Day: 1 May 2020

European steel association Eurofer has asked the European Commission to “meaningfully” reduce 30pc country caps on major exporters, in addition to the 75pc cut in tariff-rate quota volumes it has requested for the second and third quarters of this year,.

As it stands, for some products individual countries can be no more than 30pc of the European Union import market. But Eurofer wants this reduced as exports could increase from countries that are seeing a drop in domestic demand caused by Covid-19.

Eurofer also wants the commission to amend the safeguard so that any unused quota cannot be rolled over into the next period.

In a letter dated 30 April to the commission, the association said all quotas should also be made quarterly. It said its analyses showed demand from major steel use sectors would be down 58pc, justifying the measures.

The tightening could be reviewed for the fourth quarter and 2021 later in the year, it said, adding that the rate of duty could be relaxed from 25pc to 22pc.

The commission confirmed yesterday that it would be bringing the impact of Covid-19 into the scope of its safeguard review, meaning some reduction in quotas is very likely. Interested parties have until 7 May to comment.

Sources suggested that the European Union is unlikely to use Article XXI of the General Agreement on Tariffs and Trade to implement [emergency restrictions](direct.argusmedia.com/newsandanalysis/article/2101615) on imports, though this has been suggested. Instead, it could be used to allow a larger reduction in quota volumes than would otherwise have been possible.

By Colin Richardson

Steelmaker Thyssenkrupp is in talks with German authorities about receiving financial support in response to the impact of the coronavirus pandemic, it told S&P Global Platts Thursday.

However, a Thyssenkrupp representative declined to comment on local media reports the German company would receive Eur1 billion ($1.09 billion) from state-owned bank KfW as a bridge until the time funds from its elevator business sale were transferred.

“How the impact of the crisis and financial consequences are going to affect Thyssenkrupp, is — as it is for other companies — from today’s point-of-view not possible to estimate yet. We are having precautionary talks — like other companies — if and which of the available public financial support options can be considered for Thyssenkrupp,” said the representative.

A press officer for KfW also declined to comment.

Thyssenkrupp struck a Eur17.2 billion deal to sell its elevator business to a financial consortium comprising Advent, Cinven and RAG Foundation in February, but sources cast doubt at the time on whether the deal would provide enough funds to turn the company’s steel business around after allocations to pension liabilities and paring down its debt pile were made.

With the pandemic hitting Europe’s steel industry hard, steelmakers such as Thyssenkrupp are cutting production in order to compensate for weak order books after one of their main customers, the auto industry, temporarily halted production.

According to sources close to the situation, Thyssenkrupp saw a drop in demand in April in particular due to the auto shutdowns and will be cutting further production in May.

The steelmaker produced 11.3 million mt of crude steel in the business year 2018/2019.

“The production dip is [going to] be visible next month, but looking at the entire year there’s hope for a slight recovery,” one source said.

During the past month, the flat steel producer has been producing more material than usual that is now in storage, especially slabs, as shipments to customers fell at the height of the lockdown across Europe.

“A shutdown happens fast, but ramping up takes [a long time]. To idle a blast furnace should be the last step. Hot-dipped galvanized and cold-rolled lines are easier to halt,” the source said.

Sources said they are hoping for a recovery in orders this year, but most expect demand growth from the car industry from 2021 onward.

Prices for Northwest European hot-rolled coil steel dropped Eur6/mt day on day Thursday to Eur442/mt ex-works Ruhr, according to Platts data, as mills are having to lower offer prices amid competitive import offers and weak demand.

— Laura Varriale

Turkish mills’ have been trying to keep their domestic and export sheet offer prices stable in recent days, although slow demand and competitive import offers have been putting pressure on their quotes.

Turkish producers have been offering hot-rolled coil to the domestic market generally at $405-$415/mt in recent days, as their price hike attempts have faced buyer resistance. Although mills’ export offers were generally around $10-$15/mt lower on an FOB basis, for sizable bookings, its was still too far away to match export buyers’ lower counter bids, sources said.

Confirming the above price levels in the market, a sales executive of a Turkish HRC producer told Platts that in this sentiment their HRC export sales volumes remained low. “Domestic demand, however, has begun to show some recovery signs,” he noted.

A trade source said the latest deals in Turkish mills’ HRC export sales were as low as $390/mt FOB in the previous week, but he didn’t hear any export bookings so far this week, he noted.

Competitive import offers were also pressuring Turkish mills’ quotations, sources said. Some Turkish buyers booked some HRC tonnages from the CIS region, especially from Russia, in mid-April, in the range of $375-$385/mt CFR, as Platts has reported. Turkish buyers have remained generally silent in recent days, preferring to study market direction.

Confirming that local HRC prices are currently at $405-$415/mt ex-works and imported HRC offers to Turkey from the CIS region are at $380-$385/mt CFR, a Turkish pipe producer said they didn’t yet make any bookings in that price range.

“April was very slow, and I am not expecting May will be much better. HRC prices could even decline a further $10-$15/mt in a sluggish market, as scrap prices will probably fall further. We could then make some bookings in that new price range,” he said.

After declining by $15/mt on day, domestic ship scrap prices in Turkey fell by a further $5/mt on Thursday to as low as $225/mt, which is expected to be reflected in imported scrap prices.

Turkish mills’ cold-rolled and coated coil prices have also continued to be effected negatively from the bearish market sentiment.

A service center manager said, a major coated coil producer organized a campaign at the end of last week and sold 3 mm thick HDG at as low as $485-$490/mt ex-works, which was even below the current CRC prices in the market.

“I have received a CRC offer from a major mill at $505/mt ex-works this week, but lower prices are still available from some coated coil producers,” he said, adding that he is expecting a gradual recovery in demand and prices in mid-May, amid the ease of the virus outbreak.

A coated coil producer also confirmed that CRC prices stood at $500-$510/mt ex-works this week, “Our current list price is higher, but you can also find DX51D with 50-70 grams/square meter zinc coating, 0.50 mm HDG at as low as at $550-$560/mt ex-works in the market,” he said.

Activities in the Turkish flats market, meanwhile, are expected to remain slow in the coming days, as the Turkish government declared another three-day curfew as of May 1 due to the COVID-19 outbreak.

— Cenk Can

Turkish long steel producers had a very quiet week in terms of demand and have been forced to further decrease their rebar and wire rod prices in both domestic and export markets.

Turkish mills’ rebar offers, which previously stood at $410-420/tonne fob actual weight, have decreased mostly to $400-410/t fob Turkey actual weight this week. Offers at $415/t are still available from some producers. For wire rod, offer prices mostly stand at $415-430/t fob, down from $425-440/t fob a week ago.

Customer bids, however, though very limited, stand at $20-25/t below offers for both products.

A Turkish long steel producer tells Kallanish: “The situation is awful. No calls, no e-mails, nothing during the week. Some inquire just to check the market and declare price levels that are impossible to accept.”

A Turkish mill in the Aegean region is heard to have sold rebar to Israel at $390/t fob Turkey. Asia is closed due to lockdowns in ports. Buyers in Singapore are asking for delays to their previous purchases. Demand in the USA is also weak as US buyers have low price expectations from Turkey.

Another Turkish producer says: “I can’t decide which one is worse between rebar and wire rod. Last week we sold 6,000 tonnes of wire rod to South America at $430/t fob. This was our last sale.”

Besides the negative effects of the coronavirus, the fall in scrap prices has also caused the limited number of buyers to back off and decrease their price expectations. Buyers think Turkish rebar export offer prices should be at $390/t fob levels, as they are in the Turkish domestic market.

Another Turkish producer says: “Buyers are bidding too low, even for small quantities. We are ready to decrease our prices if we can find satisfactory quantities. But with these volumes, it is becoming harder.”

Rebar prices in the Turkish domestic market have also decreased since last week. Domestic demand remains low as a result of falling scrap prices, coronavirus measures and Ramadan. Prices have fallen to TRY 3,230-3,250 /t ex-works, including VAT, depending on the region, from TRY 3,300-3,370/t a week ago. With the lira at 6.98 per dollar on Thursday, these prices translate to $392-394/t ex-works, excluding VAT, down from $400-408/t on 22 April.

European Commission has decided today to exceptionally re-open the written procedure in the on-going review investigation of the safeguard measures on steel imports in order to assess whether these measures will have to be modified in view of the covid pandemic, shared this morning the International Trade Law, Compliance and Policy specialist, Yuriy Rudyuk.

A very tight deadline (by 7 May) for interested parties to file their comments on such a crucial issue. European Steel Association (EUROFER) and ESTA already set out their demands aiming for, inter alia, a 75% reduction in the volume of the tariff quotas available for imports during Q2 and Q3 of 2020.

#safeguards #steelindustry

The EU is considering imposing emergency restrictions on imports of steel products.

The ban, using article 21 of the General Agreement on Tariffs and Trade (GATT), will possibly take place after the end of the current import safeguard quota that is currently being reviewed by the European Commission. The current safeguard period ends at the end of this second quarter.

The commission has also confirmed the impact of Covid-19 will now be in the scope of its safeguard review. This means a reduction in import quotas is almost certain, although not as much as the 75pc cut requested by European steel association Eurofer.

The commission has given interested parties until just 7 May to file comments on the inclusion of the coronavirus’ impact in its review.

Article 21 of GATT states that no Word Trade Organisation member will be prevented from “taking any action which it considers necessary for the protection of its essential security interests”. The EU can take action provided it is necessary to protect an “essential security interest” and is taken in time of an “emergency”.

Emergency import restrictions brought on the impact Covid-19 could be the event needed by steel mills to stem the fall in prices, particularly of flat products.

By Colin Richardson