Day: 21 September 2020

New tinplate producer Miorsk Metal Processing Plant (MMPZ) in the north of Belarus has produced the first coil on its recently commissioned reversing cold rolling mill, according to information from the mill and its major equipment supplier, SMS of Germany.

Besides the reversing cold rolling mill, SMS supplied an electrolytic cleaning section, a batch annealing furnace, a two-stand combined reduction/skin pass mill, an electrolytic tinning line and a coil and one sheet packaging line.

This new integrated and expandable production complex comprised of the strip rolling and processing lines is designed to manufacture tinplate in grades T1, T2, T3, DR7 and DR8 as well as thin cold-rolled sheet commercial and drawing quality grades.

Now that the first coil has been rolled on the reversing cold rolling mill, the other facilities of the plant will be put into operation step by step.

Once ramped up to its first stage capacity of 150,000 mt/year of 0.1-0.5 mm thick tinplate, the complex will make Belarus fully self-sufficient in the product.

With this output, MMPZ will meet the needs of the domestic packaging industry as well as demand for cold rolled thin sheet.

The majority of the plant’s output could be intended for export, including to Russia and other CIS countries, as well as to the EU.

Belarus consumes roughly 30,000 mt/year of tinplate with the entire tonnage being imported. It used to be mostly supplied by Magnitogorsk Iron and Steel Works in Russia and ArcelorMittal Temirtau in Kazakhstan, the only CIS tinplate makers. But as a few end-users in Belarus upgraded their production equipment, the geography of imports has changed in favor of the EU.

— Ekaterina Bouckley

Due to the COVID-19 pandemic Turkish mills’ hot-rolled coil exports to their traditional main HRC export market, Europe, declined notably in the first seven months of the year. This decline could deepen in the coming months due to the EU’s imposition a country-specific quota on HRC imports as of July 1, instead of a global quota.

According to the Platts calculations from the latest Turkish Statistical Instute (TUIK) data, Turkish mills shipped 1.3 million mt of HRC to the EU region in January-July 2020, amid the pandemic, annualized to 2.2 million mt.

Turkey shipped more than 3 million mt of HRC to the EU region during the 12-month period to July 2019, as reported. But, with the new quota system, Turkish mills can only ship 1.37 million mt of HRC to the EU during the July 2020 to July 2021 period, a sharp on-year decline in export volumes.

Turkey can export 344,890 mt of HRC to the EU region in the quarter starting July 1; 344,890 mt in the quarter starting Oct. 1; 337,393 mt in the quarter starting Jan. 1, 2021, and 341,141 mt in the quarter starting April 1, 2021.

Turkey’s quarterly EU quota, which started on July 1, meanwhile was already exhausted as of this month, which could put pressure on mills’ HRC export quotations in the coming weeks.

Turkish mills’ HRC offers to the domestic market reached as high as $435-$445/mt ex-works, while their HRC export offers reached $425-$435/mt FOB, depending on tonnage and producer, as reported.

According to the latest Turkish Statistical Institute (TUIK) data, Turkish mills shipped 1.81 million mt of HRC to global markets in January-July, lower than the 2.17 million mt exported in the same period the previous year, amid trade barriers and the COVID-19 pandemic.

Despite a roughly 100,000 mt decline, Italy remained Turkey’s main HRC export market in January-July at 578,700 mt, while exports to Spain totaled 276,300 mt, lower than 333,300 mt exported in the same period the previous year.

Turkish mills shipped 88,400 mt of HRC to Belgium in the seven-month period, 18.5% lower on year, while exports to Bulgaria totaled 84,100 mt, 6% higher year on year.

Turkey’s HRC exports to Greece totaled 68,000 mt in January-July, relatively flat on year, while exports to Portugal totaled 63,200 mt, sharply lower than the 138,200 mt exported in the same period the previous year.

Turkish mills’ HRC exports to other European countries also remained low on year in the seven-month period, amid the pandemic, while demand from Egypt supported Turkish mills’ HRC exports in January-July at 321,200 mt, more than double year on year, the latest data showed.

— Cenk Can

ArcelorMittal says that the European Commission’s announcement that a legislative proposal will be made in 2021 to introduce a Carbon Border Adjustment (CBA) Mechanism is a significant step forward in recognising that a supportive policy framework is needed as soon as possible, Kallanish understands.

The CBA is a key policy mechanism for decarbonisation, which will create a fair competitive landscape by aligning the carbon costs of EU domestic steel producers with that of imports.

The EC’s proposals to also further increase the EU’s share of renewable energy by making it easier for member states to work together and deploy renewable energy projects, is considered “…encouraging” by ArcelorMittal. Access to abundant and affordable clean energy will enable the roll-out of low-emissions steelmaking.

The comany adds that access to sustainable finance for low-emissions steelmaking is a key requirement to create carbon neutral steelmaking.

“We are hopeful that our submissions for funding from the newly-created ETS Innovation Fund are successful and welcome the EU’s plan to develop a reliable EU Green Bond Standard,” the company says.

Another positive point in the new Climate Target Plan is the European Commission’s announcement that it wants to make Europe a leader in the circular economy.

“EU climate and materials policy should be integrated, taking a lifecycle perspective to ensure that materials are used in a circular way as much as possible,” ArcelorMittal comments.

The company is working to achieve its target of reducing CO2 emissions by 30% by 2030, with an ambition to be carbon-neutral by 2050. It is building two pilot projects called Smart Carbon and innovative DRI at different sites around Europe. It believes that both routes to carbon neutrality will help to significantly reduce its scope 1 CO2 emissions, which include all process emissions, by 2030, without having to wait for the large-scale, affordable, renewable energy needed for hydrogen-based steelmaking.

The EUROMETAL sales from European steel service centres and multi-products distributors continued to be weak in July, Kallanish notes.

For flat steel service centres (SSC), January-July shipments were down -20.3% year-on-year. In July alone, the drop was -11.8% y-o-y, after a drop in June of -16.5% y-o-y.

Stocks at EU SSC reached 71 days of sales in July, compared with 72 in the same month of 2019.

A slightly better performance was recorded for multi-products distributors, registering a decrease in shipments of -13.2% y-o-y during January-July. Only rebar shipments were higher in the period compared with other products, EUROMETAL observes. In July alone, the fall of total shipments was -13.8% on-year.  

Multi-products distributors stocks were almost equal on-year with 79 days of sales in July, compared to the 78 days of sales registered in the same month in 2019.

ArcelorMittal Italia communicated to unions on Friday that some rolling lines will stop production from Monday due to market reasons. Other lines will meanwhile see shifts reduced, Kallanish learns from union delegates.

The company is stopping the cold rolling mill at Taranto, as well as the zinc coating line number 1 and the pickling line. Shifts will also be cut by a third at the hot rolled coil line number 2.

Unions have expressed their concern over this new reduction of output for finished products. It is understood the decision made by the company is linked to the need to adjust output to the volume of orders received. However, sources in Italian and European markets confirm that coil demand is currently on the rise and prices are increasing due to tightness of supply across the continent.

When expressed in days of shipments, stocks at EU-based SSCs reached 71 days in July this year, compared to 72 days in July 2019.

In the first seven months of this year, sales by multi-product and proximity steel stockholding distributors were lower for almost all products of their portfolios. Only rebar shipments were higher. In the January-July period, total shipments dropped by 13.2 percent year on year. In July alone, all steel product shipments by the distributors decreased by 13.8 percent year on year.

Expressed in days of shipments, stock volumes of multi-product and proximity steel stockholding distributors amounted to 79 days of shipments in July this year, compared to 78 days in July 2019.

Some Italian service centres have been left scrambling for hot-rolled coil supply for later this year, after a mill cancelled deliveries due under contracts pegged to a monthly index.

Several service centre sources said they received notifications in the last week that their allocations were unavailable from the large mill, leaving them short of coil amid an uptick in demand from customers in the white goods and automotive sectors.

The buyers have few domestic alternatives with one producer running at reduced capacity, and a large processor operating on a long eight-week lead time.

Another Italian steelmaker had tried to move away from contracts linked to the same index last year as it deemed them unprofitable, but ended up honouring them after a backlash from customers. The latest move is purely driven by capacity constraints rather than the structure of the contracts.

Nevertheless, a monthly index will struggle to reflect the volatility of the Italian coil market, with its need for imports and exposure to global prices. This volatility has been heightened by tight domestic supply and reduced steelmaking output across Europe.

Argus‘ domestic Italian index has risen by €72/t since August 18, to €475/t yesterday, and in the last week alone has increased by €11/t: it is incredibly difficult for an index that prints just once a month to capture such volatility, given that the market regularly moves on a daily basis.

As a result, any mill selling against the index will miss out in a rising market, while buyers will be insulated from higher levels provided contracts are honoured. In a falling market, contracts pegged to a monthly index will typically see buyers miss out, as it will lag the downside.

By Colin Richardson

Published date: 18 September 2020