Day: 5 August 2020

Rebar was the only product for which Germany’s stockholding distributors reported an increase in sales in 2019, amid an overall decline in shipments, Kallanish learns from distributors’ federation BDS.

Sales of rebar totalled 1.31 million tonnes throughout the year, and by 31 December inventories remained unusually well-filled, at 245,000 tonnes, 17.5% higher than at end-2018.

While the good rebar performance was related to Germany’s construction boom, mainly in residential construction, sales of other products typically used in construction declined. Beams and sections sales, for example, dipped by -5.2% to 1.03mt, as did plate, which fell by as much as -13% to 932,000t.

BDS chief economist Jörg Feger believes actual demand did not fall as much as the figures suggest, but that supply sources alternated. “We assume that larger tonnages were sold from [port] warehouses abroad into Germany,” meaning they did not appear in BDS statistics.

He assumes the same effect for hot rolled strip/sheet, whose sales fell by -7% in 2019 to 1.1mt after two years of increase. The dip was even more pronounced for cold rolled strip, which fell by -9% to 1.27mt. Deliveries of the largest single product group, galvanized strip, fell by only -0.8% to 2.9mt. However, restocking remined moderate, as by the end of the year inventories were -12.5% lower than at end-2018.

French stainless steel producer Aperam expects unrevised third-country EU import quotas for stainless hot rolled flat products to yield increasing import pressure in the second half of 2020.

The European Commission decided to make country quotas quarterly to straighten out import flows and prevent a repeat of the H2 2019 import surge. However, Aperam believes the Commission needs to align quotas with the Covid-19-induced demand drop in Europe.

“Current quotas are extremely generous and allow third countries to solve their problem of oversupply by dumping material into the European Union, thereby hurting domestic employment and crowding out environmentally friendly produced material,” Aperam says in a report seen by Kallanish.

Although imports maintained a disproportionate market share of close to 30% in 2019, they dropped off significantly during H1 2020. This is a direct consequence of the excessive imports during H2 2019, when several countries misused their annual quotas, which run from July to June of the following year. These countries shipped as much material as quickly as possible to Europe, consequently exhausting quotas in Q2 2020 and thereby limiting imports, Aperam observes.

The European Commission confirmed earlier this year that preliminary duties on hot rolled stainless steel flat products from China, Indonesia and Taiwan should be imposed as of 12 April (see Kallanish passim). This decision curbed imports of these products during Q2.

As a consequence, the market share of imports dropped from 27% in H1 2019 to 23% in H1 2020. A pending countervailing duties case against China and Indonesia is expected to be concluded in 2020, Aperam adds.

The company started well into 2020. The first quarter saw a seasonal volume recovery and the exhaustion of some import quotas increasing demand for domestically-produced material. However, towards the end of Q1 the company started to face significant Covid-19-related effects which continued over Q2.

H1 Ebitda was €119m ($139.6m) versus €176m in H1 2019. Total sales in H1 stood at €1,867m compared to €2,268m in H1 2019 (see Kallanish passim).

After a disappointing 2020 so far, the majority of Germany’s mechanical engineering companies are confident they will achieve a nominal sales increase again in 2021, according to their industry federation, VDMA.

This is the key message of a flash survey carried out by VDMA of 640 member companies on the economic effects of the coronavirus pandemic. Of the respondents, 60% expressed optimism for 2021. 

However, “…this optimism is expectation-driven and therefore very fragile,” Kallanish hears from VDMA chief economist Ralph Wiechers. It should be kept in mind that more than half of the companies are expecting turnover losses of 10-30% in 2020, he adds. The growth base in the following year is therefore correspondingly low, he notes.

There has been little signal until now of the situation normalising. “45% of the companies report a noticeable drop in orders, some 34% saw profound drops; this confirms the gloomy picture of recent weeks,” says Wiechers. Companies’ customers from the automotive industry are particularly hard hit.

More companies nevertheless see a silver lining on the horizon. One quarter expect a recovery in demand in the next three months, whereas 16% expect the situation to worsen. The situation along the supply chain has also continued to ease. By now, only slightly over 10% of companies say they are still affected by disruptions in the supply chain.

The UK government launched an investigation into alleged dumped or subsidized imports of PSC wire and strands of Chinese origin, Department for International Trade/Trade Remedies announced in an official statement Aug. 4.

In a summary of the issues involved in the transitional review, the department said it will consider whether the application of the anti-dumping amount is “necessary or sufficient to offset dumping of the relevant goods in the UK market.”

It will also assess whether “injury to the UK industry in the relevant goods would occur if the anti-dumping amount were no longer applied to those goods.”

According to case’s public file, goods subject to the investigation include none plated or non coated wire on non-alloy steel, wire of non-allow steel plated or coated with zinc, stranded wire of non-alloy steel whether or not plated or coated with not more than 18 wires, containing by weight 0.6% or more carbon, with a maximum cross sectional exceeding 3 mm.

The department added that galvanized seven wire strands in which the diameter of the central wire is identical to or less than 3% greater than the diameter of any of the 6 other wires will not be subjected to the review.

Interested parties are encouraged to register their interest regarding the outcome of the case via the Trade Remedies Service by no later than Aug. 14.

According to the UK Trade Remedies department, entities that have registered will be able to receive updates on the investigation as well as submit evidence to assist the department in possible recommendations to import tariff changes.

The department specified any interested party may include China, any overseas exporter or importer of the goods subject to review and any trade or business association of overseas producers, exporters or importers of the goods subject to review.

On the UK side, this may also include any producer of the specified goods in the UK and any trade or business association of UK producers of the like goods.

— Amanda Flint