Day: 7 January 2021

Given the stricter Covid-19 lockdown that was introduced in Germany in mid-December, and will probably run until the end of January, many mechanical engineering companies have extended their winter breaks.

This was the result of a flash survey amongst almost 800 member companies of industry assocition VDMA shortly before Christmas. About 77% of the companies surveyed planned a production break. For 35% of these, it will last longer than usual. Two-thirds of that group explicitly cite a reduction in the risk of contagion from Covid-19 as a reason for the extension. However, a lack of orders and low capacity utilisation also play a role in these decisions, VDMA notes   

On average, business interruptions last 15 days, Kallanish understands. According to the VDMA survey, 80% of the companies surveyed have already extended the options for home office or are planning to do so. 

“Everyone is called upon to do their part to break the wave of infection. This can only succeed through consistent action. Longer plant closures at the turn of the year are part of this,” VDMA president Karl Haeusgen says.

He says that the industry supports the decision by the government to carry out a lockdown, but notes that a general shutdown of manufacturing industries would have been wrong.

“With their hygiene concepts, the companies in the mechanical and plant engineering sector ensure that contacts in the operating facilities are reduced to a minimum,“ he says.

Byelorussian Steel Works (BMZ) shipped its first batch of steel products in 2021 to Spain, the company says.

The batch of round bars intended for the automotive industry was sent to a consumer from the Basque region. In the first hours of the new year, rebar was also being shipped to Israel, it adds.

BMZ started its stable deliveries of rolled products to Spain just last year and in 2021 exports to this market will continue, the enterprise claims.

In 2020 BMZ shipped almost the same level of steel products compared to the same period of 2019.

Exports amounted to almost 2 million tonnes, shipped to 53 countries, Kallanish notes. In January-December, the company sold over 180,000t of rolled bars with diameters from 20mm to 160 mm, up by 125% on-year. The importers included Russia, Germany, Israel, Lithuania and Poland. Over 50% of all exports go to European markets.

“The continuous improvement of production technologies and product quality allows the plant to deal with even the most demanding customers, for example, world-class manufacturers of tires and automotive components,” BMZ says. “One of effectiveness indicators of the research work is the share of innovative products in the total shipment volume, which traditionally exceeds 20%.”

BMZ has 57 certificates of conformity for the production of various types of products, which allow it to supply products to most EU countries, as well as Israel, Russia, Ukraine and the US, the enterprise claims.

The company suffered financial losses from its EAF stoppage during August, precipitated by the social unrest seen in Belarus after the presidential election (see Kallanish passim).

BMZ increased crude steel production in the first half of the year to 1.25mt, up by 16% on-year.

Steel plants in Ukraine were supplied with more scrap tonnages in December compared with the previous month, according to data from the Ukrainian association of secondary metals, UAVtormet.

The volume amounted to 288,600 tonnes, up by 33.1% on-year, Kallanish notes. However, January-December supplies fell by -3.9% on-year to 2.9 million tonnes.

The largest consumers in December were Metinvest and Dnieper Metallurgical Plant (DMK) each with 175,000t, Interpipe with 52,000t, and ArcelorMittal Kryvyi Rih with 20,500t.

Reserves of scrap at steel plants at the end of last month amounted to 170,175t, UAVtormet says.

“In the current conditions, metallurgists in Ukraine do not experience problems with scrap metal,” the association observes.

In 2019 Ukrainian imports of scrap exceeded exports for the first time, when exports shrunk eight-fold to 42,182t, and imports increased by 17.2% on-year to 49,934t (see Kallanish passim).

Ukrainian steelmakers took in around 3.1 million tonnes of ferrous scrap in 2019, -20% less than in 2018, despite a €58/tonne ($65/t) scrap export duty.

The online monitoring system of UK steel quota allocation has been delayed due to “technical issues,” resulting in traders not being able to check the quota balance of imports, the UK tax office said Jan. 6.

Importers can still make quota claims for material but will not be able to know if a quota has been filled as the quota look-up section in the UK online tariffs page is not available yet.

The UK introduced steel import quotas Jan. 1 following the end of the transition period with the EU.

The delay has caused some irritation with UK buyers who fear quota levels have already been exhausted in the first few days of the year as it had been previously for some products when European steel safeguard quotas applied.

“Like other companies, we have box section entries we lodged on Jan. 1, which is a product likely to bust on day one, so very important they do not lump in the later entries,” said a UK trader.

He feared that if the quota for that product was exhausted the excess volumes would be pro-rated across all quota claims and a duty would need to be paid on the portion.

In a letter seen by S&P Global Platts, the UK tax office said: “The quota balances will not be updated and CHIEF (Customs Handling of Import and Export Freight) will continue to accept quota claims when the quotas may be exhausted.”

“If a quota claim is made but does not receive an allocation you will be contacted later by NIDAC (National Import Duties Adjustment Centre) to collect the duties due.”

— Laura Varriale, Amanda Flint

US new vehicle sales are forecast to have fallen about 15% year over year to 14.4 million units in full-year 2020, the lowest total since the beginning of the decade, but the industry’s performance finished the year stronger than anticipated, according to industry analysts.

Cox Automotive said strong December sales boosted the year’s final projection, according to a report Jan. 6.

“The final days of December appear to have been stronger than forecast, and a number of [automotive] OEMs have cited unexpected robust retail activity over the holidays,” said Charlie Chesbrough, Cox senior economist. “There was also no shortage of positive news in the last week of December, and that may have encouraged consumers and lifted sales – passage of the stimulus package, more certainty around the election outcome, coupled with a lot of vaccine news.”

Cox said sales in 2020 were similar to those in 2012 when the automotive market was recovering from the 2008 financial crisis.

Consultant JD Power. separately said new vehicle retail sales in December are projected to have reached 1.4 million units, rising 1% from December 2019 when adjusted for the number of selling days.

“Retail sales are up, transaction prices are at record levels and retailer profits are at all-time highs,” Thomas King, JD Power president of the data and analytics, said in a recent report. “This reinforces that manufacturers and retailers are succeeding in getting vehicles built, shipped and sold in alignment with resilient consumer demand.”

In its own report, automotive industry analyst Edmunds said there are still uncertainties to consider in 2021, but the market should continue to recover at a steady pace without the steep declines recorded in 2020.

“Even if we face another wave of retail shutdowns, the good news is that dealers are far better prepared now for selling virtually than ever before,” Edmunds’ executive director of insights Jessica Caldwell said. “The vaccines on the way should only help keep consumer confidence high.”

Edmunds said the projections put 2020 on track to be the lowest sales year for the automotive industry since 2011.

Both Edmunds and JD Power also projected 2020 sales of about 14.4 million units.

— Nick Lazzaro