Day: 3 June 2020

Stability returned to the European steel coils market on Tuesday, with prices unlikely to decline further, sources said.

A Nordic-based buyer noted that Korean mills were desperate to move their stock into Europe given lack of demand in their home region, and said, “they have a lot of unused capacity and they want to get rid of it.”

Domestic European prices have bottomed out, according to the same source, who said mills are now trying to maintain some sort of stability in price levels.

“One of the reasons mills aren’t reducing prices is that they didn’t see any effect from the buying side. [From Korean exporters] they have reached the bottom for material that will be delivered in September, but they have announced from their side that prices won’t be lowering anymore,” the source said.

He also said that the summer period would “hit people a lot more” and that lack of demand would last until mid-August.

“The automotive has been hit — they’re not selling or producing, so this a major factor, I’ve lost all confidence in the automotive industry. We have ongoing orders for older contracts but this week will be slow. If things don’t pick up by next week, they won’t pick up until August,” he said.

A Benelux service center source lamented the current lack of transparency in prices due to limited buying activity, and that mills were unable to lower their prices.

“It’s such a weird situation — we’re seeing very different prices because of the lack of transactions, and many mills can’t stop production, adding to the supply,” he said. “If they decrease any more it will damage their organization.”

An Italy-focused trader said that there was currently a wider gap in pricing between Italian domestic steel producers.

“Two markets now exist in Italy, one mill is cheaper for HRC but with limited range, so if they don’t have what you want, you will have to pay more — if you have an existing contrast in place from the end of last year then you will get cheaper on a base-plus contract.”

The trader said that the market in Italy was still weak but that activity levels would improve in June and July.

The Platts TSI hot-rolled coil index was calculated unchanged June 2 at Eur412/mt ($460.41/mt) ex-works Ruhr, and cold-rolled coil was assessed Eur512.50/mt ex-works Ruhr, gaining 50 euro cent day on day.

In southern Europe, HRC slipped 50 euro cent lower on the day and was assessed at Eur395/mt ex-works South Europe, its lowest level since September 2016.

— Len Griffin, Amanda Flint

After slowing heavily in March, activity by companies in the French construction sector again deteriorated significantly month-on-month in April, according to a report from l’Institut National de la Statistique et des Études Économiques (Insee) monitored by Kallanish.

In April almost all business managers of building firms with more than 10 employees were pessimistic about the general outlook of the sector although they were rather confident in January. Many more companies than in the previous month have anticipated a decrease in their activity for the next three months. Also, significantly more business managers than in March have indicated a decrease in their activities over the last three months, the report says. 

In April, more building companies than in January have reported a lengthening of payment periods from their clients. “The corresponding balance has sharply increased and has reached his highest level since April 2015… That goes hand in hand with a degradation in their cash-flow position”, the report concludes.

Marcegaglia is to revamp its 4-hi plate mill in San Giorgio di Nogaro, Italy. The revamp will be carried out by Italian equipment maker Danieli Automation Service.

To better improve plant results, the contract includes also the upgrading of the furnace automation system. This will improve the yield and enhance the slab temperature uniformity. Consumption of natural gas will also be reduced. Danieli Automation Service Team is specialized in tailored solutions for improving performance at older automation systems, Kallanish learns from Danieli.

Marcegaglia is also improving its coating system for pre-painted steel products and widening its product range in the flat stainless steel division. Thanks to the purchase of a new cut to length line and to better meet the stainless steel market demand Marcegaglia Specialties is adding a new range of hot rolled stainless steel sheets, with a width of 2,000mm and thicknesses up to 12mm, in 304L, 316L and 316Ti grades.

The Spanish steel sector says expressed its concern that working at less of half of its usual capacity will be unsustainable beyond a few months. The activity was sharply impacted by the Covid-19 outbreak in April, registering a record low, the Spain`s steelmakers’ association Unesid says in a note seen by Kallanish.

“The size of the deterioration of the sector is serious and requires explicit support with measures to maintain its more than 60,000 jobs as well as steel manufacturing activity that is basic in certain regions of the country,” Unesid warns. The steel-consuming sectors need to return to their pre-confinement activity, either by promoting private demand, as with automobiles, or directly through public actions, as in construction, the association proposes.

The European steel sector awaits actions from the European Commission and a review of safeguard measures. “The Commission’s first proposal benefits only a few products. A more general and far-reaching action is needed, also reflecting for the future since these measures will be extinguished in 2021,” Unesid demands. “The EU industry produces under much more demanding environmental standards than those from outside the region and develops an important capacity for innovation with a commitment to climate neutrality before 2050,” the association explains.

The Spanish steel sector produced 626,000 tonnes of crude steel in April, a drop of -52% year-on-year. As a comparison, in a typical July or December, when activity is usually most reduced, Spanish output ranges from 900,000t to 1 million tonnes. The lowest monthly production registered during the last financial crisis in 2008/09 was 725,000t, according to Unesid.

The fall in output was seen in almost all steel products, although it was greater in the automotive sector, which was practically halted in April. Only tinplate output continued at its usual rate given its need in the food industry.

Turkish steel output has fallen due to the coronavirus crisis, and so have both imports and exports. With the European Union moving to further restrict imports from Turkey, Turkish steel groups are lobbying for retaliatory measures to balance any impact on the country’s steel trade balance, Kallanish notes.

Turkish crude steel production in April dropped -26.3%% year-on-year to 2.3 million tonnes, with January-April output down -0.1% on-year, according to the Turkish Steel Producers’ Association (TCUD).

April finished steel consumption was 1.4mt, down -44.1% on-year. Consumption had increased by 42.3% in the first quarter, but growth has slowed to 15% in January-April due to the sharp fall in April.

Exports decreased -21.6% in April to 1.5mt, and -27.7% in value terms to around $1 billion, due to the coronavirus impact on the international steel market. January-April exports decreased -14.4% to 6.6mt, and -18% to $4.7 billion.

April imports fell -54.6% to 563,000t, and by -47.8% in value to $504 million. Over January-April, however, due to the 33.3% increase in imports in the first quarter, imports still increased 5.6% to 4.2mt, though by value they were down -4.6% to $3.1 billion.

Over the January-April period, the ratio of exports to imports decreased to 148:100 from 172:100 in the year-earlier period.

Turkey’s January-April steel exports to the EU fell -44.4%, while HRC exports fell -47%. Steel imports from the EU, on the other hand, increased by 6.5%, according to TCUD.

“Despite the current situation with the EU, The European Commission (EC) is continuing its initiatives to prevent steel imports from Turkey,” says TCUD general secretary Veysel Yayan. “Despite the ongoing protectionist measures against Turkish steel, the EU has initiated an antidumping investigation against Turkish HRC on May 14, and Eurofer has applied the commission for a CVD investigation against the same product.”

“Recently, on May 29, in the notification sent by the EU Commission to the World Trade Organization, it is understood that the EU will further restrict the conditions for the coming period, increase its approaches that target our country predominantly, and this will cause our exports to the EU region to decrease significantly,” says Yayan. He underlines the need for an immediate protectionist measure in response from Turkey.

On May 25, to provide balanced foreign trade and minimize the negative effects of EU practices on bilateral trade flow, Turkey announced that for some steel imports from the EU, there will be additional import duties that vary between 9%-17%.

Yayan says that the Finance Minister’s statement regarding a change in imports, excluding products that are not produced locally, are welcomed and gave hope for the future.

“However, as soon as this was announced, we have observed some attempts to invalidate this decision,” says Yayan. He adds, “it is obligatory to stop the companies that want to continue importing for their own benefits, in order to avoid the destruction of our economy and our industry during the most difficult days of our country while world’s most developed countries’ practices are obvious to protect their own industries.“

Global crude steel production decreased -13% on-year to 137mt in April. Four-month production fell -4.1% on-year to 581mt.