Day: 27 March 2020

US heavy equipment producer and plate consumer is adjusting its financial guidance and reducing production in response to Covid-19, Kallanish reports. 

Caterpillar says in a release that the pandemic is now beginning to affect its supply chain. 

“At this time, Caterpillar is continuing to run the majority of its US domestic operations and plans to continue operations in other parts of the world, as permitted by local authorities,” the company says. “However, due to uncertain economic conditions resulting in weaker demand, potential supply constraints and the spread of the Covid-19 pandemic and related government actions, Caterpillar is temporarily suspending operations at certain facilities. The company will continue to monitor the situation and may suspend operations at additional facilities as the situation warrants.”

Caterpillar did not immediately provide details on which facilities would be closed or ramped down. It also cautioned that its previously issued financial outlook for 2020 is no longer valid. 

“The magnitude of the Covid-19 pandemic, including the extent of any impact on Caterpillar’s business, financial position, results of operations or liquidity, which could be material, cannot be reasonably estimated at this time due to the rapid development and fluidity of the situation,” Caterpillar says. “It will be determined by the duration of the pandemic, its geographic spread, business disruptions and the overall impact on the global economy.”

The Italian steel sector is going through a liquidity and payment crisis. Re-rollers, producers and distributors who spoke to Kallanish are receiving warnings from customers that they will have to postpone paying their outstanding invoices.

While some customers are asking to pay by instalment, others are unable to pay as they have not invoiced for a month now. All steel companies in Italy are shut down this week starting from 25 March until 3 April in compliance with the latest government decree of 22 March that also puts local industry in lockdown.

“This week the market is completely frozen,” a distributor says. “Prices are stable and we are all expecting big price increases following the restart […of trading activity], but the problem is that companies won’t have any money to buy.”

Credit insurance is also becoming an issue as banks are offering support to companies that are financially solid but not to smaller, more vulnerable ones. “This crisis will cause bankruptcy in the steel sector,” another source warns.

French carmaker Renault has decided to stop production at more plants around the world amid the spread of Covid-19, a source at the company tells Kallanish.

In Turkey, “…by also considering the disruptions in the global supply chain processes we gradually and temporarily suspend most of our operations as of 26 March… in Oyak Renault Automobile Factories,” Renault says. “The production resumption date will be shared again according to the developments in the country and the world.”

The company has also shut down production in Latin America until further notice, depending on the evolution of the virus situation. The plants of Santa Isabel in Cordoba, Argentina, the four sites at Curitiba in Brazil, Envigado in Colombia and Cormecanica in Los Andes, Chile will all be idled starting 26 March.

From 16 March Renault shut down its 12 plants in France, Spain, Slovenia, Morocco and Portugal.

Russia’s NLMK confirms to Kallanish it is only stopping production at its heavy plate plant in Verona, while its other European assets will continue to operate for the time being.

NLMK Verona can produce up to 450,000 tonnes/year of heavy plate. The mill is stopping for at least two weeks, in line with requirements from the Italian government.

NLMK also produces plate in Europe at its plants in Denmark and Belgium. The group also has a strip rolling plant in Belgium and France.

Its other European assets are currently unaffected by stoppages, but the situation is being monitored constantly, NLMK’s spokesperson adds.

Vietnam led the export destination list with 2.214 million mt, or about 28% of overall exports of finished steel, more than 3.5 times the 0.622 million mt recorded the year before. Of the 2.214 million mt in exported steel, 2.19 million mt comprised of hot-rolled coil.

“Steel exports to Vietnam and Taiwan witnessed an increase during April- February 2020, whereas, it declined in case of Belgium, Spain and Malaysia,” the Indian Ministry of Steel said.

Exports to Vietnam are expected to continue into the first quarter of the next Indian financial year as Vietnamese steel giant Hoa Phat has indefinitely delayed a startup of its new HRC mill at its Dung Quat plant in Quan Ngai province due to the COVID-19 pandemic. It was slated to start up April 1.

Hoa Phat said Danieli Group of Italy, which supplied the HRC mill, could not send its engineers to ensure a smooth startup due to a travel ban that resulted from the pandemic.

The new mill is expected to produce 3.5 million mt/year of HRC with strip thicknesses ranging from 1.5 mm to 12.0 mm and widths from 900 mm to 1,500 mm.

Likewise, the import data showed flat steel products made up 89% of overall shipments, but was down 7.8% on the year.

On the production side, India’s output of finished steel over April 2019-February 2020 totaled 94.29 million mt, about 2.5% higher on the year, while crude steel production rose 0.2% on the year to 101.11 million mt.

— Clement Choo

Turkish export rebar prices fell sharply to their lowest level in over three years Thursday, as mill workable prices fell amid extremely weak demand due to the coronavirus outbreak.

S&P Global Platts assessed Turkish exported rebar at $390/mt FOB Turkey Thursday, down $9.50/mt on day. This was the lowest level reached since early February 2017, when prices hit a low of $387.50/mt FOB.

“Maybe it will be $350/mt FOB soon because there is no buyer and most of the orders are to be postponed and there are some cancellations too,” a Turkish trader told Platts.

Another trading source cited tradable value for a large quantity like 10,000 mt at $390/mt FOB Turkey or below.

The second trading source said: “$390/mt FOB or below for large quantities is possible today because there is no buyer in the market.”

A third trading source cited a tradable value for similar quantities at $390-$395/mt FOB. A fourth trading source cited a tradable value with a firm bid at $390/mt FOB.

An Iskenderun mill source cited offers at around $390/mt FOB, while a Marmara mill source cited an offer at $395-$400/mt FOB. An Izmir mill offer was heard at $435/mt CFR US, including a countervailing duty. This was normalized to around $390/mt FOB Izmir, in line with Platts methodology.

The US Department of Commerce announced the results of its review into anti-dumping duties for Turkish-origin rebar last week. These were set at zero for Turkey’s Icdas, Kaptan, Colakoglu and Habas, as reported. Rebar imports from these producers were previously subject to final dumping margins of 5.39%-9.06%. Habas also saw its countervailing duty slashed to 3.37% in a separate review.

The reduction and removal of these duties has lent some optimism to a struggling Turkish export rebar market, with the hope that the notable rise seen in Turkish mills’ rebar export volumes to the US in recent months could continue in the coming months, once the coronavirus outbreak has eased.

Elsewhere, an eastern Chinese trader cited a rejected bid at $413-$415/mt CFR Singapore theoretical weight, equivalent to $390/mt FOB Turkey actual weight, highlighting some divergence among Turkish mills regarding workable levels Thursday.

S&P Global Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $220/mt CFR Thursday, down $3.50/mt on day.

The Turkish longs melting margin — the spread between Turkish export rebar and import scrap – was assessed at $170/mt Thursday, down $6/mt on day.

— Viral Shah