Day: 22 May 2020

EU imports of finished steel products kept falling in March, impacted by negative sentiment in the market, Kallanish learns from the latest data published by Eurofer.

Combined imports of flat and long products were down over -27% year-on-year in March to 1.7 million tonnes. The y-o-y fall was more or less in line with the one seen in February, Kallanish notes.

The drop in imports was evenly split between flat and long products, according to the Eurofer data. Overall Q1 imports of finished products were down -20% y-o-y.

It is also worth noting that March figures were only minorly impacted by the coronavirus outbreak, which officially escalated during March. April-June levels are expected to be more impacted by the coronavirus emergency.

Currently, the European Commission is considering reducing safeguard quotas and imposing anti-dumping measures on Turkish hot rolled coil imports. The market for imports seems to be following the overall negative trend seen in demand. HRC imports from Turkey, for example, were down by over -50% y-o-y during Q1, according to Eurofer data.

The import market for coils in southern Europe is getting ready to slow down significantly due to the uncertainty surrounding the safeguard review and the investigation into Turkish hot rolled coil Kallanish learns from sources.

According to traders in Italy, new orders of HRC from Turkey were booked last week at a level of €385-395/tonne cfr, but now the risk of incurring trade measures is preventing further deals. “You can order from Turkey for July shipments at the moment, but the possibility is very high that the registration process part of the AD investigation will be announced soon. For that reason, the Turkish HRC market is closing down for European buyers. Some could look into CRC and HDG,” a trader explains.

All sources agree the coils market globally is looking up in terms of prices, but Europe is in a strange position due to the uncertainty of import rules going forward into the third quarter. “Indian and South Korean suppliers are in the process of increasing their prices and so should Turkish mills be doing in the next days,” another source notes. “Nevertheless, most buyers do not want to risk now because they believe there will be a cut in safeguard quotas from the first of July,” he adds.

According to Eurofer’s latest data, EU imports of HRC during Q1 were already down by over -25% y-o-y. Turkish-origin imports saw the steepest fall of -50%.

According to a Spain-based trader, clients are now also receiving import offers for cold rolled coil at €440/t cfr and 1mm HDG at €480/t cfr.

The significant drops in stainless steel end-use demand in the US and the EU are prompting increased calls for protectionist measures and slowing down the recovery in the stainless steel industry, which accounts for 70% of the nickel applications, Russian company Nornickel said in its latest market outlook.

Nornickel estimates primary nickel consumption in the US and EMEA falling by 13% this year from 2019 to 47,000 mt and 178,000 mt respectively.

In Europe, while stainless mills are already ramping up production, the impact of the end-use demand contraction remains the biggest concern. Germany, Europe’s largest economy, saw double-digit declines in orders for machinery, electrical appliances and motor vehicles in March.

In the context of the coronavirus pandemic, the European Steel Association (EUROFER) has asked the Commission to slash the quota covered by the safeguard measures for steel, and implicitly stainless steel, by 75% for a period of six months. If approved, the reduction in H2 2020 could result in over 200,000 mt stainless output that could be produced locally instead, the equivalent of 7% of the EU’s half-year production.

The measure will top 6% to 18.9% provisional anti-dumping duties on hot rolled stainless steel products from China, Indonesia and Taiwan the EU imposed in April 2020. The anti-subsidy investigation against Indonesia and China is also underway with a decision due in Q3 2020.

Both the EU and the US are also large consumers of Chinese stainless end-use products. Apart from steel, China exports large volumes of fabricated stainless products, with about a quarter of its stainless production exported either directly or as finished products, Nornickel estimates.

Weak demand from these major end-use markets slows down China’s stainless industry recovery and the financial aid allocated by the Chinese government to the nation’s economy of 2.5-3.5% of its GDP cannot fully mitigate that impact. Nornickel forecasts nickel demand in the Chinese stainless sector will decrease by 4% this year to 1 million mt Ni.

Capacity ramp-ups with stainless rebound in view

Beyond 2020, the company expects the stainless steel industry to recover in line with the global economy. It sees potential for further growth, especially in developing countries where nickel consumption per capita is still low.

Last year, global stainless steel production absorbed 1.74 million mt of nickel, or 71% of the 2.44 million mt total consumed.

Pointing to brighter prospects are some Chinese producers’ pursuit of capacity ramp-ups. In February, Linyi Steel Investment started the construction of the 2.4 million mt/year facility due for commissioning by year-end. The company plans to produce 300 series (350,000 mt), 400 series (280,000 mt), and Duplex stainless steel (70,000 mt).

Also this year, Heibei Bishi Group plans to break ground on a plant with a 1.3 million mt/year 300 series capacity in Naiman, Inner Mongolia.

The country that seems to be even more incentivised to develop stainless capacity is Indonesia. While stainless exports from China declined by 320,000 mt, exports from Indonesia increased by 330,000 mt in 2019.

The availability of large volumes of lateritic ore with high nickel content and the integration of nickel pig iron plants with stainless steel mills in Indonesia has further bolstered the lowest cost industry.

So far, Indonesian stainless production has maintained at the 2018 levels (2.2 million mt) with the primary nickel demand at 173,000 mt Ni in 2019, but the figures may change should new capacities come on line, noted Nornickel.

— Ekaterina Bouckley

Italian industry sources this week expressed concern that ArcelorMittal could withdraw from its Italian asset, the former Ilva works at Taranto, which is at its lowest-ever production rate due to COVID-19 related restrictions and a European steel market slump.

ArcelorMittal has an option to withdraw from the troubled works in November. If it does so this could threaten the survival of the Taranto plant, in capacity terms the largest flat carbon steelmaker in the European Union.

“The situation around Ilva is very confused at the moment. It is very unclear what is happening as the company is working at such low rate. It is true that the market is very weak, due to the COVID-19 outbreak, but it seems more a political move to keep the plant at such low production level. Either Mittal is trying to have more help from the Italian government as a lot of mills need some help due to the Coronavirus outbreak or it just wants to leave,” a senior industry source commented.

AM Italia is operating only two of four blast furnaces (numbers 1 and 4) and with most of its cold end lines temporarily shut down, union sources told S&P Global Platts on Thursday. The Taranto site in southern Italy is producing around 7,500 mt/day of crude steel, several sources said.

According to union sources, ArcelorMittal’s Genoa and Novi Liguri sites, in the north of Italy, are also working below capacity. In Genoa the company has two hot dip galvanizing (HDG) lines with a combined capacity of 900,000 mt of galvanized products a year. The Genoa site was expected to reopen one of its HDG lines next week but it will not re-open, and the other was temporarily shut down this week, the union sources said. In Genoa the company is producing tinplate only, at a rate of 130,000 mt/year tinplate on a 200,000 mt/year line. In Novi Liguri the company has two HDG with a combined capacity of 900,000 mt/year and neither are working, according to the union sources.

Unions in the north of Italy have started strike action as the number of temporary layoffs at the company’s north Italian site has reached 800 workers out of 1,000, while in Taranto unions are planning a strike starting Monday as the number of temporary layoffs is now at 6,000 workers, out of a total of 8,000.

Lease-and-purchase accord

ArcelorMittal agreed to buy Ilva, Europe’s biggest single-site steel firm, in 2018 under a lease-and-purchase agreement for Eur1.8 billion ($2 billion) and to invest another Eur2.4 billion in cleaning up and modernizing the plant dogged by environmental issues. Following legal issues with the Italian state, ArcelorMittal in early March this year reached an accord with the Italian authorities over the future of the former Ilva group, amending the existing lease and purchase agreement. The agreement left ArcelorMittal with the right to withdraw from its Ilva purchase by November 2020, subject to the payment of a fine of Eur500 million. The lease-and -purchase agreement may extend until May 2022.

“Mittal, when he bought Ilva, saw an opportunity to make his company the strongest in south-eastern Europe but then so many problems started with the Italian government. Now with COVID-19 and demand unlikely to bounce back any time soon in Europe I think he’s really considering to take advantage of the latest agreement and to withdraw from Italy,” a senior source close to the mill commented.

Italy is the EU’s second biggest steelmaking nation with 23 million mt crude steel production last year and ArcelorMittal Italia is the nation’s largest producer with an installed capacity of around 11 million mt crude steel a year. Due to the coronavirus outbreak Italian mills temporarily shut down for around a month with the exception of ArcelorMittal Italia and Arvedi, the second largest Italian steel plant. ArcelorMittal Italia was kept operative because it uses the blast furnace production route, which is harder to shut down temporarily.

Currently all Italian mills are operative and working at around 50% of their capacity. European steel industry association Eurofer said in its latest report that it does not expect market conditions to improve before the fourth quarter of 2020 or early 2021, although much will depend on the length of the industrial lockdown in steel-using sectors. ArcelorMittal declined to comment when contacted by Platts Thursday.

— Annalisa Villa

US-based distributor O’Neal Steel will begin operations at a new facility in St. Joseph, Missouri, on 1 June, Kallanish reports

The new metal distribution centre will add approximately 64,000 square feet of warehouse distribution space to O’Neal Steel’s operations.

“We are proud that O’Neal Steel has chosen St. Joseph for its next distribution facility. O’Neal Steel’s expansion to Missouri will support multiple industries statewide and show that our state remains a prime location for leading companies,” Missouri Governor Mike Parson said in a news conference on 20 May. “This announcement shows that even in the midst of Covid-19 there are still good things happening and Missouri is still a top location for businesses.”

“We are thrilled about our expansion into the St. Joseph market,” says O’Neal ceo Stephen Armstrong in a statement. “This new facility opening aligns with growing demand in the area, and we are extremely well-positioned to support that demand.”

O’Neal Steel is headquartered in Birmingham, Alabama, and operates 19 distribution centres throughout the US.