Day: 9 September 2020

Italian steel producer Arvedi will restart production at its largest electric-arc furnace, No 2, idled since early August for upgrading, at the beginning of the week starting Sept. 13, an executive close to the company confirmed to S&P Global Platts on Sept. 8.

Arvedi is the second-largest Italian producer of flat products and it has two EAFs: No. 1 has 1.4 million mt/year of crude steel capacity and was installed in 2018 by Primetals technologies to replace an existing EAF, and No. 2, for which the recent upgrade is intended to make more cost efficient and to increase its capacity to around 2.8 million mt/year of crude steel from 2.2 million mt. The revamped EAF was built in 2008 by Tenova and the upgrade work were planned months ago. The EAF was supposed to restart production at the beginning of September, but it will restart just few days later than scheduled because of a small fire caused by a short circuit in the plant’s cooling tower.

“The absence of Arvedi in the market has helped even more the coils prices to increase, there is recovery in the steel demand in Italy and overall in Europe,” a market source said. “In Italy, in particular Ilva in Taranto, is still producing at its lowest historical production (3.5 million crude steel a year) so Arvedi will benefit now by the increased demand and higher prices.”

Platts HRC EXW Southern Europe increased by Eur43.50/mt since May 1, when prices were at Eur417/mt base ex-works.

Arvedi is not a listed company, according to its latest 2019 financial statement the Italian steel producer registered last year an increase in volumes by 1.5% year on year to 4.3 million mt of steel products with earnings that reached Eur2.76 billion in 2019 down by 10% year on year on lower margins.

The company is focused also to reduce its emissions and last year invested Eur180 million, mainly to become carbon free in few years. From 2007 to 2019 Arvedi invested in total Eur2.04 billion to relaunch and re-modernize the mill.

— Annalisa Villa

ArcelorMittal Italia is carrying out maintenance and renovation work at its main Taranto plant despite speculation it will break the lease contract for the former Ilva. The company completed the replacement of converter exhausts at meltshop no.2 during the August summer break, Kallanish learns from company sources.

Workers in the maintenance department and contractors from the area of Taranto were employed to complete the complicated installation of 26 tonnes of structure at a height of 90 metres. The new exhausts will last for 20 years, the company explains.

Talks continue between the government and ArcelorMittal in an effort to find an agreement, retain the Italian investment and weather the current demand crisis linked to the Covid-19 pandemic. The company will extend temporary layoffs for most of its Taranto employees for a further nine weeks starting this month. The layoff extension has been granted by the government to all Italian companies in response to the pandemic crisis (see Kallanish passim).

Trade unions, meanwhile, remain concerned by the fact the mill is still working at minimum utilisation, with 2020 expected to see crude steel output of below 4 million tonnes.

Around 22 blast furnaces are currently being restarted by steelmakers around the world, as steel demand picks up and also for operational reasons, analysts from UBS said in a Sept. 8 report.

The restarts represent around 34% of the total blast furnace capacity that was hot-idled or temporarily halted due to COVID-19, and the rest can be expected to restart by year-end, according to the report.

“This is not a surprise, given the time-constraints of hot idling and as demand is picking up,” said analysts led by Myles Allsop. “We expect most idled BFs to restart by end-20; this is needed for pig iron production ex-China to be flat h/h in 2H.”

A total of 72 blast furnaces around the world with capacity of 132 million mt of crude steel were hot-idled or banked in 2020 as a result of COVID-19-related factors, said UBS, citing research from CRU.

According to the research from both UBS and CRU, the idled BFs were located 31 in Europe of which 8 have now restarted; 26 in North America of which 6 have restarted; 13 in Latin America of which 4 have restarted; 46 in Asia of which 16 have restarted, and 15 in the rest of the world of which 6 have restarted.

Some steelmakers are restarting furnaces in response to demand, which has partially recovered from April lows, but remains down around 30% year-to-July, according to UBS. However, others are reopening their furnaces because otherwise these will cool and may get blocked and inoperable, the analysts said.

“Typically the minimum length a BF is banked is around three months due to economics and the maximum is around six months (after which it is hard to sustain the heat),” they said.

Companies that have curtailed blast furnace output this year include ArcelorMittal, voestalpine, Thyssenkrupp, Vallourec, Salzgitter, US Steel, SSAB, Ferreira di Servola, Isdemir, Liberty, AK Steel, Nucor, Stelco, Usiminas, Gerdau and CSN, UBS reported.

Impact on iron ore

Prices for iron ore, a key ingredient for blast furnace steelmaking, are likely to fall over the next six months on greater Brazilian supplies and inventories, despite expectations of greater demand from steelmakers bringing BFs back on stream, according to UBS.

The analysts expect prices for 62% Fe iron ore fines delivered to China to fall back to $85/mt in 2021, after touching a six-year high of $130/mt last week, “with Brazilian supply recovering faster than global steel production,” they said.

“Iron ore inventory at Chinese ports rose 2 million mt w/w after having been stable for the previous five weeks; they are now at highest level since Apr-20,” UBS said. “Inventory on vessels outside the key iron ore ports in N China are down 1 million mt w/w but remain high at 17 million mt (average since Jan-18 is around 6 million mt) due to port congestion following changes to customs protocols and poor weather.”

Scrap tightness

In a separate research note, analysts from Macquarie Bank said that scrap flows, including for steelmaking, have collapsed post-lockdown. Ferrous scrap is typically used in electric arc furnaces rather than blast furnace steelmaking.

“As global economic activity recovers post-lockdown, markets become increasingly aware that scrap supply options are no longer adequate to meet recovering demand, requiring a lift in the buying rate of primary supply,” said Macquarie analysts led by Tom Price.

“Virus controls severely limited the scrap collection process,” they said, noting that copper and zinc refining have a relatively low dependency on scrap flows (less than 20%) while aluminum, lead, nickel and steel markets are heavily scrap dependent, which has resulted in a rising price trend.

S&P Global Platts assessed Turkish imports of premium heavy melting ferrous scrap 1/2 (80:20) at $302/mt CFR on Sept. 8, up $2/mt on day, to match the previous 2020 high of $302/mt CFR reached on Jan. 7.

— Diana Kinch

German steelmaker Thyssenkrupp has cancelled the group’s attendance at major industry fair Wire & Tube in Germany amid unknown developments of the pandemic and infection risks, the company said Sept. 8.

The event is due to be held Dec. 7-11 in Düsseldorf after already been postponed from March when the pandemic started to hit Germany.

“The cancellation is a reaction to the unforeseeable further development of the corona pandemic and the infection risks associated with it. Thyssenkrupp is foregoing the face-to-face event to protect customers and employees,” the company said in a statement.

Thyssenkrupp’s cancellation comes amid market chatter at major European mills pondering whether to pull out of this year’s trade show in order to save costs after being hit with cash flow problems and general concerns over travel restrictions and safety.

After the postponement of the Euroblech fair to 2021, the Wire & Tube is set to become the only major industry event planned in Europe in 2020.

Wire & Tube organizer Messe Düsseldorf has not responded to S&P Global Platts’ request for comment on whether the event will go ahead as planned in December.

The fair is held every two years and is one of the major trade shows in Europe for the flat and long steel industry. In 2018, the Wire & Tube fair attracted more than 71,000 visitors.

— Laura Varriale

Um in Zukunft wieder Flexibilität für Kapitalerhöhungen zu gewinnen, soll in einer außerordentlichen Generalversammlung, bei der die Aktionäre durch einen unabhängigen Stimmrechtsvertreter vertreten werden, beabsichtigt der Schweizer Stahlkonzern den Nennwert der Aktie von derzeit 0,30 CHF auf 0,15 CHF zu reduzieren.

Außerdem beantragte der Verwaltungsrat die Änderung des Namens der Gesellschaft von SCHMOLZ + BICKENBACH AG in “Swiss Steel Group AG”. Im Rahmen des umfassenden Transformationsprozesses, den das Unternehmen derzeit mit aller Kraft vorantreibt, ist es unerlässlich, dass sich diese Änderung auch in der Marke und im Namen des Unternehmens widerspiegelt. Ein neuer Name signalisiert einen Neuanfang und eine klare, zukunftsgerichtete Positionierung sowie die Ziele und den Beitrag an die Gesellschaft als starkes Unternehmen mit Sitz und Börsennotierung in der Schweiz.

Quelle und Vorschaufoto: SCHMOLZ + BICKENBACH AG

Autor: von Hubert Hunscheidt