Day: 2 July 2020

Turkey’s imports of hot rolled flat steel rebounded again in May on-month, but they were considerably down on-year, Kallanish notes from data published by the Turkish Statistical Institute (TUIK).

May arrivals of flat products under HS code 7208 totalled 234,220 tonnes, 26.1% up on April, but down -30% on-year. January-May import volumes totalled 1.44 million tonnes, -16.3% down on-year, with the pace of decrease deepening by -3.3 percentage points on April. 

Imports of HR flat products under 3mm thickness (HS code 720839) rebounded in May to 96,948t, 20.5% up on April, but they were still -29.5% down on-year. Ukrainian-origin shipments prevailed in May at 41,732t, 147% up on April and 42.2% up on-year. Russian shipments remained low at 30,669t, 18.7% up on-month but -56.6% down on-year. The Netherlands sent the third largest volume at 8,272t, compared to almost nothing in April and five times the May 2019 volume.

Arrivals of HR unpickled wide strip of 3-4.75mm thickness under HS code 720838 continued to decline, with 27,428t received in May, -17.5% down on-month and -60.1% down on-year. Ukraine again overtook Russia as the largest supplier, shipping 10,257t, as compared to 4,604t in April and 12,346t in May 2019. Russia’s shipments were 5,778t and France’s at 4,173t.

May imports of hot rolled coil/plate with 4.75-10mm thickness (HS code 720837) rebounded on-month, with France again sending the largest volume at 11,453t. Total import volumes came to 23,636t, 29.7% up on-month but -43.3% down on-year. France’s shipments were up 14.9% on-month and 68.9% on-year. Ukraine was the second-largest supplier with 5,250t, and Russia third with 3,924t.

Metso Outotec has commenced operations following the merger of technology supplier Outotec with its rival Metso’s Minerals Business. Trading in the shares of the new firm has begun on the Nasdaq Helsinki stock exchange.

The two Finnish firms announced the merger plan last year (see Kallanish passim).

The new firm employs over 15,000 professionals in more than 50 countries and its illustrative combined sales for 2019 were about €4.2 billion ($4.7 billion). “The combination offers potential for significant cross-selling and cost synergies and an even stronger platform for innovation, digital leadership and growth,” says Metso Outotec.

“The growing interest towards the environment and the impacts of climate change, urbanisation, decreasing ore grades and electrification are forcing traditional industries like aggregates, minerals processing and metals refining to redefine their license to operate,” the firm adds. “Metso Outotec can drive these industries towards a responsible use of the world’s natural resources.”

Metso Outotec consists of six business areas: Aggregates, Minerals, Metals, Recycling, Services, and Consumables. Metso’s chief executive Pekka Vauramo is the new firm’s ceo, with Eeva Sipilä chief financial officer.

Among other technology, Metso Outotec manufactures iron ore beneficiation and pelletising plants. Last year Metso secured a contract to supply Tata Steel India with a scrap shredder – India’s first – as well as an order to deliver a large-scale iron ore pellet plant for Tata Steel’s Kalinganagar steelworks. NLMK, meanwhile, contracted Outotec last year to boost its Stoylensky iron ore pelletising plant’s capacity. China’s Mingtuo Group is building a high carbon ferrochrome products line supplied by Outotec.

Metso Flow Control, which was not included in the merger, has become the focused standalone flow control company Neles Corporation. It also offers solutions for the metal recycling, mining and oil and gas industries.

Guangzhou-based commodity conglomerate Cedar Holdings has completed its acquisition of UK-headquartered steel trader Stemcor. Stemcor will retain its name and autonomy.

The deal was agreed in January (see Kallanish passim). Although unconfirmed by either side, the deal is reportedly valued at $150 million and sees ownership transferred fully from US investor Apollo group.

Cedar, which has so far been largely focused on non-ferrous metals and chemicals, said the acquisition will help to develop its ferrous metals industrial chain. Cedar is China’s largest private commodity trader, with 2017 revenue of $32.7 billion.

In 2019 Stemcor sourced and delivered 3.1 million tonnes of steel and raw materials, up 5% on-year. Revenue fell -10% to $1.74 billion due to a higher proportion of raw material shipments and lower prices. Profit before tax halved to $8m.

“The Group faced a number of external challenges to the business throughout 2019, from a softening global economy, declining industrial activity, continuing Brexit-EU and trade war uncertainty and increasing levels of protectionism,” Stemcor chief executive Steve Graf said last month.

Stemcor has a 70-year history in steel trading. It was once one of the top three global traders of steel and raw materials. Around 20% of its business is focused on the Chinese market, Kallanish understands.

ArcelorMittal Italia and Italian government representatives are in talks about agreement on a restructuring plan offered by the company and opposed by the government because it would mean the loss of 3,300 jobs, a source close to the company said July 1.

No further details were available.

Production at AM Italia’s Northern Italy facilities, meanwhile, has been restarted in response to increased demand, offering a possible glimpse for their future.

According to the 2020-2025 plan prepared by ArcelorMittal, steel production in the former Ilva facilities will be ramped up to 6 million mt/year by 2025 rather than 8 million mt/year. The 8 million mt/year target will be reconsidered in 2025 when demand presumably will have returned to pre-coronavirus pandemic levels. Production at AM Italia’s Northern Italy facilities, meanwhile, has been restarted in response to increased demand.

AM Italia’s steelworks in Genoa-Cornigliano restarted production at its No. 5 galvanizing line on June 30 and has started to work at full capacity on its tinplate line, the source close to the company and a union representing workers at the facilities said July 1. The Northern Italian steelworks has four galvanizing lines, but only two have been operative for the past few years. AM Italia’s Genoa-Cornigliano hot-dipped galvanized lines Nos. 3 and 5 have combined production capacity of around 900,000 mt/year. The No. 5 stopped production in March, due to the coronavirus outbreak, while No. 3 has been operating intermittently since March, at very low production. The line started operations in 2016, with a production capacity of 460,000 mt/year. The Cornigliano-Genoa works processes around 1.5 million mt/year of hot band from Taranto, of which 900,000 mt are transformed into HDG on the two lines, while 100,000-150,000 mt are transformed into tinplate and the rest sold in the open market as hot rolled product, mainly sheets. The tinplate lines are also working.

The company also restarted the productions at its HDG line in Novi, which has a capacity of around 450,000 mt and was also halted in March. Also the mill in Racconigi, near Genoa, has restarted two lines of tube productions out seven seven tubes. In total, the facility produces about 140,000 mt of tube when operates at full capacity. All the lines stopped production back in March.

“The Genoa galvanized line will re-stop production in the month of August, but is still a positive news,” the source said. “It also shows the willing of ArcelorMittal to carry on production when and where is possible. At the moment the company is still negotiating with the government the future of the mill, but considering how Italy works I doubt we will have news before the Puglia regional election that are due in September.”

There are that ArcelorMittal could pull out from its Italian asset. AM has an option to withdraw from the troubled works in November. If it does so this could threaten the survival of the Taranto plant, in capacity terms the largest flat carbon steelmaker in the EU. The Italian government’s position about the former Ilva plant was always divided, with some elements favoring the closure of the hot-end facility in Puglia and others wanting to tranform it into a “green mill” using European Commission funds.

The Taranto plant is currently operating only two of four blast furnaces (Nos. 1 and 4) and with most of its cold-end lines temporarily shut, union sources told Platts. The Taranto site is producing around 7,500 mt/d of crude steel, sources said.

AM declined to comment on this issue when contacted while the Italian government representative did not respond.

— Annalisa Villa

Global finished steel demand is forecast to fall 6.4% in 2020 due to the COVID-19 pandemic and rebound by 3.8% in 2021, the World Steel Association’s Director of Economic Studies Nae Hee Han told the Southeast Asia Iron and Steel Institute e-conference June 30.

Demand for finished steel globally was seen falling to 1,653.9 million mt in 2020 from 1,766.5 million mt in 2019, before recovering to 1,717.4 million tons in 2021, Han said.

“In this minus 6.4%, we have some growth from China, around 1%, so the picture of the rest of the world is not actually as beautiful as 6.4%, it is more likely minus 14%,” she added.

Developed counties will be more deeply impacted than emerging and developing economies by the pandemic, and India’s domestic market more affected than China’s, she said.

However, China’s role as a crisis buffer has been reduced compared with the global financial crisis 11 years ago, she said, adding the impact of the global pandemic on GDP was already greater than during the global financial crisis due to the lockdowns in multiple countries. While China’s steel market recorded a 23.4% growth rate after the global financial crisis in 2009, only 1% growth in demand was forecast in 2020, she noted.

The automotive sector was among the hardest hit both during the global financial crisis and the COVID-19 pandemic. It is forecast to contract 19.6% year on year in 2020, compared with a 23.8% on year decline in 2009, while mechanical machinery was forecast to fall 11.7% in 2020, in line with 11.7% in 2009, according to World Steel Association research.

Disruptions to value chains will also ripple through other industries, many of which will struggle to recover while social distancing measures remain necessary, she said. “We do not think the recovery of demand will be strong, as with high unemployment there is more cautious consumption,” she added.

Small and medium industries in particular are at risk of bankruptcy as social distancing will be difficult to maintain, she said.

The restoration of confidence will depend on a discovery of a vaccine or cure, she said. In the meantime, the experience of lockdown could prompt societal changes, such as movement from highly urbanized centers to lower-density rural locations impacting transportation, urbanization and investment.

While automobile use plunged during lockdowns, the increasing preference for private vehicles over public transport as restrictions ease is also likely to result in structural transformation that will impact steel markets in years to come, she added.

— Analyst Chelsea Ye