Day: 12 August 2020

Ferrum has signed a €19.8 million ($23.4m) agreement to supply Polish gas pipeline operator Gaz-System with insulated welded pipe for Baltic Pipe LOT D, the Polish pipemaker says. Deliveries will take place in January-July 2021.

Last month Ferrum won a €21.9m contract to supply insulated pipe for the construction of Baltic Pipe, with deliveries to be carried out until May 2021 (see Kallanish passim).

Separately, Ferrum has ordered PLN 30.8m ($8.25m) of steel products from Severstal Distribution. Deliveries will take place until March 2021. This takes overall business between the two firms in the last 12 months to PLN 75.6m.

Ferrum’s pipe sales declined -17% on-year in the first quarter to 23,800 tonnes.

Severstal Distribution increased sales in the first half of the year, the company says. Shipments amounted to 1.3 million tonnes, up by 8% on-year, Kallanish notes.

Severstal’s sales in Russia increased to 580,000 tonnes, up by 4% on-year. Shipments to Europe amounted to 740,000t, up by 13% on-year.

“We have created a large distribution centre in Vologda for the prompt supply of our regional warehouses with rolled metal,” says Severstal Distribution head Timur Yudichev. “This year we launched a programme to supply consumers from the small and medium-sized business segment. The pilot program started in Moscow.”

Exports of rolled products from Russia to the EU are limited by safeguard quotas, and supply to the domestic market is often more cost-effective for Severstal, the company claims.

Therefore, the European division of the distribution network focuses on sales of steel products with increased added value. These include products with polymer and zinc coating, as well as steel certified to be sold in the Nordic countries.

“We strive to become the first-choice company for our clients in the Baltic States, Finland, Sweden, Germany, Belgium, the Netherlands, Poland, Czech Republic, Slovakia,” says Timur Yudichev.

Severstal’s output of crude steel and steel products decreased in the second quarter to 2.81mt, down by -2% on-year (see Kallanish passim). Hot metal output decreased -3% each on-quarter and on-year to 2.33mt, following the short-term upgrades of blast furnaces No.1, No.4 and No.5.

A recovery in the European stainless steel market to levels prior to the Covid-19 pandemic will take significantly longer than many anticipate, says Joost van Kleef, commercial director of stainless scrap merchant group Oryx Stainless.

Although demand for stainless steel has recovered from its lowest levels in March and April, overall European demand is not expected to exceed 70% of pre-pandemic levels. Some leading market analysts forecast that a return to pre-pandemic levels will not occur until 2023, van Kleef writes in the latest Bureau of International Recycling (BIR) stainless steel mirror.

“The stainless steel market was weak for most of the recent years, but it looked like it would pick up this year,” Oryx chief financial officer Roland Mauss tells Kallanish. “China seemed to achieve a turnaround – but then Covid-19 came.” He notes that the stainless market has meanwhile started to recover, especially in Asia. Availability of stainless scrap has improved, too, and is basically in line with demand, “…so that the price level won’t change too much,” he adds.

For Europe, import penetration will remain a challenge, van Kleef notes in his article. “The latest development within Taiwan should be seen as a warning sign,” he says, referring to the closure of furnaces in favour of importing stainless slab from Indonesia. Van Kleef criticises the deeper environmental impact of using Indonesian-produced slab rather than melting scrap.

As steel consumption in Turkey rose notably in June and exports soared by 40.3% year on year in that month to 2 million mt, amid recovery attempts globally, Turkish mills’ crude steel output rose 3.8% year on year to 3.8 million mt. However, despite this rise, Turkish mills H1 steel output remained 4.1% lower than last year at 16.3 million mt due to the pandemic.

The decline in Turkish mills’ export volumes could accelerate again in the coming months due to EU quotas, the Turkish Steel Producers’ Association (TCUD) said on Aug. 11.

According to the European Commission data, the three-month EU steel quotas, during July 1- September 30, for construction steel and hollow sections have already filled, while more than 90% of the quotas for organic-coated plate, sections and wire rod were already used as of the end of July.

The 8.7% rise seen in Turkish steel consumption, however, supported Turkish mills output and prices in H1. Long steel consumption in Turkey rose 12.4% year on year in H1, while flat steel consumption increased by 5.8% on year in that period, despite the pandemic.

“However, the rise seen in finished product output remained lower than steel consumption in H1, as imports weighted consumption habits . . .,” the TCUD said in an Aug. 11 statement..

Highlighting that steel imports into Turkey rose by 59.8% on year to 1.4 million mt in June, the TCUD said: “To avert the rise in steel imports, Turkey should impose counter measures against the EU as soon as possible.”

Turkey informed the World Trade Organization on May 25 about possible duties against EU steel, as Platts has reported. But no presidential decree about it has been published yet, despite mill expectations.

Some Turkish market participants’ expectations in this regard are decreasing, as Ugur Dalbeler, CEO of a major Turkish steel producer, told Platts last week.

“Our expectations about counter measures against EU steel are decreasing, but we will continue to try to exist under the current conditions,” the CEO said.

— Cenk Can