approximately eight months. It will be restarted for a period of two weeks after which an assessment on the order book will be made. Strip mill no.2 has been operating normally and has increased its output since the beginning of February.

The restart of the strip mill will come weeks after the relaunch of production at the site’s plate line, confirmed at the beginning of February. Altogether, these restarts will bring back to work from temporary layoffs over 600 workers, Kallanish notes.

ArcelorMittal Italia is still negotiating with Italian authorities over the future of the former Ilva; sources in Italy say an agreement is getting closer.

German stockholders have increased their stocks for long and flat products in January, but data shows that restocking activity was slow, according to latest figures from German stockholders association BDS.

Flat steel stocks for January dropped 15.6% year on year to 1.2 million mt, seeing only a 4.1% increase in stocks from December 2019.

Long product stocks stood at 825,014 mt in January, 5.8% lower compared to the same month last year, but 4.1% higher from December 2019.

Sources said that restocking activity remained limited in January due to uncertainty over the sustainability of price rises and subdued demand in some end-customer markets.

“We are trying to sell what we can but wouldn’t be able to do any big projects because of low stocks,” said a German source in the distribution sector.

“Stocks are low because many people didn’t buy a lot. There are lots of sales ex-stock,” said the source.

Sales volumes at stockholders grew 5.3% year on year to 281,273 mt in January for long products and 2.5% for flat steel to 597,073 mt. Both product groups saw significant jumps in sales volumes month on month — at 65.2% for longs and 91.9% for flats.

Sources, however, said that it would still be difficult to lift prices ex-stock as end-buyers remain hesitant to price increases making the situation difficult for stockholders as European producers have lifted prices since January.

— Laura Varriale

Liberty Steel confirmed this week disruptions in the supply of substrate for hot-dip galvanized (HDG) sheet steel production, which is impacting delivery of galvanized coils at their Liege-Dudelange HDG line in Belgium.

“There are some intermittent production issues at one of our HRC suppliers, which is temporarily impacting deliveries to Liberty Liège-Dudelange. The team is working with all of our suppliers to mitigate the impact,” a Liberty Steel spokesman said.

Market sources said this week they had been approached by customers looking to replace HDG orders at other mills.

“I had a customer who approached me this week and I asked why they need so much material suddenly and they said Liberty Liege could not deliver and there is no benefit of imports in the market,” a European mill source said.

A second European mill source reported that lead times in HDG were now extending to 10 weeks from eight and that their order book was full.

The operations at Liege-Dudelange, Belgium were bought from ArcelorMittal in July 2019 in a Eur740 million ($707 million) deal and were part of the remedy package imposed by the EU for ArcelorMittal to take over Italy’s Ilva.

London-based Liberty Steel, part of GFG Alliance, said in a previous statement that it intends to increase sales at the plants by 50% by 2022.

According to analysts at Jefferies Research Services, Dudelange and Liege in total have annual capacities 1.6 million mt of galvanized/coated steel, 300,000 mt of cold-rolled coil and 200,000 mt of tinplate.

According to ArcelorMittal’s website, Dudelange consists of two hot-dip galvanizing lines, two electrogalvanizing lines, two slitting and two cutting lines. It produces Aluzinc, Alusi, Usibor and EG sheet.

— Len Griffin, Laura Varriale