Day: 5 March 2020

Spanish galvanized steel production increased 15% to 650,000 mt in 2019 driven by the energy and construction sectors, Spain’s industry association Asociacion Espanola del Galvanizado (ATEG) said Friday.

For 2020, ATEG president Manuel Lopez Caamano said the sector sees strong growth potential due to increased activity in the renewable sector and the growing globalization of the construction sector. The energy sector provided 40% of 2019 demand for galvanized steel and construction 26%, according to the association.

Spain is Europe’s fourth-largest producer of galvanized steel with 43 plants which make up around 5% of Spanish steel output.

— Gianluca Baratti

ArcelorMittal CLN, the Italian-based service centre and distribution company, has sold back its shares in distributor San Polo Lamiere to the main shareholder. The latter is an independent steel service centre located in the area of Parma, Kallanish notes.

ArcelorMittal CLN previously held 16.67% of the company, having acquired the shares in 1991 from the family operating San Polo. These have been sold back to the original owner, effective from 28 February 2020.

The sale is part of ArcelorMittal CLN’s strategy to focus its attention on the core businesses of the company.

San Polo Lamiere sells around 200,000 tonnes/year of steel products, mainly in the Italian market. The company celebrated its 50th anniversary in 2019.

Turkish wire rod exports declined in January, by -35% on-year to 110,651 tonnes; however, they were up 6.2% from December, according to Turkish Statistical Institute (TUIK) data monitored by Kallanish. Their average price fell to $465/tonne versus $488/t in January 2019. However, they were up from $446/t in December 2019.

January exports of round rod below 14mm diameter comprised 61,938t, down -50% on-year. Israel was the main buyer with 19,908t, up 4.5% on-year. This was followed by Egypt which more than doubled its intake from 3,462t in January 2019 to 8,498t in January 2020. Libya took in 6,155t versus zero last year, followed by Serbia with 3,474t versus only 283t a year earlier.

Compared to 14,389t last year, Romania took in only 2,812t in January, while Bulgaria and Belgium sourced zero this year versus 10,165t and 6,703t respectively last year. This was the result of European quotas being fulfilled by Turkish mills. Lebanon, with 7,605t a year earlier, sourced only 500t in January.

Exports of deformed reinforcing rod, meanwhile, increased 2.1% on-year in January to 45,614t. However, this was down from 52,786t in December 2019. Israel was again the largest destination with 25,554t versus 11,994t a year earlier. Singapore took in 16,547t and Romania 1,036t versus 1,978t and 7,290t respectively last year. Haiti, which sourced 10,307t last year, sourced zero in January.

• Italian government to take a stake in AM Italia
• Plan includes DRI, EAF development
• AM Italia to produce 8 million mt/year of steel by 2025
• Investments planned for lower-carbon steelmaking
• AM InvestCo can withdraw if investment agreement not executed by Nov 30

AM InvestCo, the main holding company of ArcelorMittal Italia (AM Italia, formerly Ilva), and the Ilva Commissioners on Wednesday signed an amendment to the original lease and purchase agreement for Ilva, ArcelorMittal stated. The Italian government will take a stake in AM Italia, but the percentage will be determined by November 2020, according to the official notice.

According to the ArcelorMittal statement, the amendment agreement “is structured around a new industrial plan for Ilva, which involves investment in lower-carbon steelmaking technologies. The core of the new industrial plan is the construction of a DRI facility to be funded and operated by third party investors and an EAF to be constructed by AM InvestCo.”

According to local sources, AM Italia’s current crude steel production rate is 4.1 million mt/year. In Wednesday’s statement the company did not report the production target, but when asked separately by S&P Global Platts, ArcelorMittal confirmed that in the new agreement AM Italia has targeted 8 million mt/year by 2025 and it will also revamp AM Italia’s idled No. 5 blast furnace using “the best practice available.”

AM InvestCo and the Ilva Commissioners, which include Italian government officials who managed the former Ilva when it was in administration, have entered into a separate settlement agreement whereby AM InvestCo agreed to revoke its notice to withdraw from the original agreement and the Ilva Commissioners agreed to withdraw their request for an injunction, which was scheduled to be heard in the Civil Court of Milan on March 6.

If the investment agreement is not executed by November 30, AM InvestCo has a withdrawal right, subject to an agreed payment, that ArcelorMittal did not quantify in its statement, but that according to a draft of this final agreement seen by Platts, should be around Eur500 million. Final closing of the lease and purchase agreement is now scheduled for May 2022 instead of August 2023.

As previously reported, ArcelorMittal signed a non-binding agreement with the Ilva Commissioners in December to continue negotiations on a new industrial plan for AM Italia involving investments in green technology, together with discussions about a government-controlled entity possibly taking a substantial equity investment in the operation. The agreement was signed after the company, in November, announced plans to withdraw from its Ilva purchase as consequence of a law changed by the Italian government that removed ArcelorMittal’s legal protection for implementation of an environmental clean-up plan.

— Annalisa Villa

European steel association Eurofer has urged the European Union and the United Kingdom to reach a trade agreement as soon as possible to guarantee frictionless trade, Eurofer said Wednesday.

“While each side rightly wants to defend its regulatory autonomy, a deal that ensures EU and UK trade interactions are fair, reciprocal and frictionless is essential,” Axel Eggert, director general of Eurofer said.

Eurofer highlighted that mutual market access, as well as alignment of standards on state aid, competition policy, state-owned enterprises, employment, environment, climate change, relevant tax matters and other regulatory measures and practices, would be vital.

During the current transition period, nothing changes in terms of the UK’s trading relationship with the EU. If the EU and UK agree on an extension, they must do so by July 1 to avoid that the transition ends on December 31, even if there is no agreement reached.

“No deal would be the worst possible outcome – erecting barriers to trade overnight that would be needlessly damaging,” said Eggert.

Eurofer cut its 2020 EU apparent steel consumption outlook to an increase of 1.2% at 159 million mt from a 1.4% forecast in its fourth-quarter 2019 report earlier this year.

The association said the major risk factors are escalating trade wars between the US and several of its main trading partners, mostly China, even after signing of the phase one trade agreement on January 15 eased frictions, and persistent uncertainty regarding the final Brexit deal to be agreed by the end of 2020. These factors are set to weigh on trade conditions in 2020, and may even lead to a further deterioration in business sentiment.

— Laura Varriale

NLMK DanSteel, based in Denmark has delivered the first batch of high-strength, high yield strength steel plate to German machine builders, its parent company NLMK tells Kallanish.

DanSteel is supplying its so-called S500MC high-strength plate to the machine builders and the first batch of 1000 tonnes has now been delivered, the company says. This grade has a yield strength of 500 MPa and is used to manufacture heavy vehicle components including wheel axle parts.

The use of high-strength steel ensures strong performance under high static and dynamic loads at temperatures as low as -50°C and increases the reliability of equipment, NLMK adds.

DanSteel launched industrial production of 13-60mm thickness S500MC plate in 2019 after an accelerated cooling system was installed at the site’s plate mill. Thermomechanical treatment ensures high strength and viscosity properties and better plate weldability, the company says.

Slabs used by NLMK DanSteel for the production of high-strength plates are supplied by NLMK Lipetsk, NLMK Group’s flagship site in Russia.

ArcelorMittal has reached an agreement with the Italian authorities over the future of the former Ilva group, amending the existing lease and purchase agreement. The new resolution stops both the ongoing legal procedures and the possibility of ArcelorMittal to immediately terminate its control over the Italian integrated steelmaker.

“The amendment agreement outlines the terms for a significant investment by Italian state-sponsored entities into AM InvestCo, thereby forming the basis for an important new partnership between ArcelorMittal and the Italian government. The equity investment by the Italian Government in Ilva, to be captured in an agreement to be executed by 30 November 2020, will be at least equal to AM InvestCo’s remaining liabilities against the original purchase price for Ilva,” ArcelorMittal says in a note sent to Kallanish.

In the agreement the parties confirmed the intention to invest in lower-emissions steelmaking, including the construction of a DRI facility and an EAF in Taranto. The DRI plant is expected to be funded and operated by a third-party investor, with the EAF constructed by ArcelorMittal.

The agreement finally leaves ArcelorMittal with the right to withdraw from the agreement by November 2020, subject to the payment of an undisclosed sum of money. The close of the lease and purchase agreement is now scheduled by May 2022.

The local trade unions confirm that the agreement was signed and have expressed their concerns over the agreement on many issues. These include the number of workers to be retained and the industrial plan, which is still not completely clear, the unions say.

The European steelmakers’ association, Eurofer, has called for Europe and the UK to negotiate a deal regarding Brexit that is “… fair, reciprocal and frictionless.”

In a note sent to Kallanish, Eurofer says that negotiations on the future relationship between Europe and the UK are starting this week. “We welcome the official start of the negotiations, given the importance of protecting the prosperity of citizens and businesses on both sides of the channel,” says Eurofer director general Axel Eggert. “While each side rightly wants to defend its regulatory autonomy, a deal that ensures EU and UK trade interactions are fair, reciprocal and frictionless is essential.”

European steelmakers are convinced that maintaining a level playing field should be the leading principle in this negotiation. Both entities involved should ensure continuity of a series of actions, Eurofer says. These include logistical procedures, mutual market access and alignment of standards on state aid, competition policy, state-owned enterprises, employment, environment, climate change, tax matters and other regulatory measures.

“No deal would be the worst possible outcome – erecting barriers to trade overnight that would be needlessly damaging,” Eggert concludes.

ArcelorMittal Nippon Steel (AMNS) India has acquired the 500MW Bhander Power plant from Edelweiss Asset Reconstruction Company. ArcelorMittal India (AMIPL) was also selected as preferred bidder for Thakurani iron ore mine in Odisha.

The Hazira-based power plant will be captive to AMNS India’s steelworks in the same location. It will help the steelmaker increase its self-sufficiency in power supply.

Meanwhile, Thakurani block in the district of Keonjhar, with estimated reserves of 179.26 million tonnes, is expected to make a valuable contribution to AMNS India’s long-term raw material requirements. Once the licence is awarded, AMIPL will proceed to seek requisite clearances, as well as mine development and production agreements, before commencing mining operations.

The acquisitions are “…in line with an intent to secure a robust captive power and commodity supply chain as we continue to make strong strides in our production and operational performance,” AMNS India chief executive Dilip Oommen says in a note seen by Kallanish.

“Efforts to become increasingly self-reliant, in this case through the procurement of a key energy source in Gujarat and an iron ore rich reserve in Odisha, form part of AMNS India’s medium to long term strategy to significantly grow our production capacity in India,” he adds.

ArcelorMittal and Nippon Steel completed the joint takeover of Essar Steel last November, thereafter renaming it AMNS India. The new owners plan to complete by 2022 the doubling of the Paradeep iron ore pelletising plant’s capacity to 12 million tonnes/year.