Day: 4 June 2020

Antonio Marcegaglia, head of the homonimous group, has expressed his scepticism over the new further closure of the EU steel import market as a consequence of the review of safeguard measures and new investigations.

Speaking during a webinar this week, the executive noted that he understands and supports the need to protect in some ways the European steelmakers following the slump in demand due to the coronavirus emergency. He added, nevertheless, that so far the decisions made by the European Commission have not been correct.

“I am not ideologically against limiting imports, even though my group is a large importer. During the last quarters and in the second part of last year we have bought more in Europe than abroad, as possibilities were available. I would have understood a reduction of tariff-free safeguard quotas (not as much as requested by Eurofer), to align them to current demand. Nevertheless the decision proposed by the Commission is not satisfactory,” Marcegaglia said.

Last week the Commission notified the WTO of its proposed changes to the safeguard system. HRC imports will be the most impacted by the new rules, as quotas will be assigned on a country-specific basis rather than globally. The volumes are nevertheless calculated on the basis of 2015-2017 figures and risk forcing a reduction of as much as 50% for HRC imports during the 12 months starting in July, Kallanish notes.

Marcegaglia added that the opening of AD and countervailing investigations on Turkish HRC imports as well as the possible increase of AD duties for Russia’s Severstal indicate that the European Union wants to close its market further.

Going forward the executive confirmed that an acceleration in the regionalisation of the steel market is highly possible.

ISD Huta Czestochowa (HCz) lessee Sunningwell International Polska has declared its intention to acquire the heavy plate mill privately after HCz received no bids in its tender sale this week, Kallanish learns.

HCz’s trustee has submitted an application to the Czestochowa district court to confirm the terms of the next tender. The court is expected to announce its decision by 5 June.

The court said in April Sunningwell International Polska has a pre-emption right to acquire insolvent HCz. If another bidder were to win the auction, it would not be permitted to take possession of the mill until the deadline expires for Sunningwell to exercise its pre-emption right, or until Sunningwell waives this right.

Polish steelmaker Cognor and UK-based Liberty House were previously thought to be interested in the Polish steelmaker, while Metinvest, itself a producer of plate in neighbouring Ukraine, was touted as a potential investor.

Electric arc furnace-based HCz has an 800,000 tonnes/year slab capacity and 1.2 million t/y capacity of heavy plate.

French crude steel production plunged again year-on-year in April after a strong decline in March. This follows a hike in January and a decline in February, Kallanish learns from data released by the Federation Française de l’Acier (FFA).

Crude steel output declined by as much as -54.9% y-o-y in April to 581,000 tonnes. This is down from 1,288,000t in April 2019, the association says.

Over the first four months of 2020 French crude steel output also fell significantly y-o-y, by -22.1% to average just over 1 million tonnes/month. This is down from 1,289,000 t/month in January-April 2019, FFA says.

Before the coronavirus pandemic, 2019 output had dipped by -6.1% on-year to 1,204,000 t/month. This was down from 1,282,000 t/month in 2018, which in turn fell from 1,292,000 t/month in 2017, the FFA says.

British steel said June 3 it will halt production at its Skinningrove rolling mill on June 13 for three weeks and furlough around 300 staff, in what will be the second closure in three months due to low demand as a result of COVID-19.

Skinningrove was halted at the beginning of April for three weeks.

“Trading conditions in our markets remain challenging, including for products manufactured by our Special Profiles business in Skinningrove,” a spokesman said.

“While a small number of employees will remain on site, around 300 of our people will be furloughed…This is a temporary measure and, like last time, we will look to resume production at the earliest opportunity.”

Skinningrove produces steel products for industries such as yellow goods, rail and construction that has been hard hit as orders dried up. A spokesperson from British Steel was unable to provide figures on the amount of production capacity will be lost.

British Steel’s operation at Lackenby – Teesside Beam Mill – as well as the two blast furnaces in Scunthorpe will continue working, the spokesman said.

Last month, British Steel was purchased by Jingye Group. The Chinese company pledged to invest GBP1.2 billion ($1.5 billion) into British Steel, including improvements to production infrastructure, with the construction of an electric arc furnace in Teesside, opening 800 jobs in the area.

British Steel is the UK’s second-largest steelmaker behind Tata Steel, with 3 million mt/year of installed products capacity. The company has primary blast furnace production at Scunthorpe Steelworks and rolling facilities at Skinningrove and Teesside in the UK.

According to market sources, last year British Steel produced around 2.5 million mt of liquid steel.

According to S&P Global Platts data, the company produces 96% of the UK rail network’s steel rail, with Network Rail alone taking 100,000 mt/year. Other major customers are JCB, Caterpillar and South Africa’s Robor.

— Annalisa Villa

According to the company, the new sizes, available in stock and production in standard packages of 1,500-2,000 kg, are made thanks to Marcegaglia Group’s investments, with the purchase of a new cut-to-length line, able to flatten coils up to 2,000 mm wide and 12 mm thick.

Meanwhile, Italian plantmaker Danieli said that it will upgrade Marcegaglia’s 4-hi plate mill in San Giorgio di Nogaro, Italy, with new hydraulic cylinders, a new L2 process control system, and upgrading of the furnace automation system.    

The company stated that both revenue and earnings were affected by the economic meltdown, non-recurring effects, and the economic consequences of the coronavirus. Coupled with worldwide trade conflicts, these developments hit Europe’s export-driven industry, which accounts for about two-thirds of the company’s revenue, particularly hard. The automotive segment, which is important for voestalpine, slumped worldwide, while iron ore prices rose globally in the face of simultaneously falling steel prices.

On the other hand, Voestalpine will maintain its current programs that are aimed at cutting costs and boosting efficiency. “From today’s vantage point, a scenario that posits an improvement in the economy as a whole after the summer of 2020 is likely,” Voestalpine AG chairman Herbert Eibensteiner said. He said he also expects Voestalpine to generate EBITDA of between €600 million and €1 billion in the business year 2020-21, given the continued volatility of the economic environment. The company plans to reduce its investments to €600 million this year from €777 million in 2019-20 in response to the macroeconomic environment.

European steelmakers are dissatisfied with the results of the European Commission’s steel safeguard review, which they suggest does not account for the crisis environment caused by Covid-19.

Many of the measures lobbied for by the European steel association (Eurofer) on behalf of its steel-producing members were unacceptable to the European Commission.

The drastic temporary quota reduction requested by Eurofer was dismissed by the commission, which viewed the 75pc request as an import ban that could provide direct price control to domestic producers.

It also lacks the legal ability to alter the quota volumes originally allocated, although it has almost halved the amount of Turkish material that can be imported through its country-by-country quota. Overall quota volumes were almost untouched, besides the theoretical limits imposed on hot-rolled coil even these allow countries not included within the scope of the review to sell abundant tonnages into Europe.

Countries without their own specific quota are not limited to 30pc of the quarterly other countries quota for any period, despite large exporters being able to access only 30pc of the residual quota in the last period. European mills had hoped this percentage cap would also be reduced, or that large sources would have no access to the quota.

The commission also refused to reduce further its quota liberalisation from 3pc to 1pc, as requested by Eurofer, or to prevent rollover of unused quota from one period to the next. This in effect means that should importers have cargoes arrive that could be hit with a 25pc tax, they can hold them over and clear customs as soon as the new quota opens.

Legally, the safeguard is intended to avoid market-disruptive import increases and deflection that injure the union industry, rather than help cope with a demand depression, although it did state that Covid-19 and its impact was within the purview of the review.

Eurofer recently held a call to discuss its unanswered and unaccepted views with members, and member states are set to vote on the commission’s proposal on 12 June. Should they reject the proposal, it would mean business as usual, with safeguards functioning as they have been since the previous review in September 2019.

By Colin Richardson