Day: 9 June 2020

European steel service centres (SSC) were the most hit among distributors of steel products by the decline in economic activity registered in the continent, EUROMETAL explains in its latest note.

During the first four months of 2020 EU SSC saw shipments fall by -18.5% year-on-year. In April alone their shipments dropped by over -50% y-o-y, after a drop of -17.4% y-o-y in March, Kallanish notes.

The negative trend at SSC, as expected, also significantly pushed up SSC stock indices.

As a comparison, multi-products distributors only saw their shipments fall by -8.7% y-o-y during January-April. In April alone shipments were down -28% y-o-y, confirming that the worse downturn was registered at SSC, which mainly supply the automotive industry.

Unions at Tata Steel Netherlands have voted in favour of strikes and demonstrations during the coming days to demand the company safeguards the Dutch unit in Tata Steel’s European asset reorganisation.

The unions started to organise rallies at the end of May, when the head of Tata Steel Netherlands, Theo Henrar, left the company. Since then, Tata Steel Europe has communicated to workers that it will not implement new job cuts until at least October 2021, as originally agreed. However, these reassurances have not stopped unions from deciding to prepare further strikes, Kallanish notes.

Workers at the Dutch unit are demanding Tata Steel completely drops plans to integrated the local company with the British arm. They also want to scrap any plans to sell the group’s Dutch companies as part of the asset reorganisation.

Last year the company announced the intention to cut 3,000 jobs, but this figure was later reduced. Since the coronavirus pandemic began, however, decisions on this matter have been delayed until at least July.

The chief executives of EU steelmakers have written to the European Commission voicing their disappointment over the proposed safeguard review prepared by the Commission.

In the letter published by European steelmakers’ association Eurofer, the steelmakers again request safeguard tariff-free quotas to be cut significantly, in line with the Covid-19-related slump in steel demand.

“Steel demand has fallen by 50% since the start of the Covid-19 pandemic in March,” they write in the letter. “Our industry has had to cut production sharply to adapt to these changed circumstances, with 40% of the EU steel workforce laid-off or having to work part-time. Meanwhile, countries such as China, India, Indonesia and Russia have not rested: they continued, or are restoring, steel production and stockpiling. The imminent risk of cheap steel offers flooding the market would hamper our recovery and the survival of one of Europe’s strategic industries.”

Earlier, Eurofer asked for quotas to be cut by as much as 75%. As it stands, this request was not included in the review proposal of the European Commission. It has nevertheless included a series of changes to the system in order to limit further imports of some key products from key importing countries.

The Eurofer letter starts by stating that the survival of Europe’s steel industry is at risk because of the review proposal by the Commission. A similar theme has appeared in numerous requests made by European steelmakers to limit imports during the last five years, Kallanish notes.

Last month the Commission published its proposal to review the safeguard measures, but these measures still need to be approved to become effective as from the beginning of July. While Eurofer hopes further changes to the proposal will be implemented, it states: “This crisis requires a serious review that takes into account the world as it is today. The steel safeguard being reviewed was created for the pre-Covid era. Now it needs to be adapted to the post-Covid world.”

The Fiom Fim and Uilm unions have announced a 24-hour strike on 9 June in all facilities of former Italian steelmaker Ilva, now ArcelorMittal Italia. The strike is a protest against the company’s new industrial plan for Ilva and, particularly, the Taranto facility where 3,300 job cuts have been proposed, Kallanish learns from union sources.

According to rumours, the new industrial plan submitted last week to the Italian authorities also proposes production of 6 million tonnes/year. Investments such as the revamp of blast furnace no. 5 will also be delayed due to the current Covid-19 crisis that is seen affecting the steel industry for the next three years, ArcelorMittal told Italian economic development minister Stefano Patuanelli.

The unions have obtained an urgent meeting on Tuesday with Patuanelli to discuss in detail the content of the industrial plan which is still unknown to them.

Meanwhile, in a televised interview, Patuanelli announced that ArcelorMittal’s new industrial plan “…does not reflect the government’s intentions for Taranto.” The company seems to be finding excuses not to keep its promises, he added. The government is working on a national plan for the Italian steel industry that also involves other sites such as Acciai speciali Terni and the former Aferpi, now JSW’s Piombino steelworks, he explained.

Eurofer, the European steelmakers’ association, is asking for the EU steel trade policy to shift into “a crisis mode” in response to the 50% drop in steel demand since the start of the COVID-19 pandemic, the executives of major EU steelmaking companies said in a statement published by Eurofer on June 8.

The statement was Eurofer’s response to the changes in the European steel import safeguard system, proposed by the European Commission. The new solutions by the EC are insufficient and “unhelpful” in tackling the sharp decline in steel demand, Eurofer said, demanding a considerable reduction in the tariff-free import quota size.

In addition, the transfer of unused quotas to subsequent quarters and the access to the residual quotas for countries with their own quotas ought to be prevented, Eurofer stated.

In its notification from May 29, the EC proposed to bring back country-specific import allocations for hot-rolled coil. It also suggested changes focused on making the import flow of various steel products more evenly spread out between quarters and protecting some of the smaller export countries from being crowded-out from the residual quota by bigger countries.

The EC’s proposals did not mention a radical reduction in the tariff quota size, however, which is what Eurofer members are calling for.

Russia, China, India and Indonesia have been mentioned among those countries, which are posing the risk to the EU steel producers.

Eurofer claimed that the current proposals by the EC are not sufficient and could boost the share of imports in the EU market further.

Also, without tougher measures on imports, the targets to reduce the EU steel industry’s carbon footprint, as set the European Green Deal, are questionable, according to Eurofer.

“If the European steel sector is wiped out by imports, we will simply not be there to lead emissions reductions from the global steel industry,” the statement said.

— Wojtek Laskowski

Flat steel product shipments from EU steel service centers fell by 18.5% in January-April from the same 2019 period, as lockdowns related to the COVID-19 pandemic took their toll on industrial activity, the European Federation of Steel, Tubes and Metals Distribution & Trade (EUROMETAL) stated June 5.

Shipments by stockholders and distributors of EU multi-product & proximity steel, including long steel construction products, fell 8.7% in January-April from the year-ago period, with only rebar shipments increasing, EUROMETAL said.

Steel distributors, service centers and traders supply around 80 million mt/year of steel, tubes and metals, accounting for more than 60% of supplies to end-users in EU manufacturing and construction industries, EUROMETAL said.

In April strip mill flat steel product shipments plunged 50.8% on year, compared with a 17.4% on-year decline for the month of March, the distributors’ group said.

Lower shipments led to higher stocks, with flat products inventories at EU steel service centers soaring in April to the equivalent of 139 days-worth of shipments, nearly double the 76 days-worth of April 2019.

Stock volumes in the multi-product & proximity steel distribution category were equivalent in April 2020 to 94 days of shipments, up from 80 days-worth in April 2019.

EUROMETAL members said in late May they were optimistic that steel distribution levels had started to show an upturn.

The World Steel Association forecast June 4 that global steel demand would decline 6.4% overall in 2020 from 2019 levels. Steel demand in the developed economies is however expected to decline this year by 17.1%.

“The manufacturing sector, which was forecast to enter a recovery phase in early 2020, was pushed back into a deeper recession as lockdown measures led to a massive fall in orders,” worldsteel said in its short-range forecast. The steel sector association said the EU’s automotive sector – which uses primarily flat steel products.

Source: Eurometal