Day: 24 March 2020

French-headquartered tube producer Vallourec is accelerating the execution of its cost savings program to deal with the current coronavirus situation. As with many steel companies in France, the company is said to have been drastically reducing output since last week as a consequence of a collapse in demand for finished products.

“The environment in which Vallourec operates has been through significant changes in recent weeks. The coronavirus epidemic in the countries where the group is present, combined with the sudden decline in the price of oil, will have an impact on the group’s activities, especially in North America where oil and gas operators are announcing drastic reductions in their drilling plans. It is impossible at this stage to quantify the impact of these factors on Vallourec’s 2020 performance and targets,” the company says in a statement sent to Kallanish.

Vallourec is in close contact with its banks and is maintaining a constructive dialogue with them in order to launch a rights Issue of €800 million ($858m) announced on 19 February “… as soon as conditions allow,” it adds.

The Italian government is closing all ‘non-essential activities’ from 23 March until 3 April. The country’s industrial association Confindustria however is negotiating with authorities to keep some companies up and running. This is to guarantee a reduced level of activity to limit the impact of the country’s economic slump and liquidity crisis, informed sources tell Kallanish.Some steelmakers, notably Arvedi and ArcelorMittal Italia, are continuing to produce.

In a letter to the government seen by Kallanish, Confindustria president Vincenzo Boccia is asking for an exception to the revised closure decree for “… sectors that cannot be interrupted for technical reasons, for example those with continuous casting equipment.” Boccia has also stressed in the letter the importance of the continuity of production and maintenance activities. He has asked prime minister Giuseppe Conte to immediately address the issue of lack of liquidity “… to prevent irreversible consequences” for Italian companies.

The revised Italian decree however specifies that “… production activities from continuous cycle equipment are allowed”. Italian steelmaker ArcelorMittal Italia is therefore allowed to continue producing at its Taranto works. The trade unions however have asked the company to anticipate a meeting initially scheduled on 24 March to discuss further developments and may urge the authorities to shut down production.

Flats’ producer Arvedi meanwhile tells Kallanish that the company is also continuing to produce. With reference to the revised decree “… as communicated to the Prefects of the respective provinces in which it operates – [… Arvedi’s] production activities continue in full compliance with the decree itself and all the safety measures already put in place by the group for several weeks to protect all of its workers,” the company says.

Other steel players who are still producing are supplying those sectors that are considered essential by the government and are guaranteeing deliveries only to those buyers. “… Recession will be strong in Italy this year. We have reduced output and we are resisting by implementing enforced holidays and temporary closures for sanitising work but customers are shutting down, the ones still standing cannot pay and the economy will feel a strong deterioration in the second quarter,” one steel industry source tells Kallanish.

Spanish-headquartered longs supplier, Celsa, has announced to its trade unions its intention to launch a temporary layoff scheme for part of the workforce, Kallanish learns from market sources.

The company is expected to use the scheme to reduce output, but its furnaces and production lines in the group’s main mill, near Barcelona, will continue to operate. Unions note that the biggest issue is the supply of scrap for the EAFs, which is expected to be reduced in the coming weeks.

With the exception of Italy, Spain is the country in Europe most impacted by the coronavirus outbreak. The country had gone into lockdown since last week, but a number of steelmakers are continuing to produce, albeit at a reduced rate.

Earlier last week some companies such as Tubos Reunidos and Sidenor halted production temporarily. Acerinox on the other hand is confirming that production will continue for the time being.

The impact of the coronavirus outbreak on the flat steel sector in Benelux is increasing since the end of last week.

Liberty Steel has halted its coil rolling mills in Belgium and Luxembourg. While the closure comes as demand from the carmaking sector in particular is expected to fall, it will also put further pressure on the availability of HDG and processed coils in the European market.

“Liberty Liege-Dudelange confirms that it’s three sites at Flémalle, Tilleur and Dudelange are closed as of 21 March. Finished products ready for our customers will still be shipped. We apologise to our customers for any impact caused as a result of this decision,” the company says. Liberty Steel can produce almost 1 million tonnes/year of HDG in Belgium and over 600,000 t/y in Luxembourg. The company is also active in producing packaging steels, Kallanish notes.

Meanwhile Tata Steel confirms in a note that it also is implementing production adjustments at some of its European mills. It says nevertheless that “… to date, the impact of these changes on its steelmaking hubs in IJmuiden (Netherlands) and Port Talbot (UK) has not been significant.”

“While demand is steady in some sectors, production pauses in the European automotive sector are expected to have a knock-on impact on steel supply,” Tata Steel says. “Given this is a fast-moving situation, Tata Steel is working closely with customers and suppliers to reduce possible impacts from the coronavirus outbreak and restrictions.”

ArcelorMittal France has declared force majeure and is reducing production at its flat products’ plants in France. “This decision follows the current sharp slowdown in the steel market, as well as the interruption of activity by certain customers and suppliers, despite the continuing strong demand in segments such as packaging steels (cans in particular),” ArcelorMittal says in a note sent to Kallanish.

At Fos-sur-Mer in southern France ArcelorMittal will shut down a blast furnace, converter and continuous casting line. For an initial period of 7 days, the strip mill at Fos and downstream finishing lines at Fos and the Saint-Chély-d’Apcher plant will also be idled. This reduction in activity that started gradually on 19 March will continue until further notice.

In northern France, ArcelorMittal has shut down a blast furnace and converter in Dunkirk from 23 March. “This will reduce the need for coke sooner than expected and the impact on the Florange coking plant will have to be reassessed. The number of cold rolling lines remaining in operation and the number of stations per line will be adjusted. Our workforce will be reduced to the minimum necessary on each plant concerned while ensuring market demand,” the company says.

The European Commission (EC) has confirmed that preliminary duties on hot rolled stainless steel flat products from China, Indonesia and Taiwan should be imposed as of 12 April.

The Commission explains in a note monitored by Kallanish that duties have been proposed in a range between 7.5% and 18.9% depending on the provenance of the material. Taiwanese products will be hit less hard, while Chinese and Indonesian imports will be assigned higher duty rates.

The investigation was launched in August 2019 following a complaint by Eurofer. The products covered are hot rolled stainless steel flat products falling under HS codes 7219 11, 7219 12, 7219 13, 7219 14, 7219 22, 7219 23, 7219 24, 7220 11 and 7220 12. There are some exclusions and these codes are given for information only, the EC says.

Earlier in January this year the European Union had asked regional customs’ operations to register the imports of the products under investigation. In addition to the AD investigation, there is an anti-subsidy investigation on the same products begun in October last year.

Certain Italian steel mills will have to shut down most operations under a government decree issued Sunday, tightening restrictions to fight the spread coronavirus.

The government has ordered the suspension of industrial and commercial activities that are not essential by March 25.

Market sources said that although most mills would not be allowed to continue production, some are trying to secure the requisite permission from local prefects to carry on. Unions have promised to fight such moves and say they are ready to call a huge strike to prevent plants staying open.

Under the government decree, continuous production cycle plants activities are permitted “from which interruption results in serious damage to the plant itself,” but again this is subject to a greenlight from the local prefect.

AM Italia: BFs said operational

ArcelorMittal Italia’s plant in Taranto, the largest Italian flat steel producer, has some continuous cycle production at its plant that should be allowed to keep running.

On Saturday it shut down blast furnace No.2 at Taranto, as well as the facility’s No.1 melting shop. Crude steel production will be around 8,500 mt/day, with only two blast furnaces — No.1 and 4 — continuing to work, unions sources told S&P Global Platts.

“AM Italia has shut down some of the hot end; we do understand that BF1 and BF4 have to continue to be operative, but we ask to shut down all the other cold end part activities that are still working in Taranto as well as in the sites of the company based in North Italy such as the Genoa re-rolling plants and Novi Liguri,” a union source said.

“We urge the government and the prefects to listen to us and stop all the activities — there is no need for the cold end parts to work for the time being, also considering that most of the Italian steel producers’ buyers — domestic and not domestic — have halted productions, in particular the automotive sectors,” he added.

Unions were due to meet with company representatives Monday afternoon.

The company declined to comment.

Arvedi to continue producing

Arvedi will continue to produce steel, according to an official note Monday from the second largest Italian flat products producer.

Arvedi operates electric arc furnaces (EAFs) and scrap, a raw material which has seen a sharp price decrease due to the outbreak. Most of Arvedi’s core production is for the automotive sector, which is currently largely idle.

Arvedi declined to comment when asked on which grounds the prefect had granted it the greenlight to continue working. However, in a brief note to the press the company underlined that “the production activities continue regularly in full compliance with the Decree itself and all the safety measures already put in place by the Group for some weeks to protect all its workers.”

Arvedi’s Servola plant in the Trieste area was due to close permanently at the end of March in any case.

Arvedi is based in one of the areas of Italy which has suffered most fatalities from the coronavirus outbreak.

— Annalisa Villa

As the WTO ramps up monitoring of the COVID-19 pandemic’s trade implications, Director-General Roberto Azevêdo calls for transparency with regard to trade-related policies introduced to fight the virus.

In a 24 March message asking all members to submit information to the WTO Secretariat about recent trade and trade-related measures, DG Azevêdo called specific attention to the policies members had introduced in response to the coronavirus outbreak.

“The current COVID-19 pandemic represents an almost unprecedented health crisis, and members are understandably responding by introducing legislation and policies to seek to combat this health emergency,” he wrote. “These include measures that are trade-related, such as export measures and economic support programmes.”

The DG asked members to provide the Secretariat with information about their COVID-19 policies with trade implications, emphasising that whatever they submit would be used purely for transparency purposes.

The request was part of a longstanding transparency exercise in which the WTO Secretariat compiles regular reports on trade-facilitating and restricting measures introduced by members of the Group of 20 leading economies as well as by the WTO membership as a whole. The next trade monitoring report will look at measures taken between mid-October 2019 and mid-May 2020.

The monitoring exercise has previously shone a spotlight on trade measures taken in the context of health emergencies, notably the H1N1 flu outbreak in 2009-10.

In comments on the COVID-19 outbreak, DG Azevêdo has stressed the importance of transparency with regard to trade-related measures, arguing that it would be particularly useful for the many countries that rely on imports for medical supplies.

More broadly, the Director-General has set up a task force of experts from across the Secretariat to monitor the impact of COVID-19 on trade flows and the overall global economy. Some of the task force’s findings will inform the WTO’s annual trade projections which will be released next month.​

Tata has not idled any blast furnaces across its Port Talbot and IJmuiden sites in the UK and the Netherlands, despite reducing production because of lower demand.

The company appears to be slowing to the lowest technical minimum level possible in the UK, and is mulling a potential furnace stoppage as well as the hot idling of coke ovens.

German steelmaker ThyssenKrupp will also cut production because of the drop in demand caused by the coronavirus crisis, and because its “top priority” is the health of its employees, it told Argus.

Smaller Austrian producer Voestalpine said yesterday that it was idling a blast furnace at its Linz site because of the collapse in demand from its customer base, and was implementing short-time working.

Meanwhile, German steelmaker Salzgitter is cutting strip production as well as crude steel output, it said.

The company had earlier said that it would reduce blast furnace output. No blast furnace will be idled, but output will be scaled back across all units. And it will reduce rolling mill and coating line output “in accordance to the market development and the availability of staff”, the company said today.

Salzgitter will “monitor the situation closely” to see if any furnaces need to be idled, it said. The company’s blast furnace three was closed last year.

By Colin Richardson