Day: 11 June 2020

“Green” steelmaking was a key theme of this week’s Bureau of International Recycling (BIR) ferrous webinar.

Renate Featherstone, Principal Analyst – Multi-Commodity Research at Wood Mackenzie, explained that steelmaking accounts for as much as 10% of global carbon emissions. Producers are therefore under mounting pressure to adopt an environmentally cleaner approach.

“The first logical step to reducing emissions when demand is growing is to recycle and reuse all available scrap,” she stated in the webinar monitored by Kallanish. “Only when we maximise scrap use do we significantly reduce overall virgin iron production and get emissions closer to government targets. This is why scrap is so important.”

Although integrated steelmaking “…will remain the main source of steel in China over the next two decades,” Featherstone predicted, electric furnaces’ share in global steelmaking could rise to 30% by 2026. This could then grow to 34-35% by 2040, potentially heading as high as 52% outside of China and India in two decades from now.

Featherstone said global crude steel production was likely to take “…at least five years” to recover to 2019 levels. Demand in China is forecast to fall only -1% in 2020, “…much better than people thought at the beginning of the year.” A slump of -16% is anticipated for the rest of the world.

George Adams of US-based scrap merchant SA Recycling contended that the scrap use hike projected by Featherstone would apply significant downward pressure on iron ore prices. This could encourage iron ore’s use in steelmaking.

Zain Nathani of the Nathani Group, meanwhile, acknowledged that some of India’s leading steelmakers had been exporting substantial tonnages of semis to China during the lockdown. However, he believed this was unlikely to develop into a long-term trend.

The huge environmental contribution of the ferrous scrap recycling industry was further stressed by BIR divisional Statistics Advisor Rolf Willeke. An estimated 630 million tonnes of steel scrap are recycled every year, preventing nearly 950mt of annual CO2 emissions that would have come from the production of virgin steel. This also saves energy and conserves natural resources, he pointed out.

Although Turkey remained the world’s leading steel scrap importer in 2019, its overseas purchases fell -8.7% on-year to 18.86mt, Willeke observed. India took second place with a 11.4% rise to 7.05mt. Also last year, the EU-28 remained the world’s leading steel scrap exporter, growing its outbound shipments by 0.6% to 21.79mt, whereas global external steel scrap trade – including internal EU-28 trade – dropped -5.8% to 100.4mt.

The debate continues over the European Commission’s proposed review of safeguard measures, Kallanish notes. In an open letter, Eunipra, the association for European non-integrated wire processors, strongly attacked the latest request by Eurofer to slash imports into the continent.

“As the representative of this user industry, Eunipra fundamentally opposes the extravagantly protectionist measures advocated by Eurofer in response to the Covid-19 pandemic which have no other purpose than bluntly seeking to shield the European market from all imports of steel products by adjusting the safeguard quotas in ways that are incompatible with basic EU and WTO principles,” the letter says.

Eunipra stresses that the EU steel sector is supported by steel users and processors that need a diversified flow of material. The association also points to the need to secure the viability of non-integrated processors in a market in which large steelmakers are consolidating further downstream to compete directly with processors.

The association also argues that Eurofer is using the threat imports pose to investment into less-CO2-intensive steelmaking as leverage in its push for lower quotas.

“The current safeguard measures in place serve a very specific goal: to protect the European market from increasing imports and trade distortions stemming from Section 232 of US tariffs on steel and aluminium,” Eunipra reminds. “There is clear consensus that the EU has a vital role to play in setting sustainable targets. However, safeguard measures are not the appropriate tool. The EU should use a comprehensive set of carefully balanced rules that will lead to a successful transition to carbon neutrality that is fair, sustainable and allows all the industrial operators in the steel industry to remain globally competitive.”

While non-integrated wire processors voiced their opposition to the latest requests by Eurofer, the Italian member of the European Parliament, Massimiliano Salini, issued a statement supporting steelmakers. He says he hopes the European Commission will review again its latest proposal. Salini was earlier this year the first signatory of a letter to Ursula von der Leyen to urge the Commission to cut steel imports in the continent.

Weglokoks has come to an agreement with PKO BP bank that will pave the way for the coal exporter to acquire the production assets of its stockist and fabricator subsidiary Huta Pokoj. The bank is one of Pokoj’s main creditors.

“This means the path has been opened to restructuring the unit, and also to saving jobs at the plant,” Weglokoks is quoted as saying by Polish media. Once the agreement is finalised, a part of Pokoj’s production assets’ debt will be paid and the way will be paved for future investments in the firm. Current production will not be affected, the coal exporter added.

Weglokoks’ spokesman did not respond before deadline to requests for confirmation.

Last week Pokoj’s unions carried out protests against the management’s handling of the firm. They wrote a letter to Polish Prime Minister Mateusz Morawiecki requesting him to partake in discussions with union representatives. They had previously called for his intervention last August (see Kallanish passim). Last week they again blamed government inaction for allowing imports of coal from Russia and steel from the East to damage domestic industry.

Last December unions secured an agreement with Weglokoks to maintain production and procure feedstock. Weglokoks was then supposed to buy out the remaining shareholders in the firm by end-February 2020; however, this did not happen. Huta Pokoj owes Weglokoks almost PLN 180 million ($42m) and a further PLN 52m to PKO BP. Pokoj and its workers previously reached an agreement with Weglokoks last September for internal restructuring and debt relief.

The meeting between Italian government and ArcelorMittal Italia union representatives over the steelmaker’s future was considered “…inconclusive and a let-down,” union sources tell Kallanish. A new meeting has been scheduled for next week.

The latest industrial plan submitted by ArcelorMittal has been judged unacceptable by economic development minister Stefano Patuanelli. In a note seen by Kallanish, union representative Rocco Palombella says ArcelorMittal submitted “…a liquidation plan, not [a plan for] the relaunch of the plants, which implies an environmental and employment disaster… It is a plan to earn some time to get to the end of the year when, by paying only €500 million, they [ArcelorMittal] will be able to leave.”

At present, 8,200 workers in Taranto are on temporary layoffs, Palombella continues. Taranto employs over 10,000 workers.

Meanwhile, Federacciai president Alessandro Banzato has expressed his full support for the government. In an interview with local paper La Stampa, Banzato welcomed the possibility of government participation in the matter but only with defined timing and with the view to return Ilva to a private entrepreneur.

“Until Taranto belonged to a private entity, the Riva family, it had a positive cash flow,” he said. “Therefore, I insist: a public intervention is welcome at this stage – better if in a partnership with players from the steel sector – but with a defined time schedule and with the guarantee that the company will go back to a private entity.”

The Fiom Fim and Uilm unions have been on a 24-hour strike starting on 9 June in all facilities of ArcelorMittal Italia. The strike was a protest against the company’s new industrial plan that involves massive job cuts and delayed investments (see Kallanish passim).