Day: 21 April 2020

As Turkey has increased import duties on some finished and semi-finished steel products for three months as of April 18, EU producers have gained an advantageous in exports to Turkey, Ugur Dalbeler, CEO of major Turkish steelmaker Colakoglu, told S&P Global Platts Monday.

According to a presidential decree published Saturday, customs duties on some alloy and non-alloy billet, slab, hot-rolled coil, cold-rolled coil, coated coil, stainless steel, sections and some bar products have been increased by 5% effective April 18 through July 15, an increase from the previous range of 9%-15% to 14%-20%.

Customs duty rates also increased by 2% for three months for some users that benefit from lower import rates, including pipemakers and white goods producers. These will now rise from a 6%-7% range to 8%-9% .

EU countries and countries with which Turkey has free trade agreements are exempt from the duty increases.

“The rise in import duties is a surprise. Already shipped imported materials will be faced with 5% additional cost, while unshipped materials probably will be deferred,” Dalbeler said. “We shouldn’t also ignore a [possible] extension in import duties after July 15.”

“European producers, who didn’t obey the agreements that we signed and targeted Turkey with protection measures in the last two years [have gained advantage] with this decision, which is worrying me,” Dalbeler said, adding that he heard Monday that European steel association Eurofer made an application to the European Commission on March 31 for an antidumping and subsidiary investigation against HRC imports from Turkey.

Eurofer didn’t confirm this information to S&P Global Platts Monday.

Dalbeler also told Platts that his main concern is the removal of unfair competition instead of outright protection. “Other countries however are [dumping] in their sales to Turkey as they couldn’t sell to other countries due to trade barriers,” he said. “Russia, Ukraine, India, Japan, Korea and EU are all targeting Turkey without minding any price level.”

Although Turkish mills’ flat steel exports have slumped since the beginning of March amid the COVID-19 outbreak, some low-priced import bookings of HRC, mostly from the CIS, were heard in the market in recent weeks.

Drawing attention to the fact that most of the recent HRC bookings have been made with an inward processing regime in Turkey, which exempts exporters of finished products, such as pipemakers, from feedstock steel import duties, the recent rise in import duties on steel from third countries will not have a significant effect on imports, market sources observed.

— Cenk Can

IndustriAll Europe, the federation of EU labor unions, has called for the European Commission to strengthen European steel safeguard measures to prevent thousands of tonnes of cheap steel being dumped onto the EU open market, the federation said in a letter addressed to the EC and seen by S&P Global Platts.

IndustriALL stressed how COVID-19 is having a massive impact on the steel sector with European steel production being reduced by 50%, resulting in workers being placed on short-time working hours or being subjected to temporary lay-offs. According to the association, there has been a huge cut in new steel orders (down 70-75%) that has led to the idling of steel plants and even the shutdown of production.

“While Europe has been suffering, other countries continue their production and even stockpile their products. Indeed, China managed to increase their production by 3% in January and February 2020. There are real concerns that some countries will use the COVID-19 pandemic as an opportunity to build up their capacities, increase their stockpiles and flood the open EU market,” the federation underscored in its letter.

IndustriAll Europe therefore called on EU policy makers to update the current EU steel safeguard measures to bring them in line with the decline in EU steel demand.

“The existing tariff-rate quotas are no longer relevant, and in particular, we call for a reduction in these quotas by 75% for Q2 and Q3 in 2020. Should this not happen, we struggle to see how the industry in Europe, and its thousands of workers, will be able to get back on their feet. European workers and their families continue to suffer dreadfully during this health crisis, and we need the EU institutions to demonstrate that they are working together, are representing all member states and are standing up for workers in Europe in times of crisis,” the union federation stated.

At the beginning of April European steel federation Eurofer asked the EC to review the current import safeguard quota asking that quota volume be reduced immediately by around 75% and for a period of six months in order to “align them with the devastating situation.”

The tariff level of 25% could be reduced after a review of the situation for the last quarter of 2020 and beyond.

Eurofer also proposed to implement emergency import restrictions outside the context of safeguard measures, as permitted under Article XXI of the GATT 1994 agreement. The safeguard measures do not cover products imported from undeveloped countries.

The latest import data available from Eurofer show that EU imports of hot-rolled coil in February, the latest full month for which data is available, amounted to 533,519 mt, a decrease of 22% from January and 11% lower than February 2019.

However, Russia increased shipments by 2,187 mt to 166,353 mt, which was enough to push Turkey from the top spot in February in volume terms, a position which it has held since November 2019.

Imports from Turkey decreased in February by 108,000 mt to 138,000 mt, while South Korea saw its HRC volumes surge 31% higher in February to 43,389 mt.

The EC Safeguard quota balances, which were refreshed on April 1 and run on a quarterly basis, allow some insight into more recent import activities and show a collective inflow in HRC of 283,000 mt in the two weeks to April 16, with Russia remaining the leading supplier to the bloc.

Price performance for domestic and import material has fallen with import offers heard at increasingly aggressive levels pressuring domestic prices lower.

The Platts TSI index for HRC was assessed Monday at Eur450.50/mt exW Ruhr, a decline of EUR32/mt since March 2.

Over the same period Platts assessed HRC imports basis CIF Antwerp Eur82/mt lower to Eur410/mt Monday.

The IndustriALL Global Union represents 50 million workers in 140 countries in the mining, energy and manufacturing sectors and is a force in global solidarity taking up the fight for better working conditions and trade union rights around the world.

— Annalisa Villa, Len Griffin

Trasteel and Vanomet, two Switzerland based trading firms, acquired 100% ownership in Officine Tecnosider, or OTS, an Italian based producer of hot rolled heavy plates, the two companies said Monday.

Trasteel has been a minority shareholder in OTS with a 30% of stake since the beginning of the creation of the company and together with Vanomet acquired the remaining stake from the founders and previous owners in this transaction.

OTS is located in San Giorgio di Nogaro in the North-East of Italy and it has a production capacity of 370,000 mt/year of heavy plate that are used in a wide range of sectors, from general engineering to construction and shipbuilding.

OTS serves the domestic market as well as clients in central, western and eastern Europe as well as ships to North and South America. The company employs 110 workers.

“We are convinced that the new shareholders shall continue our successful business and that the flexibility and efficiency of our plant shall continue to give us a competitive advantage,” Ivo Conti, CEO and former shareholder of OTS commentated, who will stay at the helm of the company. “Despite a temporary shut down in the wake of Covid 19, OTS has restarted production recently and is planning to move back to near-full capacity utilisation in the second half of the year. In contrast to other mills, OTS can achieve a sound profitability even when operating at less than full capacity.”

“Having been shareholder of OTS for a long time we are now proud that together with our partner Vanomet we have taken full control of OTS and are looking forward to continue working with the OTS management,” said Gianfranco Imperato, CEO of Trasteel.

Ruedi Mathis, Vanomet Founder and Chief Executive, emphasized: “…OTS provides Vanomet with a complementary value creation opportunity and allows us to leverage our excellent relationships to slab suppliers with a state-of-the-art manufacturer of finished steel plates.”

The parties did not disclose details about the purchase price. The transaction is subject to approval by Italian authorities. Once they will have the green light, Trasteel will become the majority owner of the company while Vanomet the minority owner. The companies declined to give the percentage ownership details to S&P Global Platts when requested. PwC Switzerland and PwC Italy/PwC TLS Italy provided M&A and legal support, as well as financial due diligence and tax advice to the buyers.

— Annalisa Villa

Sidma, one of the main Greek steel trading, stockholding and processing players, has confirmed its acquisition of the activities of Bitros Steel, another local trader and processor of steel products, Kallanish learns.

Sidma is now set to incorporate assets and liabilities of Bitros Steel following completion of the deal last week, the stockholder says in an announcement.

Sidma is part of the Viohalco group and is one of the main steel processing and distribution companies in Greece. Being part of the same holding, the company has a strategic partnership with Sidenor, the biggest steelmaker in the country.

Bitros Steel is a major processor and distributor of steel products in Greece, focused mainly in the longs market.

The measures for containing the coronavirus pandemic are causing huge distortions in Germany’s passenger car production, Kallanish hears from automotive association VDA.

The country’s carmakers at their domestic plants built 287,900 cars in March, -37% less than in the corresponding 2019 month. Production during the first quarter came to 1.0 million units, a drop of -20% year-on-year. Exports are suffering similarly, VDA says. Last month, 234,500 new passenger cars were supplied to customers around the world (-32% y-o-y). In the first three months, 771,300 vehicles were exported (-21% y-o-y).

A year-on year decline could already be felt in the first two months, before the effect of the coronavirus kicked in. Domestic plants lost -12% output in February, and -10% in the first two months accumulated, with 730,000 units produced.

The pressure on the European Commission to slash steel safeguard quotas is mounting as European trade union IndustriALL has sent a letter to trade commissioner Phil Hogan to request a reduction.

In the letter seen by Kallanish, IndustriALL shows its concern for the future of the steel industry in Europe. “Steel production in Europe has reduced by -50% and there has been a huge cut in new orders (down -70% to -75%). This has led to the idling of plants and even the shutdown of production. As such, there are real fears that around 50% of steelmaking capacity could be lost,” the association says.

Following on from the requests made by Eurofer earlier at the beginning of April, IndustriALL is also calling for safeguard quotas to be reduced by -75%. “The existing tariff-rate quotas are no longer relevant, and in particular, we call for a reduction in these quotas by -75% for the second and third quarters in 2020. Should this not happen, we struggle to see how the industry in Europe, and its thousands of workers, will be able to get back on their feet,” the letter explains.

Similarly, Italian minister for foreign affairs Luigi Di Maio sent a letter to Hogan last week requesting a review of the quotas to be made before the new ones become available on 1 July.

This new support for the limitation of safeguard quotas could well push the European Commission to take a decision in this instance. A number of associations grouping steel users and distributors oppose the reduction of safeguard quotas. During recent times however the European Commission has mostly supported requests coming from producers and workers rather than steel consumers.