Day: 28 October 2020

Italian flat products output decreased again year-on-year in September after tumbling each month since March due to the coronavirus pandemic, says local steelmakers’ association Federacciai. Long products output, meanwhile, also slumped last month, Kallanish reports.

September flats output declined year-on-year by -33.4% to 694,000 tonnes. Over the first nine months output fell by -22.1% compared to the same period in 2019, reaching 6.8 million tonnes. Italian longs output declined by -1.5% in September to 1.1mt. It tumbled over January-September by -14.5% to 7.9mt.

Crude steel output in Italy fell significantly in September, by -18.7% to 1.7mt. In the first nine months of the year Italian steelmakers produced 14.5mt of crude steel, down -17.2%, Federacciai says.

A supply shortage has caused activity to stall in the Italian flats market (see Kallanish 26 October). ArcelorMittal Italia will end the year with a crude steel production of 3mt, as the company is producing between 7,000t and 10,000t of steel per day, an informed source from the former Ilva Taranto steelworks comments.

US heavy equipment producer and plate consumer Caterpillar saw its sales drop by almost a quarter on-year in Q3, Kallanish learns. 

Caterpillar generated revenues of $9.9 billion in Q3, down -23% from the $12.8 billion it generated in Q3 2019. 

Caterpillar attributes the drop to “…lower sales volume driven by lower end-user demand for equipment and services.”

The company’s profit per share was $1.22, down from $2.66/share in Q3 2019. 

Last year, Caterpillar predicted that its sales would be off organically due to lower end-user demand. This forced the company to draw down its headcount, which plate sources predicted would pressure the 2020 plate market. 

These predictions and moves, however, were made well in advance of the Covid-19 pandemic. 

“Our third-quarter results largely aligned with our expectations, and we’re encouraged by positive signs in certain industries and geographies,” says ceo Jim Umpleby. “We’re executing our strategy and are ready to respond quickly to changing market conditions.”

ArcelorMittal Poland has reduced its pig iron and steelmaking capacities by little over a third each with the recent closure of its blast furnace and three basic oxygen furnaces in Krakow, according to S&P Global Platts calculations based on company results statements and market sources.

However, sources said Oct. 27 that the actual loss of output to the company — which comprises mills in Krakow, Swietochlowice and Dabrowa Gornicza — could in fact be somewhat smaller, at around a quarter, given that the BOFs in Krakow had been running at less than half their full capacity over the last decade, producing 1.2 million mt/year on average between 2010 and 2019.

ArcelorMittal does not disclose the furnace capacities of individual units, but the company’s factbook for 2014 says the Krakow site was equipped with 2.3 million mt/year BF and 2.6 million mt/year BOF capacities.

Dabrowa Gornicza has BF capacity of 4.4 million mt/year, and steelmaking capacity of 5 million mt/year, according to the same factbook.

According to sources, the Krakow BF and BOFs were among its oldest, with little in the way of upgrades over recent years.

“It could have been a choice between [downsizing in] Poland and France. Obviously, it is easier and cheaper to close an industrial enterprise and dismiss workers in Poland due to the country’s more liberal labor legislation,” one source said.

An ArcelorMittal spokeswoman told S&P Global Platts that a number of different factors contributed to the decision, including high energy costs and the introduction of additional capacity market fees in Poland from January 2021.

Low capacity utilization of the Krakow hot end could also be one of the reasons., sources said.

Last year, ArcelorMittal Poland made 4.8 million mt of steel. Its production fell by 0.5 million mt or 9.5% on the year due to the idling in November of the Krakow’s furnaces amid the demand downturn.

In the five years to 2018, ArcelorMittal Poland’s annual steel production averaged 5.25 million mt/year, or around 70% of the unit’s 7.6 million mt/year capacity.

Of the two steelworks, Krakow had been least utilized relative to its nameplate capacity. In the same period, with average crude steel output of 1.4 million mt/year, the plant’s run rate hardly exceeded 55%.

By comparison, Dabrowa was producing 3.9 million mt/year in 2014-18, the equivalent of 78% of its 5 million mt/year crude steel capacity.

— Ekaterina Bouckley

Major Turkish steelmaker Colkaoglu pulled up its lira-denominated domestic scrap buying prices on Oct. 27, amid ongoing sharp Lira depreciation and strong imported scrap pricing.

S&P Global Platts’ daily HMS 1/2 (80:20) assessment was at $291.25/mt on Oct. 26. The HMS 75/25 and A3 assessments were at $281.25/mt and $280/mt, respectively, all CFR Turkey.

Colakoglu, one of Turkey’s largest EAF-based steelmakers, pulled up its lira-denominated buying price for DKP grade (auto bundle) scrap on Oct. 27 by Lira 70/mt to Lira 2,380/mt ($292/mt), while the company’s extra grade domestic scrap buying price rose to Lira 2,205/mt ($271/mt).

Turkish mills have been consuming around 30 million mt of steel scrap per year and are procuring generally one third of it from the domestic market.

As scrap costs rose further and the Turkish lira fell to a new historically low level against the US dollar, Major Turkish long steel producer Icdas, pulled up its domestic rebar list prices for the second consecutive day on Oct. 27.

Turkish Lira lost around a 1% further value against the US dollar and began to trade in the range of Lira 8.15-8.16/$1 at 1 pm local time on Oct. 27. Thus the depreciation in Turkish lira exceeded 2% within two days.

Icdas started offering 12-32 mm rebar at Lira 4,410/mt ex-works Biga, including 18% value-added tax (VAT), on Oct. 27, which equated to $458/mt ex-works, excluding VAT, relatively flat day on day on a dollar basis. This price, however, reflected a roughly $3/mt rise week on week, amid strong scrap pricing.

Sharp depreciation in the Turkish lira, however, has begun to limit rebar demand in the country’s construction.

— Cenk Can