Day: 4 August 2020

Sales at Germany’s stockholding steel distributors in 2019 totalled 10.7 million tonnes, a dip by -4.3% on-year, following a couple of years of increase, Kallanish learns from their federation, BDS.

The main customer group was construction, which accounted for 21% of sales, a remarkable leap of four percentage points on-year. The leading customer sector of preceding years, automotive, lost slightly and in 2019 took 20% of sales.

This marks a shift in the balance between construction and automotive. Looking back, BDS notes that until 2003 construction usually took between 20% and 30% of sales, and that automotive gradually gained since then. The share of other sectors changed little in 2019, except for the group of miscellaneous sheet and metals working companies, which lost five percentage points to 11%.

Over the course of the year, July stood out with nearly 1mt sold that month. The inventory backlog at the beginning of the year stood at 2.22mt, and by 31 December had gone down by -8.8% to 2.03mt. Notably, that low level led to strong restocking activity in February/March this year.

Belgium-headquartered steel wire specialist Bekaert is projecting a gradual recovery in tire markets in the remainder of the year. However, demand in other markets is more difficult to project in the current economic environment, the company says in its first-half earnings report seen by Kallanish.

The risk of a potential second wave of Covid-19 continues to create a high level of uncertainty, limiting the company’s ability to forecast the full-year impact.

H1 demand from tire and automotive markets was significantly impacted by the Covid-19 pandemic. Global tire demand on average reduced by -40% in the second quarter but showed some signs of recovery at the end of the period. Construction activity was constrained in most parts of the world by the Q2 lockdowns, except in China, where stimulus programmes started to boost infrastructure investment.

Demand from agriculture, utility, and mining markets remained solid across H1 as these sectors, generally considered as essential industries, appeared to be less affected by the pandemic.

The Steel Wire Solutions and Bridon-Bekaert Ropes Group business units accelerated the implementation of profit restoration measures and succeeded in substantially improving business-mix. This drove a solid turnaround in profitability and cash generation. The Specialty Businesses unit further enhanced its margin level through cost control and an improved product mix, while Rubber Reinforcement implemented extensive measures to partially mitigate the inevitable margin impact from a -43% sales collapse in Q2.

At present, all Bekaert’s production plants globally are operational, either fully or partially. H1 sales stood at €1,770 million ($2,077m), down -20% compared to H1 2019. Ebitda was €194m ($228m), Bekaert reveals.

Seaborne iron ore prices surged on Monday. Strong expectations for China’s steel demand in the coming months, and an expected slowdown in deliveries to ports, were fuelling speculative trading.

The Kallanish KORE 62% Fe index jumped $5.91/t to $115.35/dry metric tonne cfr Qingdao, the highest since 1 August 2019. The Kallanish KORE 65% Fe index gained $4.94/t to $125.90/dmt cfr, and the KORE 58% Fe index surged $4.38/t to $103.88/dmt cfr. 110,000 tonnes of Newman Fines sold at $116.3/t with a laycan in 21-30 August.

On the Dalian Commodity Exchange September iron ore settled up CNY 24/t at CNY 861.5/t. On the Singapore Exchange September 62% Fe futures settled up $4.52/t at $110.46/t. The same contract for 65% Fe and 58% Fe futures settled up $4.32/t at $122.43/t, and up $3/t at $102.67/t respectively.

Confidence in Chinese steel markets remains strong and that has meant mills are keen to top up their stocks from ports. Seaborne deliveries to ports, meanwhile, are expected to pull back slightly from the levels of recent weeks due to a slowdown in shipments from Australia and Brazil in July. 

China is also seeing the late arrival of its typhoon season. After unusually seeing no typhoons on its shore in July, over the weekend it issued a blue alert for Typhoon Hagupit. The typhoon made landfall on Monday night but is not expected to cause significant disruption to ports.

US raw steel capability utilization continued to increase last week, rising to 59.3% from 58.9% the previous week, according to data released by the American Iron and Steel Institute on August 3.

Production increased by 0.6% to 1.328 million st during the week ending August 1, up from 1.320 million st the previous week, according to the data.

Last week’s production was down 28.1% compared with the same week a year earlier, when capability utilization was at 79.3% and production totaled 1.846 million st.

The AISI calculated adjusted year-to-date production at 46.1 million st, with a capacity utilization rate of 66.2%. The total is 19.9% lower than that of the same period last year, when the utilization rate was 80.9% for 57.6 million st of output.

While the Great Lakes region saw a 1.9% decrease in production and the Southern district saw a 1.7% decrease compared to the previous week, the remaining regions saw week-on-week increases for the week ended August 1.

Last week’s production totaled 134,000 st in the Northeast; 462,000 st in the Great Lakes region; 145,000 st in the Midwest; 515,000 st in the Southern district and 72,000 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.

— Grace Parker