Day: 30 September 2020

World stainless steel melt shop production fell by 9.4% year on year to 23.673 million mt in the first half of 2020, figures released Sept. 29 by International Stainless Steel Forum showed.

Output was down in all regions monitored by the ISSF, with China showing the smallest decline, off 2.7% from H1 2019 at 13.961 million mt. Production in Asia outside of China, on the other hand, fell 24% to 2.966 million mt.

Double-digit year-on-year declines were also seen in the US, down 20% to 1.077 million mt, and Europe, down 16% to 3.131 million mt.

Output in the “others” category — comprising Brazil, Russia, South Africa, South Korea and Indonesia — was down 8.4% at 2.538 million mt.

Global melt shop production in the second quarter of this year was, however, up from Q1 levels at 11.968 million mt -— a 2.2% increase.

That was due to a rebound in Chinese output, where Q2 production rose to 7.881 million mt from 6.08 million mt in Q1.

Q2 production in the other regions was down from Q1 levels.

— Andy Blamey

As quotas reduced demand for Turkish CRC notably in Turkey’s main CRC export market, Europe, Turkish mills’ cold-rolled coil exports declined by around 100,000 mt on year to 197,200 mt in the first seven months of the year. The COVID-19 pandemic was another factor in this sharp decline.

According to the latest Turkish Statistical Institute (TUIK) data observed by S&P Global Platts, the sharpest decline in Turkish CRC exports was seen in shipments to Italy in January-July. Italy imported 22,100 mt of Turkish CRC in that period, significantly lower than 144,000 mt imported in the same period the previous year.

Spain became Turkey’s largest CRC buyer in January-July at 27,800 mt. But, this figure was also lower than 29,300 mt imported in January-July 2019.

Belgium imported 21,000 mt of CRC in the first seven months of 2020, while CRC exports to other EU countries remained notably low, amid quotas, increasing the price pressure on Turkish mills’ quotations.

Turkish mills again reduced their CRC prices as of this week, due to low demand both in the domestic and export markets, despite high HRC costs.Turkish mills tried to diversify their export destinations in a sluggish sentiment in the first seven months of the year.

Egypt became Turkey’s fourth largest CRC customer at 20,200 mt in January-July, more than double on year, while Turkish mills’ CRC exports to Iraq reached 18,900 mt up around 80% on year.

Turkish mills also exported 11,200 mt of CRC to Ukraine and 9,600 mt of CRC to Canada in the first seven months of 2020, the latest data showed.

— Cenk Can

ArcelorMittal resumed operations at the No. 3 blast furnace at its Bremen site in Germany and at the No. 1 blast furnace at Fos-sur-Mer in France last week to balance production after it temporarily shut one of its 2.5 million mt a year blast furnaces in Ghent, Belgium, a company spokesman told S&P Global Platts Sept. 29.

The steelmaker halted the furnaces at Fos-Sur-Mer and Bremen at the end of March due to falling demand caused by the coronavirus pandemic.

The scheduled Ghent reline started a couple of weeks ago, with the work expected to be completed in around four months. Ghent produced 5.5 million mt of crude steel last year.

ArcelorMittal has two blast furnaces at Fos-sur-Mer with a combined design capacity of 4 million mt/year of crude steel. ArcelorMittal intended to shut the No. 2 furnace at Fos-sur-Mer temporarily due to a lack of orders last month, but then decided to keep it running because the market for coils is picking up. Bremen also has two blast furnaces with an annual combined capacity of 3.6 million mt of crude steel. Last year the mill produced 3.1 million mt.

The European hot-rolled steel coil market has been rising since the beginning of September triggered by the stronger demand and European steelmakers keeping supply and demand well balanced. Platts HRC, ex-works Ruhr, assessment has risen by about 9.4%. since Sept. 1.

— Annalisa Villa

The European hot-rolled coil market is currently driven by end-user purchases, such as the automotive and tubemakers, sources told S&P Global Platts Sept. 29.

Market participants said that spot-market buying from distributors has been slow in Europe over the past weeks following the end of an initial restocking phase, but that current demand for mills would be driven by end-users.

“We have not seen not seen huge deals being concluded in September by distribution, they rather bought in August or even before,” said a European mill source.

A Benelux trader confirmed that end-buyers would be particularly active on the market but that overall there is still a lack of deals.

“I don’t see a lot of transactions going on. Now the mills have a lot of orders from the car industry,” said a Benelux trader.

The market is also looking towards China again to see where international steel prices are heading as Chinese export prices have shown some weakness. “Let’s see, China is going on holidays and on October 15, we will see what the Chinese market will do,” the trader added.

Prices in Southern Europe were reported at Eur490/mt EXW S.EU with lead times in January/February but one German supplier was heard to be offering at Eur480/mt delivered Italy for December to secure volumes.

The Southern European daily Platts TSI index increased by Eur3/mt to Eur485.5/mt EXW S.EU based on higher tradable values Sept. 29.

Long lead times for European material, however, remain a turn off for buyers in an uncertain economic environment, particularly for those who do not necessarily need material .

“I think at Eur495-500/mt EXW Ruhr we will reach a peak, and I am cautious to buy at that level, afraid that when material comes in, prices will have gone down already,” said a German stockholder.

“People have enough material, people need to wait if sales are successful for end-users. Will price increases touch the end users? Is the demand really recovering or is it only apparent?” the stockholder said.

The daily Platts TSI index for Northern Europe increased Eur2.50/mt to Eur496/mt EXW Ruhr Sept. 29.

Indian import offers were heard at Eur490-500/mt CIF Antwerp, while one source said that Turkish imports were offered below that level for tubemakers, but, considering the pending anti-dumping investigation, were deemed not attractive.

— Laura Varriale, Amanda Flint

Ukrainian steel companies have almost exhausted their current round of EU supply quotas for some products, show national metals association Ukrmetallurgprom data. The new quotas are from 1 July 2020-31 June 2021.

Ukrainian rebar shipments to the EU have amounted to 40,400 tonnes, fulfilling 98.67% of the 40,900t quota, Kallanish notes.

As of 30 September, Ukraine had exhausted 97.44% of its quota for seamless stainless steel pipes, supplying 3,300t versus the available 3.400t.

The supply of unalloyed wire to the EU reached 98.12% of the quota, with deliveries of 17,200t form the available 17,500t.

As of 1 July, all individual EU quotas are distributed not on an annual basis, but on a quarterly basis, Ukrmetallurgprom reminds.

The quarterly system for issuing country quotas will operate for a year. After the quota is exhausted, further imports are subject to a 25% duty.

ArcelorMittal’s Bosnia-based Zenica long steelworks has completed two major environmental overhauls that will contribute to improved air quality, the company says.

A second hybrid filter has been installed in the sinter plant, cutting dust emissions from sinter machine No.6 to below 10 mg/Nm3, a level which is well within EU standards. It is also far below the 50mg/Nm3 legal limit in Bosnia and Herzegovina. The company also marked the completion of the installation of the secondary dedusting system at its oxygen converter.

Total investment amounted to €5.1 million ($6m), Kallanish notes. Putting the entire system into operation and testing the equipment is currently underway, and on course for completion before the end of 2020.

The company is also in the process of installing new gas boilers for a new combined heat and power plant that will provide greener energy to the city of Zenica.

In 2017, ArcelorMittal Zenica became the first steel plant in the world to have industrial-scale hybrid filtration technology installed in its sinter plant, the enterprise claims.

The company resumed production at the end of May after ten days of stoppage due to low demand provoked by the Covid-19 pandemic (see Kallanish passim).

Zenica produced 800,000 tonnes of crude steel in 2019, up 14% on-year. Several new investments are expected in the coming years to continue improving the environmental footprint of the plant by reducing emissions.

Tata Steel UK has awarded Danieli Automation with the revamping of the continuous annealing processing line at the Trostre Works, South Wales. The new automation system will be designed to comply with Industry 4.0 principles. It is scheduled to go live by end-2021.

The revamping will include the complete replacement of the line automation, including a new Level 1 system based on the latest platform available in the market, new MCC cabinets and new DC converters for the existing strip transportation motors, Danieli tells Kallanish.

This comes after Tata Steel UK contracted Danieli to revamp hot-dip galvanizing line no.6 at the Shotton Works, where commissioning is expected by December.

Tata Steel said last month it remains in talks with the UK government on receiving support for its flagship Port Talbot steelworks but declined to comment on specifics. Tata Steel Europe’s June-quarter performance was affected by the overall weakness in economic activity in Europe. “Spreads are at unsustainably low levels but are expected to improve going forward,” Tata Steel chief executive TV Narendran said of Europe last month.

Outokumpu says it will initiate a turnaround programme to develop the Long Products business internally, after it concluded the business area’s strategic review initiated in February.

The turnaround programme will involve personnel measures that might lead to a reduction of approximately 100 positions. Actions also include commercial measures such as expanding the current product mix and focus on higher-value specialty grades, Kallanish hears from the company.

In 2019, Long Products’ revenue amounted to €642 million ($754m) and adjusted Ebitda was negative €7m. In the first half of 2020, the business area’s revenue amounted to €289m, while adjusted Ebitda was negative €5m.

Outokumpu has also appointed a new leadership team as of 1 October, and announced a new strategy to be published on 5 November. The team consists of Heikki Malinen as president and ceo, Pia Aaltonen-Forsell as cfo, Jan Hofmann as chief strategy officer, and Johann Steiner as chief human resources officer. Also, Tamara Weinert has been appointed acting president for business area Americas.

OKD will close its Darkov and CSA mines for good at end-February 2021 after the Czech government’s decision last week to start the gradual transfer of mines to state-owned Diamo for decommissioning.

The symbolic last truck will be dispatched from these two mines at the end of February next year, says OKD director operations David Hajek.

“It is no secret that the decline in coal prices to historic lows and the Covid-19 pandemic and related circumstances, such as reduced demand, long-term production cuts due to safety and anti-epidemic measures, as well as a complete interruption of mining, have had a significant negative impact on OKD,” says OKD chairperson Vanda Stankova.

“The combination of all these factors has essentially prevented OKD from any attempt to successfully cope with the decline in coal prices that OKD has faced since the beginning of the year,” she adds.

The miner has spent some CZK 25 million ($1.1m) as a direct result of Covid-19 measures, not including costs related to the mass testing of employees, it says. In mid-August the firm resumed all mining operations following a six-week stoppage due to the high number of workers that tested positive for Covid-19 (see Kallanish passim).

A social programme will be prepared for all employees who transfer to Diamo next year, with termination of employment and full severance pay assumed once the mines have completed decommissioning.

OKD will continue to operate its CSM-Jih and CSM-Sever mines, which were not included in the government’s decision.

“The length of operation of the CSM mines is conditioned by a number of factors,” Stankova observes. “Deep mining is very sensitive to price fluctuations; any further downward movement is extremely risky due to the high share of fixed costs of any company engaged in this method of coal mining. OKD is in a difficult financial situation for many reasons related to coal prices and the current Covid-19 pandemic, and it is currently not possible to responsibly make a longer forecast for the development of coal prices in the coming years or predict further developments in the epidemic situation.”

Moreover, OKD does not have the funds to finance long-term mining, which would require adequate investment. “From a purely economic and safety point of view, it is not possible today to decide on the long-term functioning of the CSM mines, without having a positive outlook for the future in terms of coal prices, economy and security of mining finance,” Stankova concludes.

The gap between global production and capacity is expected to reach 700 million tonnes in 2020, increasing for the first time since 2016, the OECD steel committee said during its latest session held virtually.

The association noted the latest available data from the OECD show that global steelmaking capacity could increase to 2,455.8m t/year. This new growth would widen the gap between production and installed capacity following a series of declines in the 2016-2019 period, Kallanish notes.

This year, global excess capacity could rise by 41.8mt, mainly supported by new capacities becoming available in the Middle East and Asia. “The Committee noted with concerns that a number of planned capacity increases are premised on expectations of an increase in future demand, including demand in export markets,” the OECD commented.

The growth of capacities together with the difficulties created by the outbreak of the coronavirus are expected to fuel uncertainties this year. There are concerns, moreover, over the continued growth of Chinese production despite the fall of demand for steel globally. “The Steel Committee noted with concern the divergence from the global trend in China, where steel production reached record volumes in the first semester of 2020, and where inventories have reached historically high levels,” it observed.

“These developments pose a risk of oversupply in China exacerbating global imbalances resulting from the Covid-19 demand shock,” OECD said. “In this context, the Steel Committee recognized that the work of the Global Forum on Steel Excess Capacity (GFSEC) has become more important than ever.”