Day: 22 April 2020

Swedish engineering steel specialist Ovako has lowered three out of its six alloying element surcharges for hot rolled bar for May. The company’s scrap surcharge for May has also been lowered continuing ferrous scrap’s seesawing price trajectory in 2020. The alloy surcharge for nickel continues its steady descent, Kallanish notes.

Ovako’s nickel surcharge falls for May for the fifth month in a row to SEK 887/tonne ($90.47/t) per 1% alloying element by weight from its April value of SEK 980/t per 1%. (The conversion rate used is that given by Ovako of SEK 1 = $0.102). This is the fifth consecutive monthly fall following four months of steady and strong increase. The surcharge for chromium rises again month-on-month by 3.2% to SEK 162/t per 1%.

The alloy surcharge for vanadium slips back for May by -4.7% to SEK 1,670/t per 1% after two months of solid increase. The manganese surcharge rises again by 2.0% to SEK 51/t per 1%.

The surcharge for silicon continues to recover after having had fallen for 21 months in a row up to December. For May it rises by 12.5% m-o-m to SEK 81/t per 1%. That for molybdenum falls back by -6.8% to SEK 1,589/t per 1% following two months of increase.

The steelmaker’s scrap surcharge for May falls back by -11.7% to SEK 1,738/t, continuing its 2020 seesaw progress. All surcharges apply from 1 May 2020, the company confirms in its listings.

These surcharges apply to deliveries of hot rolled bar only, from Ovako’s sites at Smedjebacken and Boxholm, and Hofors and Hällefors in Sweden and from Imatra in Finland. Surcharges vary for other products from Hofors and Hällefors including bars with different finishes, and tube and rings.

Stalprofil’s steel product deliveries fell -1% on-year in 2019 to 215,839 tonnes, while steel structures sales fell -15% to 2,374t, Kallanish notes.

In its infrastructure segment, sales of anti-corrosion coated steel pipe fell -27% to 1.56 million square metres due to lower deliveries to gas pipeline operator Gaz-System.

Consolidated revenue fell -2% in 2019 to PLN 1.43 billion ($341.7 million), although exports inched up 0.1% to PLN 122.3m. The EU-28 accounted for 88.9% of exports, with countries outside of the European continent raising their share in exports by over 1 percentage point to 1.4%. Net profit declined -36% to PLN 21.8m.

ArcelorMittal, which holds a 31.48% stake in Stalprofil, accounted for 18.5% of the distributor’s procurement in 2019, down from 28.9% a year earlier. Polish pipemaker Ferrum increased its share to 11.1% from 8.4%, but Greek firm Corinth Pipeworks saw its share decline to 3.8% from 13.5%.

The firm says that, apart from temporarily closing and then reopening its Katowice warehouse earlier this month, it is yet to feel any impact from the Covid-19 pandemic on its business. In the steel distribution market, contracted orders are being carried out without interruption despite the pandemic. Domestic and export sales are at an average level despite difficulties with international logistics.

However, there is a risk of disruption to sales and therefore potential impact on Stalprofil’s financial performance, the firm concedes.

In 2020 the firm is focusing on the construction of a new automated high-bay warehouse at Katowice, which is seen as a “… response to the latest steel distribution trends,” Stalprofil says. It will further widen the firm’s product offering and improve customer service.

This week, Stalprofil had its offer accepted by Gaz-System to supply DN 1,000 pipe for the construction of the 55km stage 5 of Baltic Pipe. Deliveries will take place from 1 November 2020 to 30 April 2021.

Representatives from German stockholders are taking a predominantly positive attitude towards digitalisation of their business, according to a survey conducted by the monthly Stahlmarkt monitored by Kallanish.

“The online processing of orders especially has a lot of potential,” says Jörg Simon of one of the large steel purchasing cooperatives, Nordwest Handel. “We are putting a focus on developing the basic product data, because it enables distributors to streamline their processes, saving time and money,” he says.

Christian Pokropp, managing director of kloeckner.i cautions that steel distribution is still lagging behind many other industries in digital transformation. “The rapid technical progress, cost pressure and the need to catch up on the development will step up the pace of digital transformation,” he says.

“Digitalisation is absolutely necessary, but the hurdles are high,” says Axel Berger, head of Digital Transformation at thyssenkrupp Materials Services. As examples he names price and margin pressure, complex processes, inefficiencies, a lack of standards and insufficient data. “The good news is that there is enormous potential in our business, and we need to tackle it.”

Finally, Salzgitter highlights the fact that personal consultation with customers remains the key to success. “But digitalisation supports these efforts massively,” the company notes, and points out that its distribution unit Salzgitter Mannesmann Stahlhandel has been occupied intensively with digitalisation over the past five years.

Some of Turkey’s largest automotive producers have continued extending output suspensions due to disruptions in procurement, sales and delivery related to the expanding COVID-19 outbreak, while others have restarted output this week.

Ford Otosan, a joint venture between Turkey’s Koc Holding and Ford Deutschland Holding, which previously extended the stoppage from April 13 to April 27, re-extended the stoppage till May 4, S&P Global Platts learned from a company statement.

“Taking into consideration the decisions taken by Ford of Europe to continue to apply temporary suspension of its production operations due to the disruption in European trade and problems in the supply chain in parallel with the spread of the Covid-19 pandemic, temporary suspension of production in our Kocaeli plants is extended until May 4,” the company said.

Another of Turkey’s largest auto producers, Bursa-based TOFAS, has also decided to extend its stoppage until May 4, as Platts reported last week.

Two other Turkish auto producers, Mercedes- Benz Turk and Honda, have restarted production at their plants in Turkey as of April, 20, Platts learned.

Due to the suspensions by Turkey’s major carmakers steel demand in Turkey was already effected. But in line with the restart of the automotive production, demand is expected to recover gradually in May.

— Cenk Can

EUNIRPA, the association of European non-integrated wire rod processors, has called for current EU safeguard measures to be left untouched, Kris Van Ginderdeuren, president of the association, told S&P Global Platts on Tuesday, in response to steel producers’ request for a reduction in import quotas.

The association has written an open letter to the European Commission after Eurofer, the association of European steel producers, sent a letter earlier this month to the president of the EC asking for a reinforcement of the current safeguard measures, including a reduction of the current quota levels by as much as 75%. That request was backed by IndustriAll Europe, the federation of EU labor unions, in a letter to the EC, as reported by Platts on Monday.

“Eurofer’s request was based on grounds that steel mills are ‘essential’ to the economy, but we are essential too — the non-integrated downstream industry constitutes a continued source of technology development and creates a tremendous amount of added value. Eurofer is rather shamefully aiming to use the COVID-19 crisis as a new attempt to further weaken and ultimately eliminate the non-integrated steel industry without any consideration for the strategic importance of this industry for the economy in the EU,” Van Ginderdeuren told Platts.

EUNIRPA said in its letter that reducing available quotas under the current safeguard measures would amount, in practice, “to a near complete elimination of imports and would lead to a virtual monopolization of the EU market against all the basic principles of free competition.”

Van Ginderdeuren added that such limitations would make it impossible to buy large volumes.

In its letter the association underscored that while European mills had widely stopped production and/or deliveries within the EU due to the lockdown, a significant number of non-integrated processors are still able to continue operations because they can get their raw materials at reasonable prices from a variety of sources including outside the EU.

“Any attempt to further reduce the availability of imported feedstock would constitute a terrible blow to the non-integrated downstream industry,” it said.

The annual Turkish-origin wire rod import quota for the period July 2019 to June 2020 was exhausted on April 10, but the EU “other countries” wire rod import safeguard quota for the April-June quarter still had 48,788.44 mt available as of April 20, from an initial total of 76,0449.10 mt, according to the EC’s website.

A balance of 66,156.66 mt was left unused from the January-March wire rod quota for “other countries” and should also be transferred into the April-June quota. Turkish-origin wire rod can use a maximum of one third of the total available “other countries” quota volume for April-June.

“There are less imports so the safeguards are working so there is no need to make them tighter and any additional restrictions on imports would lead to closures and the loss of tens of thousands of jobs,” Van Ginderdeuren said.

According to the EC’s data, the EU “other countries” rebar import safeguard quota for the April-June quarter had 51,867.49 mt available as of April 20, down from an initial total of 135,728.92 mt.

“We still have a relatively large [Turkish-origin] rebar volume left to clear EU customs, which we didn’t manage to clear on April 1. We will clear more of it once the unused Q1 third countries quota gets transferred into Q2,” an EU-based trader told Platts this week.

A balance of 66,585.16 mt was left unused from the January-March rebar quota for other countries. This is expected to be transferred into the April-June quota total, and should happen by 20 working days from April 1 as per EU regulations, the trader said.

Rebar originating from countries such as Turkey which have exhausted their annual country-specific rebar quota for July 2019-June 2020 can use up to a third of the available April-June 2020 rebar quota for other countries.

“Because of the coronavirus pandemic, we are very far away from booking anything else [imported from Turkey] right now — we need more clarity related to our estimated sales in May and June before taking another position,” the trader added.

Northwest European domestic rebar prices softened last week amid lower demand and continued uncertainty regarding coronavirus-related lockdowns, with Platts assessing TSI Northwest Europe Rebar at Eur470/mt ex-works Friday, down Eur5/mt on the week.

— Annalisa Villa, Viral Shah

ArcelorMittal is likely to suspend production at its blast furnace No. 2 in Fos-Sur-mer, due to the lack of orders, French newspapers reported.

Fos-sur-Mer produces 4 million mt/year of steel and is one of France’s largest producers of flat steel, of which 80% is produced for the automotive sector. Some 60% of Fos-sur-Mer orders usually serve the Italian and Spanish automotive sectors that at the moment are completely on hold due to the COVID-19 pandemic.

ArcelorMittal already stopped one of its BFs on March 23 due to the coronavirus outbreak, as reported already by S&P Global Platts, which could not reach ArcelorMittal for comment Tuesday.

Europe’s steelmakers have cut production and idled lines due to the severe market downturn and economic fallout from the coronavirus spread, with European car making facilities employing temporary shutdowns. In March 2020, the EU passenger car market recorded a dramatic drop with a decrease of 55.1% in registrations of new vehicles as a result of COVID-19, as reported by ACEA figures.

With containment/lockdown measures taking hold in most markets, the vast majority of European dealerships were closed during the second half of March. Consequently, demand across the region fell by more than half last month, dropping from 1,264,569 units registered in March 2019 to 567,308 units.

The Platts TSI index for HRC was assessed Tuesday at Eur448.50/mt exw Ruhr ($487.12), Eur2 lower day on day and a decline of Eur20/mt since February 3.

Over the same period Platts assessed HRC import prices, basis CIF Antwerp, Eur65/mt lower to Eur410/mt.

— Annalisa Villa