Day: 22 September 2020

Schmolz+Bickenbach shareholders have approved the projected reduction of the company’s nominal share value and the change of name to Swiss Steel Holding.

At an extraordinary meeting on Monday, shareholders approved the reduction of nominal value per share from CHF 0.30 ($0.33) to CHF 0.15. The measure will serve to reduce the company’s accrued losses, the firm says in a statement seen by Kallanish.

The change of name from Schmolz+Bickenbach AG to Swiss Steel Holding AG, as proposed by the board of directors, was accepted by shareholders with 97.92% of votes represented. Originally, Schmolz+Bickenbach was a Düsseldorf-based distributor of mainly special bar quality steels. By a strategy of backward integration in the early 2000s, it acquired various mills, and eventually became more of a producer.

“After this turbulent year it was time for a change in many aspects and it’s the time to use the momentum to change the name,” says chairman Jens Alder. “The family of the founders has left the shareholder base, at which point this tradition is also coming to an end. We are on a transformation journey and are going ahead to reposition our group.”

Global long products consumption will likely fall -2.7% on-year in 2020 to 878.6 million tonnes, with sections used mainly in commercial construction seeing the steepest fall, according to Alexander Gordienko, International Sales Manager at Celsa Group.

The Covid-19 pandemic has meanwhile consolidated the existing trend of steel production and consumption moving away from advanced economies to Asia. “It hasn’t changed the direction of the market,” Gordienko said during Monday’s virtual International Rebar Exporters and Producers Association (Irepas) meeting attended by Kallanish.

The Asian growth is being driven by China whose government has implemented a mammoth $527 billion infrastructure investment programme in 2020, up 90% in value on 2019. Chinese longs exports are consequently seen falling -24% this year to 6.4mt, with flats down -16% to 16.3mt.

Global rebar consumption fell -1.8% on-year in the first half of 2020 after reaching an all-time annual high of 410mt in 2019. All countries were affected bar China where use rose 4.8%.

Wire rod is performing better than rebar this year due to wire rod capacity being idled, especially in Europe, and China exporting less material. The idled capacities are not easy to bring back online as they are mainly blast furnace based. This trend will remain for some time, according to Gordienko.

Asked how rebar prices have managed to stay afloat despite the pandemic, Gordienko observed that most rebar mills are scrap-based electric arc furnace plants that operate on tight margins dictated by scrap prices. The pandemic resulted in a scrap shortage, which caused pressure on prices of the feedstock. Secondly, China was importing huge quantities of semi-finished products from all over the world. “That created a bottom for the market,” Gordienko said. “If you couldn’t sell rebar… you just sold billet to China.”

The Turkey scrap import-rebar export spread is at a historic low, but should improve significantly in H2 as the market rebounds, Gordienko observed.

A second pandemic wave and related lockdowns, the US presidential election, China decoupling from advanced economies, and supply chain reshuffling are all causing uncertainties in the market, however.

Moreover, although the European construction sector is seen performing well until February next year, there is a big question mark over activity thereafter. Most observers expect infrastructure projects to drive the rebound, while the non-residential segment will be significantly affected due to changing trends following the pandemic.

Newly-founded German company ETIV System (Electronic Trusted Information and Verification) is offering a digital tracking system for steel products. This facilitates better transparency of their origin along the supply chain.

The Cologne-based firm’s digital certificate covers data that were so far not easily accessible from the supply chain, which helps optimise production and stockholding, the firm says in a note seen by Kallanish.

Among other things, the certification improves protection against product piracy, so that manipulation of test certificates is no longer possible. The authenticity of test certificates can be checked at any time, which increases the counterfeit protection of the products, ETIV claims.

The system works by setting measuring marks at any stage of production, and making the data accessible on a web platform. The information works like a “digital sensor” that records the status and location of a product in real time, the company explains.

ETIV, furthermore, offers an online shop for leftover materials from mill inventories, for example special sizes and cuts that need to find a matching buyer.

With the upcoming US presidential elections, Democratic nominee Joe Biden’s administration might provide a better chance for fair trade, panelists at the virtual 83rd International Rebar Producers & Exporters Association (Irepas) conference said this week.

F. D. Baysal, president and CEO of Seba International, highlighted the uncertainty, and said that with the death Sept. 18 of US Supreme Court Justice Ruth Bader Ginsburg everything is up in the air. President Donald Trump’s reelection will not bring about many changes, though a Biden administration might be more sympathetic towards fair trade, he said. Nonetheless, the Section 232 tariffs will be hard to dismiss for at least the first two to three years of the new administration, he added.

Similarly, regarding the ongoing US-China trade war, Baysal expects the situation to stay consistent.

“Most countries will continue to operate as they are doing at the moment. China might sign more bilateral trade agreements that can help China and those regions,” he said.

Murat Cebecioglu, chairman of Irepas, also said the situation will not change if Trump is reelected, but if Biden wins there might be an opportunity for change in the ongoing trade war.

“We will have to see,” said Cebecioglu, who is also the export manager of major Turkish long steel producer Icdas. Cebecioglu highlighted that regional markets are currently performing well with prices getting stronger despite uncertainties about the coronavirus pandemic and political unrest in some regions.

“We have been dealing with Hong Kong and Singapore producers,” he said. “Demand is there and we still have opportunities to get more deals for 2020,” he added, referring to alternative markets in light of ongoing challenges.

Wilhelm Alff, director of Duferco Deutschland GmbH, said that every country will need to find its own way to manage the US-China trade war while weighing the pros and cons for their own economic well-being. In light of the upcoming US elections, he doesn’t expect the current trade situation to be resolved soon.

— Rabia Arif

The  83rd meeting of IREPAS (the International Rebar Exporters and Producers Association) was held as a virtual event to ensure the health and well-being of all participants, on September 21, 2020 in conjunction with the SteelOrbis Fall’20 Conference. There were 205 producer representatives among the 627 registered delegates from a total of 53 different countries. There were also 73 registrations representing 35 different raw material suppliers.

At the opening of the conference, Murat Cebecioglu, chairman of IREPAS, emphasized that the Covid-19 pandemic has moved in a wave from Asia to America through Europe and the Middle East and has certainly worsened the market situation. He added that there has been a reduction in both supply and demand around the world, except in China where output keeps growing, and that demand in the global long steel products market is indeed not as bad as the newspapers and media outlets report.

IREPAS chairman also added that the very strong quarter seen in China and the current outlook supported by the country’s net importation of steel products have been driving the rebound. He said almost the whole market is driven by daily news and signals from China nowadays, adding that after a poor spring characterized by the idling of production capacities due to the coronavirus pandemic, we are currently in a period of recovery. But the Chairman also warned that with the ongoing political uncertainties and new threats from many corners around the globe, the overall market situation is becoming cloudy and more uncertain.

Raw Material Suppliers at IREPAS: Main savior was Chinese demand

Jens Björkman, the chairman of the raw material suppliers committee, stated that, with the start of the pandemic, prices, demand and scrap collection crashed, noting that scrap collection halted dramatically all over the world but that in some regions the steel industries were hugely affected.

The committee chairman said that, for example, in the northern EU the lockdown was less dramatic than in the southern EU, and so some raw material businesses shifted their focus to northern EU scrap-based mills. He pointed out that, once the initial effect faded, scrap prices were fairly stable from April. Looking at the summer months, Mr. Björkman said that most regions were recovering fairly quickly. He recalled that scrap prices were slightly under $300/mt in the pre-pandemic period, went down to around $220/mt, and are now back at levels similar to those before the pandemic, underlining that the main savior was China’s extreme demand for raw materials and semi-finished steel, which they imported from many regions of the world. During this period, the weakening of the US dollar also resulted in scrap prices going upwards, he noted.

Commenting on the possible impacts of the outcome of the US presidential election on the scrap markets, the raw material suppliers committee chairman said that what is important for the scrap market is investments in new melting furnaces and these capacity growth projects cannot depend on a president’s term of office. So in the long run, he said he does not expect the election to affect the steel industry, though there may be some differences in how to conduct trade.

On China becoming a net importer, Mr. Björkman said that this means China will probably have less trade frictions with the US when it comes to steel, while he sees a build-up of steel capacities outside China, namely in ASEAN countries, as being more problematic.

Regarding the outlook, while admitting that there is a lot of uncertainty about the continuation of lockdowns or possible new lockdowns, Björkman said that he is a little bit more optimistic for the demand side. The committee chairman stated that, after the initial phase of shock due to the pandemic, many have been surprised regarding the positive aspects. He added that some companies issued warnings regarding negative results, but business turned out to be better than expected in many cases, though some are still struggling.

Traders at IREPAS: Prices increase amid regional trade flow interruptions

Wilhelm Alff and F.D. Baysal, co-chairmen of the traders committee, informed the participants about the market developments during the last six months. Mr. Baysal said that market conditions in the US are stable, improving after the big shock caused by the pandemic, while capacity utilization rates are still way behind 2019 levels. He pointed out that, compared to early September last year, capacity utilization rates are still 15 percentage points lower. Regarding the construction sector, he said that the residential segment showed an improvement, though the non-residential segment is still down with little prospects of a recovery. He also said that in September prices finally saw an increase in all categories.

Mr. Baysal said that there will not be many changes regarding trade measures depending on the US election results. He said he believed that if Trump wins the US will continue filing a maximum number of AD and CVD investigations until no competition is left and that Section 232 will continue and ,while Biden may be more sympathetic to free trade, Section 232 will still remain in force if Biden wins.

Baysal also added that, for non-residential construction in the US, there will be some fundamental changes and some are already in progress. For example, as people are working from home and companies will occupy less office space, he expects a major stagnation in this market. He also expects less demand for commercial buildings.

As regards Central and South America, Baysal said that these countries are on the verge of a slow improvement in both demand and supply. Some countries such as Mexico and Brazil were hit hard by the pandemic. However, both of these countries including Argentina are exempt from Section 232, and so their supply will increase with demand coming from the US. Nevertheless, he added that he does not foresee a big improvement in terms of domestic demand in 2020.

Commenting on Europe, Wilhelm Alff said that in Germany construction continued uninterruptedly, with demand for steel being even higher than normal, as many construction sites speeded up projects worrying that they might have to shut down altogether. On the other hand, in countries such as Spain, France, Italy and Poland, demand decreased as trade flows were interrupted and consumption decreased by 10-25 percent in these areas. He noted that, after declining at the beginning of the pandemic, scrap prices have increased by $90/mt up to the present because of the regional interruption of trade flows. Meanwhile, rebar prices in the EU have increased by €60 compared to the beginning of the pandemic.

Regarding EU quotas, Alff gave some background information on the changes in EU safeguard measures, indicating that the quarterly allocation which came into force as of July 1 is an advantage, because this way the market is not flooded with all the material arriving at the same time. He said that the safeguard measures have already led to a drastic reduction in imports, and pointed out that in 2019 steel imports into the EU totaled 1.8 million mt, while in the first half of the current year total steel imports came to less than 400,000 mt.

Producers at IREPAS: Global long steel demand more or less same as before pandemic

Murat Cebecioğlu, chairman of IREPAS and also of the producers committee at the virtual event, said that the pandemic did of course worsen the market situation, reducing demand, while remarking that China has been the driving force behind the whole market and has no intention to export. He indicated that the situation in the global long products market is now unchanged compared to the pre-pandemic period; the market is stable and demand is more or less the same as it was before. Regional markets are performing well, with demand returning and EU-based cut-and-benders are quite busy. Looking at North America, prices in the US finally moved up on the back of higher raw material prices. The IREPAS chairman stated that the upward trend of scrap prices has already started slowing down, with a downward correction observed these current days, adding that producers prefer billet unless a strong spread appears between billet and scrap prices.

Commenting on whether the recent increase in Turkish rebar cargoes to the US will continue, the chairman of the producers committee said, “New shipments were booked in the aftermath of the Section 232 duty rate going back to 25 percent; that is why it looks like there is a surge. The truth is that Turkey will not be able to reach the level of exports it had prior to Section 232. When the duty rate was 50 percent, Turkey was replaced by domestic producers and other countries such as Spain, Italy and Portugal. It is not easy to recover the market shares in the US lost to other countries, especially while Turkey is still subject to AD and CVD measures.”

Mr. Cebecioğlu said that the increase in Turkey’s domestic steel consumption may be the result of the reduction in interest rates, which boosted demand for steel, providing support for the domestic market. He added, however, that he has doubts about whether this growth will persist.

German steel stocks and sales fell in August from the same month a year ago due to holidays and a weak economic performance, stockholders’ association BDS said Sept. 21.

“August was a rather poor month,” BDS said. The reasons for that are the weak economy in terms of automotive and mechanical engineering and holidays in August. “As many people have not had holidays in the Easter time and in spring or early summer, they spent their holidays in August.”

Total sales at 814,869 mt in August were lower than the 897,646 mt sold in August 2019, with falls seen in both flat and long products, BDS said.

August sales were also significantly down on the 889,096 mt sold in July 2020.

Total steel stocks held in August at 2.14 million mt were also lower than the 2.31 million mt held in August 2019, and the 2.17 million mt held in July 2020, BDS said.

However, flat products stocks rose marginally in the month of August from July, while long products stocks fell, the association said.

— Diana Kinch

Monthly alloy surcharges on austenitic 304-grade stainless steel flat-rolled products in Europe are set to rise next month to their highest level since December last year, first mill announcements indicated Sept. 21.

Finland’s Outokumpu, the continent’s largest producer, set its alloy adjustment factor for type 304 (4301) flat products at €1,462/mt ($1,716/mt) for October, up €92 from September to its highest level since it was set at €1,608/mt in December 2019.

Having hit a 15-month low of $10,865/mt in late March as the coronavirus crisis escalated, three-months nickel prices on the London Metal Exchange reached a 2020 high at $15,810/mt in early August, before easing back to trade either side of $15,000/mt for much of the current month.

Through Sept. 21, the LME nickel settlement price averaged $15,094/mt for September to date, up 4% from the August average of $14,487/mt.

Outokumpu’s surcharge for molybdenum-bearing type 316 (4401) flat products is up €153/mt to €2,066/mt in September, the highest level since March.

The 316 surcharge hit its lowest level in over two years in May at €1,852/mt.

Having tested the $7/lb level in late July/early August, spot molybdenum oxide prices have held above $8/lb for September, basis S&P Global Platts daily assessments.

The Platts daily assessment stood at $8.35-$8.55/lb on Sept. 21, up from $7.70-$7.80/lb a month earlier.

Outokumpu’s surcharge for nickel-free type 430 flat products is up €11 for October to €569/mt.

The European benchmark ferrochrome price settled at 114 cents/lb for the fourth quarter of 2020, unchanged for the second quarter in succession, South African producer Merafe Resources said last week.

The benchmark price settled at 101 cents/lb in Q1 2020, rising to 114 cents/lb in Q2.

— Andy Blamey

Buyers’ inquiries for coils availability and prices at European mills are taking longer than usual with offers mostly valid for 24 hours only, sources told S&P Global Platts Sept. 21.

The steady price increases since August in both Northern and Southern Europe have turned mills more optimistic and offers sent to customers are mostly valid for a short period of time as mills ponder hiking prices again.

Buy-side sources said that collecting inquiries sent out to domestic producers is taking longer, or that requests remain unanswered, as more mills are extending lead times or withdrawing from the spot market amid tighter availability.

The Platts TSI Southern European hot-rolled coil index increased Eur4.50/mt on the day Sept. 21 to Eur481.50/mt EXW S. EU, while the Northern European HRC index went up Eur1/mt on the day to Eur491/mt EXW Ruhr.

Some sources are still cautious however, on the sustainability of the upward trend.

“It will be difficult for [price] increases to last, but for now they are continuing,” said a German stockholder.

“At the first smell that the market is going down, it will go down. Consumption is not at pre-covid level and China is starting to export again,” the source added.

For now however, mills are relieved from import pressure and the ramp up of the automotive industry along with higher raw material costs fueled the price uptick since the end of the summer.

“Mills are enjoying it for the moment as they had enough losses, it’s more of a ‘catching-up-increase’ at the moment,” a German buyer said.

Tighter material availability remained apparent in Italy as well as Germany with market participants having mixed anticipations on the ramp-up speed of European mills following production curbs.

Lead times vary from mill to mill and depend on the order situation, but most sources reported delivery times in January, with one source adding that December would be possible from some mills.

— Laura Varriale