Day: 10 March 2020

One of Turkey’s alloy and bright steel bar distributors, Izmir-based Akcelik, has completed the acquisition of German distributor Blankstahlwerk Sindorf GmbH (BWS), S&P Global Platts learned from a company statement Monday.

Akcelik said that with the purchase of BWS, which has specialized in production and sales of bright steel since 1994, it will begin to serve Germany’s automotive and machine manufacturing industries under the name of Akcelik Blankstahl und Service Center GmbH.

Akcelik has 90,000 mt/year of bright steel production capacity at its peeling, cold-drawing and grinding lines and has served the Turkish steel bar industry since 1978.

The company is producing and offering tempered steel, spring steel, structural steel, carbon steel and free-cutting steel products to the domestic market.

— Cenk Can

Private sector Chinese steelmaker Jingye Group has completed the acquisition of British Steel’s UK and Netherlands assets from British Steel’s official receiver and will expand the company’s steelmaking capacity with a move into electric arc furnace steelmaking at Teesside, Jingye announced Monday.

Jingye said in a statement it will also build a new rebar line, enhance the current rail mill and invest in British Steel’s rolling mills to produce high-quality steel products to optimize its product portfolio.

Jingye’s pledge to invest GBP1.2 billion ($1.58 billion) to place British Steel’s business on a more competitive and sustainable footing is aimed at returning the company to industry-comparable margins within five years, the Chinese company said. British Steel is currently a major producer of rails and is expected to benefit from the UK government’s decision to proceed with the UK’s HS2 high-speed railway project.

Jingye will also construct a new 250-MW power plant to serve the Scunthorpe site, where British Steel has four blast furnaces, of which two are currently in operation, a Jingye spokesman said.

The plan is now to restart the site’s third blast furnace while the second is relined, so two blast furnaces will continue in operation, the spokesman said.

The new power plant is expected to be around a third more efficient than the one it replaces, Jingye said.

‘Vote of confidence’

UK Business Secretary Alok Sharma described the sale of British Steel, which entered compulsory liquidation May 22, as “an important vote of confidence in the UK’s steel industry. It also marks the start of a new era for those regions that have built their livelihoods around industrial steel production.”

Gareth Stace, director general of UK steelmaking association UK Steel, called completion of the sales process as “fantastic news for British Steel and its workforce. British Steel is a major strategic asset, representing over a third of Britain’s steel production.”

The completion secures the future of approximately 3,200 jobs and follows the agreement of new terms with customers and suppliers. A further approximately 100 jobs will transfer to Barrett Steel following the sale of four British Steel distribution centers.

British Steel has about 3 million mt/year of production capacity in the UK, France and the Netherlands.

As previously indicated, assets included in the Jingye transaction include British Steel’s steelworks at Scunthorpe and UK mills at Teesside Beam Mill and Skinningrove, as well as subsidiary businesses FN Steel in the Netherlands and TSP Engineering.

“It does not include British Steel’s French operations at Hayange, the acquisition of which is still subject to further negotiations with the relevant authorities in France and is hoped to be concluded separately,” Jingye said.

Sources, however, told S&P Global Platts last week that four other bids have been received for Hayange, from ArcelorMittal, UK-based industrial group Liberty House, special steel producer Ascoval (through its holding company Olympus), and German steel producer Saarstahl.

The French government, which considers Hayange to be a strategic national asset, put it up for sale last year separately, as a contingency plan in case Jingye’s purchase of British Steel did not go through.

Hayange produces 250,000-300,000 mt of rails per year, mostly for SNCF, France’s state-owned railway operator. The mill currently rolls blooms produced at British Steel UK in Scunthorpe.

Job losses, government support

While formal numbers of job losses at British Steel were not announced in Monday’s statement from Jingye, these were described as “heartbreaking” by the UK’s GMB union, while Jingye Group CEO Li Huiming also commented on the difficult negotiations that had preceded Monday’s completion.

“It has not been an easy journey since we first announced our intentions in November but the longer I have spent in Scunthorpe, the more I have come to believe in the successful future of these steelworks and the employees that have made them famous throughout the world,” Huiming said. “Together, we can forge a new partnership that will mark the beginning of a new illustrious chapter in the history of British steelmaking.”

Business Secretary Sharma added he wanted “to reassure British Steel employees who may be facing redundancy that we are mobilising all available resources to give immediate on the ground support and advice to those affected.”

Charlotte Childs, a GMB union official, said in a statement: “This deal is worth pursuing to safeguard UK steel for future generations. But, for the UK’s steel industry to have a long term future, we still need more Government assistance on energy costs to compete with European competitors, as well as domestic procurement orders.”

— Diana Kinch

Northern Italian steel mills were all reported operative – and within the framework of the latest decree under which the Italian government increased the locked down areas in its wealthy northern region, Alessandro Banzato, head of Italian steel Association Federacciai, told S&P Global Platts Monday.

Buyers from Italian mills confirmed that they have been receiving their orders, but they also said that the sentiment is gloomy due to the uncertainty over the progression of the virus and the decline in oil prices.

The Italian government on March 8 signed a decree to restrict movements in the Lombardy region and its capital, Milan, including a ban on entering or exiting certain areas of the country. The measures also took effect in the provinces of Modena, Parma, Piacenza, Reggio Emilia, Rimini, Pesaro, Urbino, Alessandria, Asti, Novara, Vercelli, Padua, Treviso and Venetia. The new measures are expected to be in place until at least April 3.

Lombardy is the industrial heartland of Italy, its richest region and one of the richest regions in the EU with a per capita GDP about 26% higher than the Italian and the EU average, according to the European Commission data.

The steel producers and re-rollers in the region include Arvedi, the second largest Italian flats producer; Dalmine-Tenaris, one of the largest worldwide seamless tube producers; Marcegaglia, the world’s largest welded tube producer, and EAF-based longs producers Feralpi, Pittini, Alfa Acciai, Riva and Ori Martin.

Nearly half of Italy’s 23 million mt/year of crude steel is produced in this area.

“Italian mills are still operative also in the so-called red zone because as per decree the movements for work are possible. The production and order deliveries are still continuing as goods can enter and leave the affected territories,” said Banzato, stressing that mills have implemented the caution measures put in place by the government. “The transport of goods is in fact considered as a working need.”

Arvedi said operations are continuing, but with special attention to the new measures. For example, in shipping logistics drivers cannot get exit vehicles and must be equipped with medical protection and prevention devices such as disposable masks and gloves. If the loading or unloading requires exit from the vehicle, a safety distance of 2 meters between people must be maintained and the transport documentation must be transmitted electronically.

Other leading mills confirmed they are working and that they are following very closely the new regulations that cover everything, including food. Canteens are closed but packaged lunches are served to mill workers, while most of the so-called “white collar” employees are working from home and taking only essential business meetings.

Buyer sources confirmed that so far they are receiving orders but that the situation is not easy due to the overall slowdown of the economy. “The situation is complex. Not only in Lombardy and in Italy but also outside Italy. Stock markets are plunging on global recession fears due to a combination of plummeting oil prices and a surge in global coronavirus cases. So if the economy will continue to slow down in general, the steel orders will be less,” said Riccardo Benso, head of Assofermet, the Italian steel distribution association.

“The slowdown in the economy nevertheless does not mean that prices will drop. At the moment coil prices are close to break-even so there is no room for drops in prices. That’s why some European mills have already announced new higher asking prices,” Benso added, underscoring that if supply declines this could help prices rise. “Raw material prices are moving up on lower supply so this can help…but at the moment is too early and too difficult to assess the outlook.”

Market sources also underscored how the industry is learning to work in a different way and this takes time, another reason why there will be some slowdowns in logistics and crude steel production. “We are learning to work in a different way but it is certain that it would be a big problem if this situation lasts too long, and if it will involve other European countries with similar or more stringent limitations,” the head of Federacciai concluded.

— Annalisa Villa