Day: 15 May 2020

Despite lower economic activity in the tubemaking and tubes services industry, Van Leeuwen Pipe and Tube Group’s 2019 financial performance improved compared to 2018, Kallanish learns.

2019 was a transformational year for the Dutch group, marked by the acquisition of Benteler Distribution, which was closed at the end of November 2019. The deal will double the company’s total sales volume.

Van Leeuwen’s turnover increased 25% on-year in 2019 to €787 million ($851m). Operating profit improved almost 26% to €17m and net profit increased to €10.1m from €9.7m. Excluding the contribution of the acquisition of Benteler Distribution, Van Leeuwen’s turnover would have risen 19% to € 750m, the company details.

Demand in the building and construction segments in Europe was excellent throughout the year, but slowed down towards the end of the year, specifically in the equipment manufacturing segment, the company states. Business activity in the energy segment improved significantly in the second half of the year, though.

The group executed large projects in North America, Asia and Europe. At the start of 2020, the order book for energy projects was at a good level, Van Leeuwen notes. However, the firm gives no indication of how the coronavirus is immediately affecting its business and outlook.

Volkswagen Group will reduce output this month as consumer demand for new cars remains low in Europe, the company says.

At its main plant in Wolfsburg, production will cease for four days on 15, 20, 25 and 29 May, Kallanish notes. VW will temporarily halt production on two assembly lines that make the Tiguan, Touran and Seat Tarraco models, and cancel one shift at a separate line that produces the Golf hatchback.

“We have to keep operating flexibly depending on customers’ vehicle orders,” the carmaker says. “We hope the situation will normalise as soon as possible.”

The German carmaker says that while sales in China exceeded the prior-year level in April, it will keep adjusting output to demand until sales in Europe pick up.

Germany’s car lobby has been calling for the government to reintroduce a scrappage bonus scheme. This was last implemented in 2009 during the last financial crisis and led to a record year for car sales in the country. However, a meeting last week between VW, BMW and Daimler executives and Chancellor Angela Merkel ended without a commitment to such a scheme. A further announcement is expected in June.

VW restarted output at Wolfsburg after a six-week break on 27 April under strict hygiene regulations (see Kallanish passim). The remaining plants in Germany as well as in Portugal, Spain, Russia, South Africa and South America followed.

ArcelorMittal has postponed the stoppage of the second blast furnace at its Fos-sur-Mer plant in the south of France, Kallanish learns from local trade unions.

The company has one BF idled at the mill since the end of March. It was planning to idle the second furnace at the plant from June, but it now intends to keep it operational at least until July, and maybe for longer.

The anticipated blast furnace idling had in recent weeks raised a lot of concern among ArcelorMittal group workers in other southern European countries, such as Italy and Spain. The postponement of the idling indicates the demand outlook could be improving slightly as most European countries are easing their Covid-19 lockdowns during May.

The Fos-sur-Mer integrated site can produce up to 4 million tonnes/year of crude steel through two blast furnaces. The plant mainly serves Mediterranean markets. The group has another integrated site at Dunkirk in France, where one out of three blast furnaces is currently operating.

The European Commission has officially announced the initiation of its investigation to determine potential anti-dumping duties on Turkish-origin hot rolled coil imports.

The investigation was anticipated last week in a note published by ArcelorMittal (see Kallanish passim).

The investigation was opened following a complaint by Eurofer lodged at the end of March. The probe will cover imports of products under CN codes 72081000, 72082500, 72082600, 72082700, 72083600, 72083700, 72083800, 72083900, 72084000, 72085210, 72085299, 72085310, 72085390, 72085400, 72111300, 72111400 and 72111900. Also included are codes ex 72251910 (TARIC code 7225191090), 72253090, ex 72254060 (TARIC code 7225406090), 72254090, ex 72261910 (TARIC code 7226191090), 72269191 and 72269199.

Provisional measures could be imposed by the end of the current year, while permanent measures will be determined by mid-2021, Kallanish notes.

According to Eurofer data, Turkey was the largest supplier of HR wide strip to Europe in 2019, selling over 230,000 tonnes/month on average. This level was almost five times higher than the tonnages it supplied in 2015. During the first two months of this year imports from Turkey reached only 63,000 t/m on average, Eurofer reports.

The EU currently has AD measures in place against HRC imports from China, Russia, Ukraine and Brazil.

Forecasting steel coil demand remains a challenge with customer sentiment shifting from day-to-day, a Benelux-based steel service center source told S&P Global Platts.

“It is very difficult to make any budget forecasts as some customers are positive and others negative but then they shift opinion every few days, so it is very hard to forecast the demand side,” the source said. “For April we forecast worst case a decline of 25% from the seasonal normal but we managed better than that at minus12% which was helped by being less exposed to the automotive sector.

“We are now concerned about a dip in the construction market in the summer as social distancing doesn’t really work in that sector and also consumer buying power has been damaged, so who will buy new properties?”

The source said that he expected further declines in price as under-booked domestic mills would need to cut prices to compete with aggressive import prices. Import offers were heard at Eur375-390/mt for HRC and at Eur465/mt for CRC, both basis CIF Antwerp.

A Benelux-based trader said there would be more uncertainty surrounding imports given the ongoing anti-dumping investigation against Turkish hot rolled material, with buyers cautious as greater protectionist measures remain imminent in the market.

The source said it would take time for demand to pick up again, with several Italian mills continuously producing throughout the lockdown period, and consumption at low levels.

“Our customers have not been closing many deals, but in two weeks we will reassess our stocks and consider purchasing again,” he said. “People are looking for July/August deliveries.

“When we are seeing prices in China go up and raw materials still relatively high, I don’t see prices going down any further,” the trader added. “I see no consolidation, we are at the bottom of prices today. Mills have to continue to adapt their production to the demand and slowly we’ll recover by September.”

The same source reported Northern European mills were looking to sell material into North Africa, although they remained less competitive than Far East and CIS producers.

A Central European service center source said steel coil inventories were quite high, with customers stopping orders and wanting to negotiate quantities and prices.

“They want to get more time – they are looking to shift quantities from the second quarter to the third,” he said. “We’re hearing there are some larger volumes on the table for this time, so mills are competing against each other.”

The Platts TSI hot-rolled coil index was calculated Thursday at Eur431/mt ($465.56/mt) ex-works Ruhr, a decline of Eur3 day on day.

In Southern Europe, HRC gained 50 euro cent on the day and was assessed at Eur414/mt ex-works South Europe.

Since the start of the coronavirus lockdown in Europe, marked by Italy on March 9, European regional hot-rolled coil prices basis ex-works are now Eur51.50/mt and Eur41.50/mt lower, respective declines of 10.7% and 9.1%.

Cold-rolled coil was assessed at Eur522.50/mt ex-works Ruhr, losing Eur4.50 from Wednesday and a decline of Eur34/mt, or 6.1%, since March 9.

— Len Griffin, Amanda Flint

Italian stainless steel producer Thyssenkrupp Acciai Speciali Terni will temporarily shut down again this month amid low volumes, unions representing employees at the company told S&P Global Platts on Tuesday, adding that the company expects finished products in May to be about half of previously announced levels.

The company has told its unions that production of finished cold steel products in May will likely reach 47,000 mt, against the 84,000 mt previously expected.

As a result, the company will halt operations at its melting shop from May 23 to June 3, while its cold rolling mill will stop production from May 25 to June 3, and its tube rolling mill will stop from May 29 to June 3.

“We have been told that this decision has been taken mainly from the decrease of orders mainly from the automotive sector. We have been told that the drop due to the coronavirus of auto orders will be of minus 30% for May,” a union source said.

Terni wasn’t immediately available for comment on the matter Tuesday.

Terni’s parent company, ThyssenKrupp, said in its earnings report that total shipments from the Italian unit last year came to 844,000 mt, while in 2018 the company shipped 888,000 mt of steel products.

In the statement, ThyssenKrupp said that its outlook due to the coronavirus pandemic and the associated impacts on the economy as a whole cannot currently be predicted in full for the remaining months of the fiscal year. At the end of March, the company withdrew its forecast for the current fiscal year.

Along with other Italian steelmakers, Terni stopped output at the end of March due to the coronavirus, although it subsequently restarted production after the Easter holidays.

— Annalisa Villa