Day: 1 July 2020

Cedar Holdings Group Co, a China-based privately owned commodities business, has completed acquisition of Stemcor Global Holdings, a privately held, independent UK-based steel trading and distribution company, Stemcor said June 30.

Conclusion of the deal, for an undisclosed sum, follows the signing of a sale and purchase accord between the parties in January at the World Economic Forum in Davos.

The transaction marks the latest acquisition of a European-based steel industry concern by a Chinese entity, following steelmaker Hesteel Group’s acquisition of Luxembourg-based steel trader Duferco International Trading in 2015 and Jingye Steel Group’s acquisition of steelmaker British Steel in March. China is the world’s largest steelmaker and consumer.

Cedar, with a total revenue of over $40.6 billion in 2019, is listed on the Fortune Global 500 list and says it is involved in the development of new metal materials and building green supply chains. Headquartered in Guangzhou, the group has branches in Hong Kong, Singapore, Switzerland, Germany, France and the US, as well as offices across Asia, Europe and Africa.

Stemcor, with a worldwide trading network, said it will retain its name and autonomy.

Established in the 1950s, the company has 30 offices worldwide and is involved in steel supplies, facilitation of financing, logistics, distribution, the provision of stockholding of niche products and other value-added services.

A turbulent period in steel markets which led to price reductions in 2015 was a factor in Stemcor undergoing a major restructuring that year, with the downsizing of a number of less profitable business units and product lines. It returned to a consolidated group profit in 2017, when it sold 3.7 million mt of materials, and had revenues of $2.11 billion, according to the company website.

Since that time, there has been market talk that Stemcor could find a new owner.

Natixis advised Stemcor’s shareholders on the transaction.

— Diana Kinch

US raw steel capability utilization continued to rise last week, increasing to 55.4% from 54.6% the previous week, according to data released by the American Iron and Steel Institute on June 29.

Raw steel capability utilization has not been above 55% since the week ended April 25 and has been steadily increasing since the week ended June 6, when the utilization rate was at 53.3%.

Production increased by 1.3% to 1.240 million st during the week ended June 27 from 1.224 million st in the previous week, according to the data.

Last week’s production was down 33.4% compared with the same week a year earlier, when capacity utilization was at 80.1% and production totaled 1.863 million st.

The AISI calculated adjusted year-to-date production at 39.2 million st, with a capacity utilization rate of 67%. The total is 18.9% lower than that of the same period last year, when the utilization rate was 81.2% for 48.3 million st of output.

Other than the Southern district, which saw a 1.9% decrease in production, all regions saw week-on-week increases.

Last week’s production totaled 123,000 st in the Northeast; 409,000 st in the Great Lakes region; 132,000 st in the Midwest; 516,000 st in the Southern district and 60,000 st in the Western region, according to the data.

The weekly raw steel production volume AISI provides is estimated. The figures are compiled from weekly production data provided by 50% of domestic producers combined with monthly production data for the remainder.

— Ingrid Lexova

The Spanish automotive sector showed some recovery on-month in May after the Covid-19 outbreak hit its performance, Kallanish learns from monthly data issued by the local Asociación Nacional de Fabricantes de Automóviles y Camiones (Anfac).

“The reactivation of the Spanish factories during the month allowed an improvement with respect to the figures registered during April, a period during which output was practically halted in Spain,” Anfac says. However, the return of activity has been very gradual and production levels remain far from normal.

“New car registrations in Europe suffered a significant contraction in April and May with falls of -76% and -52%, respectively. The reopening of the markets, especially in Germany and France, has allowed the deceleration in production to be mitigated by the progressive evolution of exports,” the association adds.

Spain’s automotive production totalled 92,900 units in May compared to the volume of 294,433 during the same month in 2019. January-May output was 744,955 vehicles, -41.6% less than in the first five months of 2019.

Spanish vehicle exports were 81,802 units during April, or 158,209 units less on-year. Five-month shipments abroad also fell, by -39.9% to 614,930 units, Anfac adds.

Tata Steel’s European assets are currently operating at 70% of their capacity, according to a statement published by the company during its latest financial group release, Kallanish notes

The company confirm that demand in Europe remains a concern. “Key steel consuming sectors such as automotive and construction sector continue to be adversely affected, though demand for packaging material has seen a sharp upsurge,” it said in its note. As a comparison, in India the group’s units are at 80% of their capacity.

Overall Tata Steel Europe saw its performance during the full fiscal year April 2019-March 2020 decreasing in terms of Ebitda. The unit registered a loss of RS 664 crores at Ebitda level. Liquid steel production was also down to 10.2million tonnes during the closed fiscal year, but it recovered somewhat in Q1 2020 by 5% quarter-on-quarter to 2.6mt.

The Italian government is working on defining the size of the public investment to help ArcelorMittal relaunch former local steelmaker Ilva, Kallanish learns from a statement issued by Prime Minister Giuseppe Conte.

ArcelorMittal has in recent weeks become more inclined to negotiate to keep its Italian investment. Conte says the government intends to implement the agreement signed with the company on 4 March and invest in Ilva through its financial subsidiary Invitalia. “We are now getting to the heart of the negotiation with ArcelorMittal to define the details of the new governance. We have promised to achieve ambitious targets both from an environmental and employment standpoint and we are determined to respect this commitment,” Conte affirms.

In a televised interview last month ArcelorMittal Italia chief executive Lucia Morselli also said the company intends to comply with the agreement signed on 4 March with the Italian government. Morselli added that the government becoming a shareholder in the steelmaker would support the plant’s relaunch (see Kallanish passim).

Meanwhile, after an agreement was signed in Trieste for the dismantling of the hot area of Arvedi’s pig iron plant, Taranto mayor Rinaldo Meucci told local press that Ilva should also indefinitely mothball its hot end. The regional authorities in Trieste are going to invest and transform the former plant into a logistics hub that will boost activity at the port of Trieste.

Meucci, together with the Taranto commerce chamber, have lamented a lack of communication between the central government, ArcelorMittal and local authorities. They are asking for a more sustainable development for the future of Taranto.

The European Commission has published the final document related to the review of the safeguard system for steel imports. As anticipated by Kallanish, the new amendments will come into force from 1 July, with some important changes in particular to the way tariff-free quotas are allocated.

Firstly, the Commission has changed all country-specific quotas to be managed quarterly, in order to avoid overcrowding of imports. This is set to dramatically change the flow of imports for some key products, as last year some country-specific annual quotas were exhausted during the first week of becoming available.

Hot rolled coil quotas will also be moved from general to country-specific, further limiting the possibility of large importers taking major advantage of allocations. With the new changes, Russian suppliers will have the largest share of HRC import quotas, despite being subject to AD duties, followed by Turkey and India. With the country-specific rule being applied, Turkey and India, for example, will see their available quotas falling below the average sold in Europe during the last two years.

Stainless steel HRC quotas will conversely be moved from country-specific to global.

The Commission will then split the quotas for large welded tube into a global allocation for material used in engineering projects and a country-specific quota system for material not used in engineering.

In addition, important limitations will be applied to the use of residual quotas during the last quarter by countries that already have a country-specific allocation.

Finally, the Commission has also reviewed the list of countries included in the measures.

As is often the case in these matters, the final decision from the EC seems to have left most market players dissatisfied. While steel consumers asked in vain for the Commission not to put new limitations on importers, European steelmakers association Eurofer’s request to drastically cut tariff-free quotas for a period of time also went unheeded.

“We have seen a collapse of 50% in EU steel demand since March, but the tariff-free import quota has been further raised,” says Eurofer Director General Axel Eggert. “Objectively, this makes no sense. We had expected a clear decision for European industry. This did not happen. The resulting marginal technical changes may help one or other steel product group but most of our industry has been left in the cold.”

“We are ready and willing to sit down with policy makers with an open mind in order to develop a way forward for our sector and the downstream sectors it services,” he continued. “The result of the revised safeguards is a major upset, and the EU must still find ways and means to avoid further closures and job losses in the European steel sector.”