Day: 28 May 2020

En el siguiente enlace pueden acceder a la edición de Mayo de nuestra revista: INFOACERO

A continuación destacamos algunos de sus contenidos:

1. Opinión – D. Fernando Moraga –Vicepresidente de la UAHE. 
2. Evolución del Índice de Precios de Productos Siderúrgicos – UAHE.
3. Información Asociativa: webinar “Estrategias para la salida de la crisis del Covid 19 en las empresas familiares”- Profesor Manuel Bermejo.
4. Ayudas Pymes: Programa de apoyos Covid 19, a través de E.O.I. (Escuela de Organización Industrial)
5. Sector Siderúrgico: “Previsión sobre los mercados del acero” – Eurofer- Informe 2º Trimestre

COVID-19 hit Turkey’s economy mid-March. Most industrial sectors, including steel long product mills, halted production in April, when the nation’s monthly crude steel output dropped 26.3% on year to 2.2 million mt, after a strong first quarter, according to the World Steel Association.

Due to the adoption of stringent measures, the spread of the virus has slowed in recent weeks and most of Turkey’s industrial sectors, including most steel mills, had restarted production as of the second week of May, in line with normalization efforts globally.

However, the domestic steel market outlook is bleak for the rest of the year, despite government efforts to spur domestic demand by cutting interest rates. In Turkey’s major European Union export market there are rising protectionist pressures.

Construction, typically the biggest steel-using sector, is expected to continue to shrink in Turkey during 2020 from 2019 levels.

Turkish automotive producers – typically the second biggest steel consuming sector – plan to raise capacity use only gradually depending on market conditions, following a 91% on-year plunge in production in April, when white goods production shrank 54%.

The World Bank has slashed Turkey’s growth estimate for 2020 to 0.5%, from 3% foreseen before the COVID-19 pandemic.

Mills’ capacity usage fell as low as 45% in April, according to Turkish Steel Producers’ Association TCUD. Ugur Dalbeler, CEO of major producer Colakoglu, believes the second quarter will be “hard” for Turkish mills, with market recovery possible in the second half of the year. Turkish mills’ 2020 crude steel output is expected to fall significantly from 2019.

Sharp exchange rate fluctuations, together with virus-related business interruptions, have significantly damaged most of the small, medium and even large Turkish steel producers’ balance sheets, sources say. “The first half of 2020 has been lost. Let’s hope that there’s some relief in the second half,” a steel service center manager said.

Infrastructure

Turkey produced around 33 million metric tons of steel in 2019 – 20 million mt of long steel products and 13 million mt flat steel – relatively flat on year, according to Turkish Steel Producers’ Association TCUD. It was the eighth largest steel producer worldwide.

Some 68% of Turkey’s steelmaking capacity is electric arc furnace based, with 24 EAF plants, making it the world’s biggest importer of steel scrap. In 2019 it imported 18.86 million mt of steel scrap, according to International Recycling Bureau BIR.

At the start of 2020, Turkish market participants were expecting a strong year following the halving of US Section 232 tariffs on steel imports from Turkey to 25% in Q2 2019, which helped Turkey maintain its steel exports last year.

Trade flows

Turkey’s steel industry is dependent on scrap imports and on steel product exports. It typically exports 50% of its total steel output every year.

However, Turkey’s steel exports shrank by 25% year on year in April as a result of the pandemic, TCUD reported.

The sector is vulnerable to exchange rate fluctuations and changes in global trade flows or protectionist currents that may lead to alterations in existing tariff and quota systems. In mid-May the European Commission started an investigation into allegations of dumping of Turkish hot-rolled coil into the EU. On May 25, Turkey notified the World Trade Organization that it could impose customs duties on steel imports from the EU in retaliation for the move.

The EC is also reviewing its steel import safeguards, which have temporarily reduced interest in Turkish-origin long steel imports. Following a sharp demand drop for Turkish-origin steel in the country’s key export markets at the height of the pandemic, Turkish mills have recently booked large-volume rebar cargoes into Hong Kong and the US, suggesting some improvement in demand sentiment since mid-May.

The Turkish lira has fallen around 20% against the dollar since the beginning of the year as its depreciation has accelerated during the coronavirus pandemic.

The US is Turkey’s largest ferrous scrap supplier, having provided 984,000 mt of scrap in Q1 2020 – around 250,000 mt higher on year – followed by the Netherlands and the UK. Russia in recent years has been Turkey’s fourth-largest ferrous scrap supplier; however volumes fell off in Q1 due to lower prices and intensified competition from US and European suppliers. In Q1 the average price to Turkey was $270/mt CFR, down from $310/mt CFR in Q1 2019.

Russia’s scrap export trend to Turkey reversed in April when the pandemic paralyzed activity at US and EU scrap merchants, while Russian collection was not so greatly impacted thanks to milder restrictions on businesses. Last month the volume of ferrous scrap Russia’s Rostov and Volga river ports exported to Turkey jumped by 65% to 35,370 mt, up from 22,000 mt in March.

Going forward, Russia’s shipments will depend on the pace of steelmaking recovery in Turkey, as the scrap procurement price needs to be higher than the current $240/mt to make exports appealing.

Prices and margins

Turkish mills’ hot-rolled coil prices fell by as much $100/mt during March, hitting as low as $400/mt mid-April, as the pandemic reduced demand in both domestic and export markets.

Turkish rebar export prices plunged $50/mt over three weeks in March before bottoming out in early April, and despite a moderate rebound remain significantly below the pre-COVID-19 level. An upturn in finished steel demand is expected with the end of Ramadan, although the impact of the coronavirus continues to depress demand. Turkish mills were heard to have sold large-volume rebar cargoes to Hong Kong, with prices heard at $390-$395/mt FOB Turkey for 55,000 mt shipments. A number of US-bound rebar sales have also been reported from three Marmara mills, but talk of rebar sales to the EU currently remains limited, with uncertainty surrounding the review of the EU steel import safeguards.

Turkish mills were heard to have booked eight deepsea scrap cargoes late last week, ahead of the Bayram holiday, which took place May 24 until May 27. Six cargoes were sold by Baltic recyclers, with one heard from a UK recycler and another from a Benelux seller. Scrap sell-side sources expect Turkish mills to take a step back from scrap buying in the coming days, as their focus shifts to boosting finished steel sales.

Premium heavy melting scrap HMS 1/2 (80:20) has traded within a range of $239-$252/mt CFR so far over May, with the downside limited by continued tight scrap supply, due to coronavirus-related collection restrictions and a sharp drop in the availability of new production scrap, following automotive stoppages in April in key scrap-exporting regions. The upside to scrap prices has been limited by poor domestic and export finished steel demand.

Import prices for Turkish ferrous scrap had plunged to $207/mt, their lowest level in four years, in early April, on coronavirus-fueled concerns of demand weakness. Benchmark import scrap prices recorded a $60/mt drop from pre-coronavirus levels over the second half of March.

The Turkish long steel melting margin – the spread between Turkish export rebar and import scrap – has remained within a range of $147-$161/mt so far in May.

— Cenk Can, Viral Shah, Diana Kinch, Wojtek Laskowski and Katya Bouckley

Turkey has informed the World Trade Organisation that it could impose additional import duties of 9-17% on imports from the EU of various products, in response to EU safeguard measures in place since 2019.

Turkey could impose a 9% duty on products under HS code 7208, 10% for HS code 7209, 14% for HS codes 7210 and 7215, 15% for HS codes 7211, 7212 and 7214, and 17% for HS code 7216.

The European Commission (EC) imposed the measures on 26 steel products from a host of countries from 2 February 2019 valid for three periods, Kallanish notes. In the following 15 months, the EU has ignored the Free Trade and Customs Union agreements between the EU and Turkey and continued to strengthen measures against Turkey, says the Turkish Steel Producers’ Association (TCUD).

In April 2019 “…Turkey and the EU notified… the WTO… [of an] extension of the 90-day period foreseen in Article 8.2 of the Agreement on Safeguards until 30 June 2021,” Turkey’s WTO delegation says in a note. “To date, no agreement has been reached so far with respect to adequate means of trade compensation for the adverse effects of the measures on Turkey’s trade.”

“Turkey reserves its right to apply the proposed suspension of concessions after 30 days following the date of publication of this notification,” the note continues. “Turkey reserves its right to modify, supplement, or replace the suspension of concessions or other obligations should the EU make adjustments to the safeguard measures which would render the measures more restrictive towards products originating in Turkey.”

“Turkey prefers to design the rebalancing measure to have proportionately less than the effect of the EU measures indicated in the table above, with a view to minimise the negative impacts on bilateral trade flows at this stage,” the note adds. Turkey’s proposed suspension of concessions will therefore affect $1.6 billion of trade.

Steel demand could rebound from the Covid-19 impact after the summer, ensuring sufficient sales to ramp up production, according to ISD Dunaferr corporate manager Evgeny Tankhilevich. The low level of orders has caused the producer difficulties in recent weeks, compounded by imports into Europe.

The executive also hopes the steelmaker finally secures a strategic investor following a period of searching that has included a number of due diligences. This investor should be an experienced steelmaking group with captive raw materials. “There should be of flurry of M&A activity this year, and I just hope that Dunaferr is on the wish-list of a good strong company,” Tankhilevich tells Kallanish.

“The German, Polish, Austrian, Czech, Italian and other key markets have restarted, but demand is rising only slowly,” Tankhilevich says in ISD Dunaferr’s latest newsletter. “The extremely low volume of orders is still causing significant difficulties. In addition, demand is being negatively affected by imports into Europe. I believe that the next three months will be extremely difficult; it will take that long for the market to fully recover and for the European Commission to take decisive action on import dumping.”

“In the short term, we are talking about survival,” Tankhilevich continues. “We are in the same situation as most vertically integrated steelmakers in Europe. But I’m optimistic; I think the pre-epidemic market situation could be restored by the end of the summer, and by then we can get enough revenue to sustain production.”

With lower production seemingly “… unavoidable” in summer, ISD Dunaferr will use the time to carry out all maintenance planned for 2020 on the blast furnace, continuous caster and hot rolling mill. The firm wants to be ready to resume output at full capacity from September.

The steelmaker plans to apply for government support to temporarily reduce working hours for workers not directly working in production. However, its face-to-face negotiations with authorities over longer-term strategic issues have been hampered by the pandemic.

ISD Dunaferr’s finished steel sales fell -11% on-year in 2019 to 1.46 million tonnes, with crude steel output down -15% to 1.42mt.

The downward trend in crude steel output at German mills has continued from March into April, when the volume was a massive -24% below that of April 2019, reaching 2.6 million tonnes. This was the lowest level since June 2009, Kallanish learns from the monthly statistics of steel federation WV Stahl.

Given that the automotive industry with its temporary full production stops is the customer group most affected, the fall at integrated mills was most pronounced, at -27%. Many EAF mills maintained a reasonably high production level if serving the construction industry. However, most speciality long products mills are dependent on automotive and mechanical engineering, so saw a drop of -16% in total.

For the first four months of the year, the overall output was -10% below the January-April period of 2019, totalling 12.4mt, compared with a fall of -6% in the first three months. Oxygen-route production in the first four months dropped -12%, while that of EAF mills fell by -5%.

Italian re-roller Marcegaglia is amongst those interested in acquiring troubled stainless steel producer Acciai Speciali Terni (AST), ceo Antonio Marcegaglia confirms to Kallanish.

Minister of Economic Development Stefano Patuanelli has also indicated local steelmaker Arvedi as another possible suitor.  During a televised government meeting to discuss the current crisis of the Italian steel industry Patuanelli said there are also other international speciality steel producers interested in Terni. He added however that the option of Italian investors may represent a guarantee of longevity not necessarily available from foreign investors.

Meanwhile Terni trade unions are meeting authorities at the Ministry today, 28 May, to discuss the situation at AST. A union source says the plant needs significant investments that have not been implemented by thyssenkrupp and the commitment of a global steelmaker that will be able to see AST through the current crisis.

Last week thyssenkrupp announced that it is seeking either a partnership or a sale for its Italian subsidiary. Pursuing its restructuring strategy, the company is considering for certain assets “… the best prospects for the future – a place under the thyssenkrupp umbrella, in a partnership or outside the company. With this reassessment of the portfolio, we have taken some difficult decisions that were long overdue and will now implement them systematically. thyssenkrupp will emerge smaller but stronger from the transformation”, chief executive officer Martina Merz said in a note sent to Kallanish.