Day: 28 April 2020

French vehicle producer Renault Trucks is gradually resuming production, Kallanish learns from the company.

Factories in France have been restarted gradually from 22 April starting with the Lyon-Venissieux Engine Plant. Other Renault Trucks production sites, such as Bourg-en-Bresse and Blainville-sur-Orne assembly plants will gradually resume activity in the coming weeks.

However, the restart of industrial activity is planned for all plants at a very low output level. “Ramp up will be slow and be spread over several weeks, in line with customer demands, the ability of suppliers to deliver the required provisions, and in synchronisation with the other Volvo Group plants,” the company says in a note.

The company is examining requests from its customers, dealers and bodywork partners and analysing market trends to adjust production rates for the coming months, it adds.

Meanwhile starting last week Renault has also gradually resumed production at some of its passenger vehicle and engine plants in France, Spain, Portugal and Russia, Kallanish hears. Production however is said to be slow and should be ramped up after France has eased its lockdown as from 11 May.

Germany’s steel mills serving the automotive industry have reduced their production significantly. All of them, including strip mills as well as those making speciality long products, had already reduced production during 2019, so the coronavirus measures have simply added to the pain.

thyssenkrupp Steel says it has adjusted all stages of production from the blast furnaces to the processing line, mainly due to the production cuts in the automotive sector. For reasons of competition, it declines to give the levels at which it is now operating, but denies that it plans to idle a blast furnace.

Indirectly, this is happening at its 50% subsidiary HKM (Hüttenwerke Krupp-Mannesmann). The steelmaker makes slab used in car bodies, and even more so for tube production which is also not faring all that well. One of its BFs will be shut down for repair until October, “… which wasn’t originally planned,” an insider tells Kallanish.

This had already happened at ArcelorMittal Bremen in September and at Salzgitter where the small blast furnace C underwent repair last year and remains out of operation. “We would rather increase production at A and B before restarting C,” a spokesman tells Kallanish.

Makers of special bar qualities for automotive purposes had all introduced short-time working even before the quarantine rules kicked in. This applies to Georgsmarienhütte, Saarstahl and Deutsche Edelstahlwerke (DEW).  “We have introduced short-time work, and defined further measures when presenting annual results in March,” a spokesman for DEW says. “We will definitely reduce production further to adjust it to the lower demand.”

European demand for flat steel coils remains weak, with any recovery expected to be gradual, sources told S&P Global Platts Monday.

“Domestic mills are not seeing a lot of business and there is no demand in Europe or anywhere else, so news that automotive sector is restarting is positive,” a German service center source said.

“But at what level of production is the question, as just one shift out of three per day on the automotive assembly lines will not take the volumes [of steel] the tier-one mills require,” he said.

“Everyone needs to decide now if they take domestic HRC on eight weeks lead time and higher price or import material, for 12 weeks plus lead time and lower price, plus the recent currency movements have started to move against imports.”

The source reported HRC from imports was offered basis CIF Antwerp at Eur385/mt.

“If the lockdowns continue, then prices can soften further from the current levels, the return to work will be gradual process, however, if this does not happen, then we will be in a much worse situation, reduced working means reduced consumption.”

A delicate balance exists between the need to unlock European economies while also ensuring there is no second wave of infections of coronavirus that could “wipe out the remainder of the year,” the service center source said.

An Italy-based service center source said that a lack of demand combined with price pressure from import material was driving the market lower.

“The first likely deals that will be done after the restart in Italy, will be around Eur390-400/mt base price, but nobody is willing to give exact prices,” he said.

“Sure there are imports in the market, however, the real pressure stems from a lack of demand, and imports volumes will be declining as demand falls, but at the moment there is no demand and therefore supply has not reduced to balance the market.”

“Import prices have to be at almost break-even level now for those non-EU mills, however, domestic producers perhaps can go another Eur20 lower,” the source said, highlighting that the spread between imports and domestic offers had room to tighten.

“The recovery will be gradual and step-by-step, there are negotiations ongoing and some small sales taking place already, however, next week will be much better as most people return to the market with urgent needs for metal.”

A second Italy-based service center source said that an immediate uptick in demand was not expected following the lifting of economic restrictions in Italy.

“Next week all the companies can restart, but I’m not expecting a sharp increase of activity. We have to wait until the third week in May to understand what could happen in the market,” he said.

The Platts TSI hot-rolled coil index was calculated stable Monday at Eur450/mt ($487.67/mt) ex-works Ruhr.

Cold-rolled coil was assessed at Eur531/mt ex-works Ruhr, slipping 50 euro cent lower day on day.

In Southern Europe, HRC was assessed at Eur425/mt ex-works South Europe, declining Eur4.50 from Friday.

— Len Griffin

German steelmaker Salzgitter is extending its production cuts and will reduce shifts from May onwards as the company sees a drop in orders, the company said in a note on its website.

The cuts are primarily affecting the flat steel division, which is the largest business of Salzgitter and heavily affected from the recent automotive shutdowns.

Salzgitter will formerly apply for the short-time working scheme, which entails financial support from the German government for worker salaries.

“The significant impact of the coronavirus epidemic only filtered through to our order situation in mid-March, with the result of the first three months therefore largely remaining unaffected. The coming quarters will nevertheless be determined by global restrictions on economic activity,” said Salzgitter, adding that the measures will be in place until the economic environment improves.

According to preliminary figures, Salzgitter generated an external sales loss of Eur31.4 million in the first quarter of 2020 compared to a pre-tax profit of Eur125.9 million in Q1 last year.

The company also revised its outlook for 2020, saying it would anticipate a negative pre-tax result in a three-digit million Euro range.

“The scope of feasible scenarios is so extensive that precise quantification would be pure speculation from a current standpoint,” the company said.

Although lockdown restrictions have started to ease across Europe and the automotive industry starting to ramp up again, steel mills are still facing weak demand resulting in extended production curtailments.

ArcelorMittal said last week it would halt No.2 blast furnace at the French Fos-Sur-Mer works in addition to already implemented cuts across its European sites.

European steel association Eurofer confirmed last week that current crude steel production would be cut by 50% and new order bookings dropped by 70-75% at mills.

The European Union produced 38.3 million mt of crude steel in the first quarter this year, down by 10% year on year, according to worldsteel.

— Laura Varriale

marketSTEEL-Interview mit Frank Gelen, COO von 247TailorSteel
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Abgesehen davon, dass wir als Unternehmen alle Vorkehrungen treffen, die die Ausbreitung des Virus verhindern, hoffe ich, dass wir diese Corona Situation schnell hinter uns lassen können und wir alle gesund weitermachen können.

Mehr Informationen: 247 TailorSteel

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