Day: 10 June 2020

The European Commission will open its first annual Eur1 billion ($1.1 billion) call to fund large-scale renewables, clean hydrogen, energy storage, and carbon capture and storage/use projects by the end of July, according to a senior official.

The goal is to get companies to invest now in the low-carbon technologies needed for the EU to achieve its goal of being climate neutral by 2050.

The money comes from the EU’s Innovation Fund, which is funded until 2030 by selling 450 million EU Emissions Trading System allowances. It has a budget of around Eur10 billion over 10 years at current EU carbon prices.

“We want to kick-start the hydrogen economy,” Christian Holzleitner, head of the EC’s innovation finance unit in its climate action department, said in an online information session on June 5.

“We want to be the first in the world to establish carbon capture and storage or use for industry, for hard-to-abate sectors,” he said. These include cement, steel and chemicals.

The EC also wants to support innovative renewables, such as offshore wind, ocean energy, geothermal, biofuels and green hydrogen.

Successful innovative projects can receive up to 60% of their additional capital and operating costs compared with current technology for up to 10 years.

This is about closing some of the investment gap given that innovative projects’ carbon abatement costs start around Eur80-90/mt CO2 and current EU carbon prices are around Eur20-25/mt CO2, Holzleitner said.

Eligibility criteria

Only yet-to-be-built new projects with a planned total capital expenditure above €7.5 million and based in an EU country, Icleand or Norway — countries directly part of the EU ETS — are eligible to respond to the first call.

This excludes Switzerland, which is only linked to the EU ETS, and the UK, which wants to link a national system to the EU ETS after its Brexit transition period expires at the end of this year.

The first call will not be targeted within the eligible sectors.

“We want to see what projects are out there and support those that are most innovative and most ready,” Holzleitner said.

The EC may target specific sectors in later calls.

Project developers will have to submit their applications by the end of October, and will find out by February/March if they can proceed to the next stage.

The EC is looking for projects that will have significantly lower emissions than current commercial technology, and go beyond incremental innovation.

Developers will also have to convince the EC their projects can reach financial close within four years to move to the second stage.

The EC may grant projects that are not mature enough for project development assistance from the European Investment Bank, and encourage them to apply again later when more mature.

In the second stage, the EC will also look at scalability and cost-efficiency.

It plans to award grants to successful projects in the second half of 2021.

The EC also plans to have a separate call for small-scale projects — those with under €7.5 million capital expenditure — at the earliest by the end of this year.

— Siobhan Hall

Drawing attention to the increase seen in protectionist moves by governments globally, International Rebar Producers & Exporters Association (Irepas) said in its latest short-range outlook that these moves accelerated the shrinkage in the global longs export markets, but some optimism has begun to be seen in recent weeks amid normalization efforts globally.

“The EU opened fire with an antidumping investigation on HRC imports from Turkey, with Turkey firing back with duties on steel products from the EU. Canada started a similar investigation against imports of heavy plates from several countries, while Egypt has been working on a 10 percent duty,” Irepas said, adding that accordingly, the world market is shrinking further and Russian mills are taking the lead and dominating the market. “It will be a real game of survival for a while and the cost of production is the key.”

While prices are heading up, particularly in Asia, consumption in the global long steel products market seems very uncertain, but on the bright side, despite the impact of the Covid-19 pandemic, the World Steel Association (worldsteel) in its recent report still foresees an increase in steel demand in China in the current year, predicting a rise of 1% from 2019 to 916.5 million mt, Irepas noted.

“This helps restrict the fall in global steel demand in 2020 to an anticipated drop of 6.4%, whereas demand in the rest of the world excluding China is foreseen to contract by 14.2% compared to 2019. Meanwhile, market players are hoping that June and July will be months of stabilization before a recovery later in the year,” the association said.

Drawing attention to the low demand conditions and bearish pricing sentiment in the EU region, Irepas said: “The biggest threat for importers is the ongoing discussions in Brussels on the reevaluation of safeguard measures. The EU is once again changing the rules in the middle of the game under pressure from Eurofer.”

Meanwhile, demand in the ferrous scrap market has recovered and raw material inventories that were depleted have had to be rebuilt as the markets have been opening up after the lockdowns, Irepas said.

Turkish imported scrap prices hit a two-month high at $258.25/mt CFR on June 4 with fresh US and EU cargoes. Prices have remained strong since then. S&P Global Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $260.50/mt CFR on June 8, up a further $0.50/mt on day.

Stimulus packages around the world are acting as fuel; there are concerted efforts to avoid a U- or L-shaped economic rebound, with a V-shaped rebound being what the financial markets are seeking, and finally, normalization procedures have been initiated in many countries, as the automotive sector is back in business in various countries, for example in the US, EU and Turkey, Irepas noted.

“The current status of the market is clearly unstable. The markets are still assessing the damages from the COVID-19 pandemic and the future remains very much uncertain. But at least investors and industries are showing optimism,” the association concluded.

— Cenk Can

ArcelorMittal expects global steel consumption to drop -7% as a result of the Covid-19 pandemic, with particularly southern European consumption impacted for longer than expected. So say sources who have read the new industrial plan for the former Italian steelmaker Ilva, now ArcelorMittal Italia. By contrast, steel demand fell -8% after the 2008/09 financial crisis.

The new industrial plan for 2020-2025 has been reviewed and adapted to the current crisis from the previous plan submitted in March. Over the period 2020-2025 the former Ilva’s crude steel output is to be pushed to 6-6.5 million tonnes/year, while the previous plan indicated 8mt as the target level. Output in 2020 is forecast to hover at approximately 3.4mt, while in 2021 it should go up to 5.3mt based on three operational blast furnaces.

The company will ramp up output until it reaches 6mt in 2025. A new electric arc furnace will be up and running in 2024, replacing blast furnace no.2, while the revamping of blast furnace no.5 will start in 2024. The firm is, however, considering replacing BF5 with a second EAF. This would also significantly reduce CO2 emissions from the Taranto steelworks. Blast furnace no.1 should be idled in 2026, the informed sources tell Kallanish.

The company will consider ramping up production to the pre-Covid-19 forecast of 8m t/y starting from 2025 when steel demand should begin to recover.

3,300 jobs will be cut this year and the future is uncertain for the 1,600 workers from Ilva’s administration who remain on temporary furlough.

According to sources, the company forecasts a dramatic fall of over -60% in consumption for rolled flat products in 2020. Flats demand will recover very slowly due to the systemic crisis of some end-use sectors such as the automotive industry. The consumption reduction in flat products will also lead to overcapacity in Europe of up to 35mt by 2025.

ArcelorMittal declined to comment on the matter when contacted by Kallanish.

According to a union source, Taranto is now producing 7,500 t/day of crude steel with only two blast furnaces, which equates to an annual output of below 3mt.

Romanian steel wire producer Dan Steel has been directed into insolvency proceedings following a request from creditor Unicredit Leasing Corporation, Kallanish learns from a stock exchange filing.

The administrators appointed are a consortium of CITR Filiala Cluj-Napoca and Prime Insolv Practice. The proceedings will be supervised by the Beclean court, where Dan Steel is headquartered.

The deadline for submission of claims is 18 July, the deadline for verification and communication of those claims is 8 August, and the deadline for resolving any appeals and displaying the final table of receivables is 2 September. The deadline for the court’s decision on the findings is 16 September. There will be a right to appeal within seven days of the court announcing its decision.

Dan Steel produces a range of carbon and galvanized steel wire, as well as welded mesh, fencing and nails. The company imports feedstock from Ukraine, Italy, Poland, Belarus and Moldova, from suppliers such as ArcelorMittal, Metinvest, Belarussian Steel Works and Moldova Steel Works. The firm’s main competitors are IS Campia Turzii, Ductil Steel Buzau, and Metalicplas. The main export markets in 2019 were Hungary and Slovakia.

In 2019 the firm suffered from weaker domestic demand compared to 2018 and had planned to increase exports to new markets after shipments abroad also declined on-year. Production fell -26% on-year last year to 31,994 tonnes. Net sales fell -15% to RON 117.4 million ($27.6m), while net loss more than doubled to RON 21.88m.

The firm furloughed all employees bar security staff from 1 April due to the Covid-19 pandemic impact.