Day: 31 March 2020

French car maker PSA is to resume production and is implementing a timetable for a gradual resumption of activities, Kallanish learns from the company.

PSA had announced the suspension of its industrial activities until March 27 (see Kallanish passim).  However, “… on the basis of the ‘prepare, test, resume’ principle, new dates will be set for European mechanical factories and assembly sites, which will also integrate the ability of suppliers to support these restarts”, PSA says in a note.

The company is implementing strengthened safety and hygiene measures to continue to combat the Covid-19 outbreak and is creating the prerequisite conditions for a resumption of activities, it says.

The Spanish Government has temporarily suspended steelmaking and metal manufacturing in the country as a “… non-essential” economic activity. The measure came into force on 30 March for at least a 15-day period. The new extreme measures to prevent the spread of Covid-19 in Spain are creating considerable uncertainty in the steel sector, representatives from the industry tell Kallanish.

Spanish steelmakers’ association Unesid has asked the Ministry of Industry and Commerce for clarification of the royal decree because it creates uncertainty in the sector, the president of Unesid Andrés Barceló says.

“There are critical plants that cannot be stopped and are not included in the decree. Nor can [… these] comply with the time stipulated by law to make such stops, since specific security plans are required to do so,” Barceló says. The decree also fails to clarify how to proceed once the facilities are halted, as these require minimal maintenance and security services, while the presence of all the workforce is banned, he continues. “We have also asked the government for an urgent system to carry out the supply and loading of material already produced and to guarantee steel arrivals [… from overseas] which are arriving at Spanish ports in the coming days,” the Unesid president adds.

All of the monitored large Spanish steelmakers confirm that they are preparing to put their furnaces in ‘hot idle’ mode until the resumption of operations. “We are evaluating the expected impact on our activities,” an ArcelorMittal spokesperson says.

“Our activity is not included as essential in the royal decree, so Gallardo Balboa is taking all the indicated measures to comply with the law. A halt in the production chain takes time to do diligently and we have 24 hours to adopt such measures,” the Gallardo Balboa steelmaking group confirms.

Other steelmakers such as Celsa, Megasa, Tubacex and Acerinox, are awaiting a possible last-minute exception or a new legal interpretation of the decree in support of the steel industry, Kallanish understands.

Spanish metal groups could face a further shutdown after measures in Spain to contain the spread of the COVID-19 virus were further extended, via a decree in the State Gazette (Boletin Oficial del Estado) Sunday.

Following two weeks of restrictions on individuals’ movements and work, the Spanish government further tightened its containment measures for COVID-19 and extended the duration through to April 9.

The new measures includes the closure of all industrial sites except for those that produce sanitary materials, food or other products for essential activity.

However, Spain’s largest metal producers said it was still unclear which parts of their production might have to close.

A spokesman for Alcoa, Spain’s largest aluminum producer with a 228,000 mt/yr unit at San Ciprian, told S&P Global Monday that the company is confident it will be considered essential and is working on ensuring that will be the case.

A steel industry source also noted said that the group was working on defining which industries would be allowed to continue operating. The groups are waiting for clarifications from the country’s Industry Ministry, after the new restrictions were only published just before midnight Sunday. Spain’s latest order will give the industries one day to make the necessary adjustments and preparations during Monday March 30, given that the order was passed late Sunday night.

Scrap dealers said they can still operate, collecting scrap even in the most virus-hit area such as Madrid, but they also underscored that the situation was fluid.

Sources said that most of steelmakers are still working but however some have started to cut productions.

Among the main domestic steel players that have cut productions according to local sources are ArcelorMittal that reduced its production in Sestao, suspending its 1.8 million mt a year EAF, as well as special long steel producer Sidenor that has temporary shut down its production in Vitoria and Basauri. ArcelorMittal and Sidenor were not available to comment.

Much of the country’s manufacturing industry, such as autos, have already closed in the previous two weeks, meaning metal demand and steel prices within Spain has already been impacted.

The Platts TSI hot-rolled coil index was calculated Friday at Eur444.50/mt ($492.28/mt) ex-works S. Europe, a decline of Eur11/mt since March 2. Hot-rolled coil in northern Europe has fared marginally better in March declining Eur7/mt within the month and was assessed Friday at Eur475.50/mt ex-works Ruhr.

Also Spanish power demand, of which around half is attributed to industry, has been slipping progressively since before the emergency measures were put in place on March 16.

For the five Mondays of March, daily demand has fallen from around 706 GWh on March 2 and 700 GWh on March 10 to 664 GWh on March 16, 619 GWh on March 23 and now to 593 GWh for March 30 — or a drop of 16% from the first Monday to the fifth.

— Gianluca Baratti, Annalisa Villa, Len Griffin