Day: 9 July 2020

Spanish long steelmaker Megasa has made official a revised offer for the acquisition of Spanish steelmaker Gallardo Balboa, Kallanish notes. 

In a note to state-owned news agency EFE, Megasa says it is interested in all of Gallardo Balboa’s assets and plans to maintain the activity of all subsidiaries to give continuity to employees. It also plans to maintain the firm’s headquarters in the Extremadura region.

According to market analysts, Megasa is in this way matching the bid made last week for Gallardo Balboa by Spanish holding Grupo Industrial Cristian Lay (see Kallanish passim).

“We sent a new offer to US investment fund KKR (Kohlberg Kravis Roberts), the current owner of Gallardo Balboa, that includes the acquisition of 100% of the steelmaker’s shares,” Megasa says. “With this improvement the company aims to resolve the concerns shown by the institutions.”

The longs producer guarantees to settle all Gallardo Balboa’s commitments to creditors, as well as working capital for the normal development of the business and investments in revamping production lines. “The important industrial and commercial synergies that would be created with the merger will allow Megasa and Gallardo Balboa to be more competitive and consolidate in the European steel sector,” Megasa adds.

Grupo Gallardo Balboa declined to comment on the negotiation process. Earlier this week trade unions voiced their support for the bid presented by Cristian Lay as it included all assets of Gallardo Balboa. Following Megasa’s bid revision, though, the Spanish steelmaker could be considered the front-runner in the bidding race for Gallardo Balboa, since it is a major international steel sector player.

Throughput of iron and steel at the key Northwest European port of Antwerp had its best month of the year in June but was still down 33.1% for the first six months of 2020, the port said July 8.

“Since mid-2019, global trade issues continue to adversely affect goods flows in the conventional breakbulk sector. This has culminated in an overall 29% decrease for the period January-June compared to 2019, with inbound and outbound flows being affected to the same extent,” the port said in a statement, without providing detailed figures.

Iron and steel is the most important freight group within the breakbulk sector.

Transshipment of coal was up in the first quarter, but came to a standstill in the second quarter, resulting in a 13.1% overall drop in dry bulk transshipment in January-June 2020 compared to the same period last year.

Total throughput at the port fell by 4.9% in the first half of the year compared to the same period in 2019. After a strong first quarter, the port experienced a decline in the transshipment of all goods, with the exception of the container sector.

Despite the impact of the coronavirus crisis on global production and logistics chains and a pandemic-driven drop in demand, the port remained 100% operational.

“Port of Antwerp is a world port that follows the pace of the European and world economy. The impact of the shutdown of the global supply chain due to the coronavirus crisis has been felt from the second quarter onwards and will affect the total throughput of goods this year,” Port of Antwerp CEO Jacques Vandermeiren said.

— Annalisa Villa

Eurofer has welcomed the launch by the European Commission this week of its hydrogen strategy for a climate-neutral Europe. The Commission set out a plan to integrate a hydrogen energy network by 2050, something that could be beneficial for steelmakers looking to cut carbon emissions through the use of hydrogen.

The association notes that steel produced using hydrogen and clean-energy based methods will be 80-95% less CO2 intensive by 2050 than steel output is today. Costs of production will nevertheless be significantly higher.

“Clean energy at competitive prices is key to achieving the steel industry’s low-carbon goals,” Eurofer director general Axel Eggert tells Kallanish. “The transition to carbon-lean steelmaking will require 400 terawatt hours of CO2-free electricity per year. Of this, nearly 250 terawatt hours is needed for the production of 5.5 million tonnes of hydrogen, which would be used in new processes to make ‘green’ steel. With this, around 5% of the EU’s total CO2 emissions could be avoided.”

Looking ahead, Eurofer notes that, together with the setting up of a hydrogen and green strategy, the European Commission will need to make sure the market recognises the value of low-Co2 steel.

“We need policymakers to ensure there is a market for ‘green steel’ and other such low-carbon industrial products,” says Eggert. “Only in making the low-carbon transition a success across the economy can we harness the EU’s leadership. The benefits to European society of this endeavour will be vast – if the whole transition can be tied together and invested in sustainably.”