Day: 22 July 2020

European steel coil demand is expected to subside as the market enters the slow summer period, sources told S&P Global Platts.

While maintaining an overall view for higher prices to be achieved, a Benelux-based stockholder said this would now likely happen after the summer holiday period in northern Europe.

“I am expecting prices to tick up and down Eur2-3/mt only over the coming weeks, overall the view is for higher prices but this will not be until after the summer holiday,” he said.

“The fear of a second wave is rising in Belgium, the Netherlands and Germany as people will gather together while on holiday,” the source said, adding that increased reports of localized outbreaks and potential lockdowns would continue to be a risk to market recovery in August.

Demand from industrial customers for black steel and coated products at the start of July was slower than expected but has been increasing in recent days, though August seasonality would see demand ease back, the source said.

“When competitors drop prices we do not follow them, we have heard some trying to sell materials to support their cash flow needs, it is not good for August but it is the same each August.”

A Northern European mill source remained hopeful of higher prices being gradually achieved each week ahead of the summer holiday period.

“We are quoting the offer but business is being done Eur10/mt lower. However, we hope for another Eur5/mt this week and again next week,” he said, adding that import offers had ticked lower due to currency movements. Hot-rolled coil was heard at $440/mt CIF Antwerp, depending on exchange rates.

The Italian market was relatively stable, according to one Italian service center source, who said any increase in prices for hot-rolled coil would be gradual.

“Offers from imports are totally missing, the European market is completely dominated by domestic mills. Orders are being confirmed for October delivery, but even though order books are getting better, we should not expect a huge increase in the southern price,” the source said.

The same source added that Italian steel suppliers have a “more aggressive” mentality when asking for higher prices, and that this has become even more apparent since imports began to decline into the region.

“Imports are missing, therefore its much easier for European suppliers to increase prices,” he said.

In the automotive industry, the service center source added that there were some improvements, with some car manufacturers inquiring for orders.

— Amanda Flint, Len Griffin

Steel inventories at German stockholders decreased further in June, but sales volumes inched up as selling activity grew, according to data provided by German stockholder association BDS July 21.

Sales volumes at German stockholders in June rose 10.3% month on month for long products to 279,978 mt and 25.5% for flat products to 451,069 mt.

Although sales are still short of June 2019 levels (4.9% below for longs and 7.7% below for flats), the stockholding sector did see improved business as German industrial activity increased following a slow spring due to the coronavirus pandemic.

A restocking failed to materialize, however. Long steel stocks continued to fall in June, down 4.7% month on month at 787,301 mt, while flat steel stocks were largely stable at 1.28 million mt, down 0.3%.

In a year-on-year comparison, stock levels remain low overall, the data shows. Long steel stocks were 10.5% below June 2019 levels, while flat steel stocks were 14.2% below.

The distribution sector did report that more inquiries were coming from buyers, but most said that actual business activity remained below last year’s levels, with most companies in the steel supply chain on reduced shifts.

However, with mill prices having increased in June, buyers that needed material turned to material ex-stock.

Stockholders themselves reported that mills started to become firmer in their asking prices in June following months of declines, but stockholders refrained from buying large volumes as overall economic uncertainty persists, with a slow summer season expected.

— Laura Varriale

Italy’s Liberty Magona steel mill restarted its pickling line and completed the refurbishment of organic coated line No. 1, the re-roller said July 21.

Liberty restarted the pickling line at the La Magona plant in Tuscany in February, but due to the coronavirus pandemic had to halt operations again.

The refurbishment of the organic coated line was planned following the mill’s purchase in 2019.

The company’s Eur10 million ($11.28 million) investment is set to lead to a 40% increase in production capacity across the plant and a 20% increase in employment at the site, with 81 additional staff joining the business.

The pickling line now has a design capacity of 870,000 mt/year. It was originally shut in 2012.

The organic coated line has a design capacity of 100,000 mt a year and was idled in 2009.

The site will now have total two coated lines. The mill produced 170,000 mt of pre-painted coils in 2019.

“I’m delighted to celebrate the first steps in our transformation plan for Liberty Magona just 12 months after we acquired the business,” Sanjeev Gupta, Executive Chairman of Liberty Steel Group and GFG Alliance, said.

Liberty bought the La Magona facility together with other mills controlled by ArcelorMittal following the latter’s acquisition of Italian steelmaker Ilva. The other mills are located in Ostrava in the Czech Republic, Galati in Romania, Skopje in Macedonia and Dudelange in Luxembourg.

— Annalisa Villa

Spanish stainless seamless tube maker Tubacex says it is implementing a series of urgent industrial reorganisation and cost-cutting measures to improve competitiveness. These include a -20% reduction in the workforce.

“Over the last few years Tubacex has continued its operations in a highly competitive environment marked by uncertainty,” Tubacex says in a note seen by Kallanish. “The negative evolution of the market, with a drop of 50% during the peak of the oil crisis, and the subsequent spread of coronavirus have driven the group to implement… urgent industrial reorganisation. The cost-cutting plan covers all the company’s areas and activities.”

The firm applied a pay cut in April to top-level management and a redundancy programme was initiated. When completed at the end of 2020, this will bring annual savings of €25 ($29m) million, Tubacex estimates.

The company has initiated a dialogue with workers’ representatives to overcome the difficult cost-cutting challenge and guarantee the continuity of business, it says.

The company confirms the current adverse circumstances will not alter its strategy focused on high value-added products, produced especially by the plants in Spain, Italy and Austria. It will transfer production of commercial-grade products to the more cost-competitive plants, based in Asia.

The group continues with its diversification strategy and growth in key regions, with new plants planned in Asia and America, and anticipates acquisitions of new companies.

SSAB is hopeful demand could improve in global markets towards the end of the third quarter. This comes after the coronavirus emergency and seasonal slowdown registered during summer further impact performance.

“Third-quarter demand for steel is expected to be negatively affected by industrial deceleration due to the effects of Covid-19,” SSAB says in its Q2 earnings report seen by Kallanish. “In Europe in particular, but also to some extent in North America, this effect is expected to be intensified by normal seasonal slowdown. Underlying demand is expected to improve somewhat toward the end of the third quarter.”

While demand for high-strength steels is expected to be hit less than other sectors, in the Americas the group expects shipments to remain flat on-quarter in Q3. In Europe, nevertheless, a further decline is expected in Q3.

“Prices realized by SSAB Americas are expected to be relatively unchanged on average, compared with the second quarter of 2020,” the company continues. “For SSAB Europe, prices are expected to be somewhat lower, with generally lower contract prices partly counteracted by a positive product mix. Also, for SSAB Special Steels, prices are expected to be somewhat lower in the third quarter than in the second quarter of 2020.”

In the first half of 2020 SSAB posted an operating profit of only SEK 92 million ($10.3m), compared with a SEK 2.9 billion profit in H1 2019. The group’s European arm registered an operating loss of almost SEK 600m, while the special steels unit was most resilient against falling profitability, reporting a SEK 942m profit, down -21% on-year.

The biggest negative impact on performance was registered, as expected, during Q2 when the group posted an operating loss of SEK 251m.

British Columbia-based Cascadia Metals has acquired the business operations of Alberta-based Varsteel Specialty Metals, Kallanish reports.

“This acquisition will enable us to better serve the western Canadian metal market and enhance our vision of developing the most efficient and effective metal distribution network for our customers’ needs,” writes Cascadia Metals in a statement. Financial terms were not disclosed.

Varsteel Specialty Metals is a flat-rolled specialty steel manufacturer with two facilities serving western Canada. Cascadia Metals is a metal distributor with operations at 14 locations throughout Canada and the Pacific Northwest.