Day: 10 September 2020

As demand from South Europe, which showed a significant recovery in June, slowed in July amid volume quotas, Turkish mills’ hot-rolled coil imports were around 70,000 mt lower than the previous month at 286,000 mt. This export figure was, however, 4.8% higher on year.

Quotas have been restricting Turkish steel exports to Europe in recent months. Turkish mills’ 2020 exports to the EU are expected fall by around 30% from 2019. As the European Commission has also launched anti-dumping and countervailing duty investigations into imports of certain hot-rolled flat products from Turkey, following a request by European steel association Eurofer, the cautiousness among European buyers has increased in recent weeks.

Egypt became Turkey’s main HRC export market in July, amid slower demand from Europe. Shipments to Egypt reached 89,200 mt, roughly triple on year and significantly higher than the 4,400 mt exported in the previous month.

Spain was Turkey’s second largest HRC export destination in July at 46,300 mt, lower than 56,200 mt exported in the previous month, while exports to Italy totaled 37,350 mt, significantly lower than 145,000 mt exported in June 2020.

Turkish mills also exported 28,100 mt of HRC to Bulgaria in July, while exports to Iraq totaled 16,700 mt.

Turkey’s other main HRC export destinations in that month were: Algeria (11,100 mt) and Belgium (10,300 mt), the latest data showed.

— Cenk Can

Some 34% of blast furnaces idled during the peak of the Covid-19 pandemic are being restarted, UBS bank says in a new steel and iron ore market analysis published this week. The trend is set to continue further.

The bank calculates 72 blast furnaces were idled globally in response to the downturn in demand due to the coronavirus, meaning a capacity of some 132 million tonnes/year was temporarily curtailed. European steelmakers were the most active in idling BFs, stopping 20 of them; in Asia 19 were idled and in North America 17.

Of the idled furnaces globally, 22 are restarting. “In our opinion, this is not a surprise given the time constraints of hot idling and as demand is picking up,” UBS says in a note seen by Kallanish. “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.”

The report notes that some furnaces were restarted because of demand recovery, while others need to be taken back into operation to avoid compromising their long-term production. “Some furnaces need to open up otherwise they will cool and block the furnace, rendering it inoperable,” the bank explains. “Steelmakers plan how long they want furnaces to run at zero and charge just the right raw materials for that length of time.”

Typically, the minimum length a BF is banked is approximately three months due to economics, while the maximum is around six months, after which it is hard to sustain the heat, UBS points out.

The steel market is recovering strongly following the Covid-19-pandemic-induced lows seen in spring, but steelmakers should not restart furnaces too early and pressure the market. So says the International Rebar Exporters and Producers Association (Irepas) in its latest short-range outlook sent to Kallanish.

Most mills outside China are suffering with depressed production and financial performance, while winter may bring a second wave of the Covid-19 pandemic. Ongoing political uncertainties are further clouding the outlook, although regional markets are performing well and prices are firming up.

European cut and benders are seeing demand rebound, with only a few projects on hold. However, they took in too many orders at low prices earlier this year during the worst period of the coronavirus – expecting prices to collapse – and are now confronted with stable-to-rising prices due to increasing raw material costs, Irepas says.

Demand in North America has also returned, with costlier raw materials and imports supporting US steel prices. However, the second pandemic wave will curtail further increases.

Brazilian capacity utilisation has rebounded to 60.5% from 48.5% in June, but steelmakers’ plans to raise utilisation further by increasing exports will be difficult due to excess capacity and protectionist measures.

The strong market recovery means inventories in the supply chain need to be replenished. The rebound is being driven by China, where investment activities and stimulus measures are generating demand and making China a net steel importer. Competition in the market remains intense, however, particularly in Asia where price changes of $1/tonne can swing the focus of buyers to supplies of a different origin.

“Service centres in Europe and the US have been low on stocks and, with any sign of an uptick, those stocks are being replenished with higher transaction prices resulting,” Irepas observes. “The increase in prices that has followed the rise in raw material prices is positive for those who have sufficient stocks for September.”

“The key here is that steel producers should not be misled by the current demand into firing up more of their furnaces, which could exert more supply pressure on the market during winter,” the association adds.

European steel producer ArcelorMittal is restarting its Sestao electric-arc furnace (EAF) in Bilbao, Spain for October deliveries.

Sestao has a nameplate production capacity of around 1.8mn t/yr of hot-rolled coil (HRC) and 600,000 t/yr of pickled material, but was operating at a fraction of this when it was shut in March.

Market participants suggest it may have been manufacturing around 300-350,000 t/yr of HRC and 160,000 t/yr of pickled and oiled coil.

The furnace can restart quite quickly as it is an EAF, with market participants suggesting it produces “best in class” coil. It will produce around 100,000 t/yr on start-up.

Sestao is being restarted to alleviate the supply gap caused by the reline of ArcelorMittal’s Ghent blast furnace in Belgium, which will take around four months.

ArcelorMittal could not officially confirm Sestao’s restart.

By Colin Richardson