Day: 8 March 2021

The premium on nickel contracts traded at LME and ShFE should largely disappear in the short-term thanks to Tsingshan’s technology promise to mass produce nickel matte, says ING Economics.

Last week’s announcement that Tsingshan found a way to make nickel sulphate by converting nickel laterite ores to nickel pig iron (NPI) and then further to nickel matte could be a “game-changer,” says Wenyu Yao, senior commodities strategist at ING.

That’s because the nickel supply chain could be moving from a “bifurcation” to a “re-marriage,” she says. In other words, the so-called Class 1 nickel (mostly used in battery manufacturing and exchange-traded) and Class 2 nickel (mostly used in stainless steel) would be in direct competition and there could be pricing convergence.

Lower nickel prices will translate into lower surcharges for specialty steel producers – particularly stainless producers

“The underlying dynamics between the Class 1 and Class 2 markets have been driving price differentials among different products,” Yao continues.

Fast-growing NPI capacity, mainly from Indonesia, has been driving strong supply of Class 2 nickel, while there’s a shortage of nickel sulphate due to strong demand from the battery sector. As a result, nickel sulphate has been trading at a premium versus both NPI and refined nickel, Kallanish notes.

“However, if the new methods that Tsingshan developed can be widely applied to produce matte and further convert to sulphate, we could see a convergence of Class 1 and Class 2 pricing (based on nickel content),” she forecasts. “Until a new market equilibrium is found, exchange-traded nickel looks bearish in the short term.”

Gabriela Farhangi UK

Southeast Europe (SEE) crude steel production increased significantly in January, according to the latest worldsteel data monitored by Kallanish. Regional output amounted to 417,000 tonnes, up by 28.6% year-on-year.

Serbia was again the largest steel producer among the seven countries of SEE, which also include Bulgaria, Croatia, Slovenia, Bosnia, North Macedonia and Moldova.

Serbia’s production of crude steel totalled 132,000t in January, down by 2.3% on-year.

The second-largest producer in the region was Bosnia and Herzegovina, whose crude steel output was more by 8.2% to 75,000t.

Third-largest steel producer Slovenia saw production of 60,000t, up by 1.8%.

Fourth-largest Moldova saw its crude steel output skyrocket by 321.7% to 45,000t, compared to 10,670t in January 2020.

However, the fifth-largest steel producer, Bulgaria, produced 40,000t, down by 20% y-o-y.

Sixth-largest North Macedonia produced 35,000t in January compared with no production in January 2020.

SEE crude steel production fell in 2020, according to worldsteel data. Regional output amounted to 6.495 million tonnes, down by 15.3% year-on-year (see Kallanish passim).

Despite the Covid-19 pandemic and lockdowns, the Serbian and Bulgarian economies navigated through 2020 in an admirably resilient fashion, ING bank previously commented.

Svetoslav Abrossimov Bulgaria

Rest-of-world (RoW) steel imported into Northern Ireland is now subject to UK steel safeguard measures, says UK Customs authority HMRC. This applies to product being imported directly into Northern Ireland as well as when coming from Great Britain, and is effective 3 March.

The EU steel safeguarding measures will not apply when calculating the duty charged for Great Britain to Northern Ireland movements of RoW steel, which are domestic goods. This will have retrospective effect from 11pm UK time on 31 December 2020, meaning the end of the Transitional Period, HMRC says.

EU safeguard measures will not apply when calculating the duty charged for RoW steel imports to Northern Ireland and movements of RoW steel from Great Britain to Northern Ireland which are not domestic goods, which are declared before 3 March 2021. This will also be applied retrospectively from 11pm on 31 December 2020.

“This measure is expected to have a negligible impact on businesses. Businesses affected by the measure – who import steel which originates from countries outside the EU and the UK into Northern Ireland – will have access to the UK safeguard quotas or an equivalent in-quota tariff treatment provided there is a relevant EU tariff rate quota and it is open,” HMRC says in a note seen by Kallanish.

“This means their steel imports will not be subject to the EU’s safeguard tariff where there is capacity in the relevant quotas,” HMRC continues.

The move has been made by HMRC so that Northern Ireland importers can continue to import RoW steel without being subject to the EU’s 25% out-of-quota rate.

In January HMRC had advised traders to consider importing RoW steel through the Republic of Ireland to make use of the EU’s tariff rate quotas (see Kallanish passim).

Adam Smith Germany

Traders in the EU coil market are finding it difficult to assess current import offers as they are increasing on a daily basis, Kallanish hears from sources.

Indian suppliers are mostly silent as they await more clarity in the market. Traders are also concerned because of the uncertainty surrounding EU safeguard measures, as customers are not sure how quickly second-quarter quotas will be exhausted and if they will be extended in Q3.

“Some competitive offers were available from Egypt,” says a trader, giving a value of €690-700/t ($822-834) cfr Italy for hot rolled coil. Another trader in Spain though says these levels have already been surpassed, at a minimum of €720/t cfr southern Europe.

A service centre source confirms imports are difficult at the moment. “Prices are soaring every day; even from Turkey with the duty added the price this week is €735-740/t cfr southern Europe, in line with domestic products,” he noted last Thursday.

Emanuele Norsa Italy

ArcelorMittal Italia has started the procedure for a new temporary layoff scheme for 8,128 workers at its Taranto steelworks, Kallanish learns from unions and sources close to the company.

In a letter to unions, the company blames the harsh market conditions brought about by the Covid-19 pandemic crisis. The new layoffs will start on 29 March and last for 12 weeks.

The company declined to comment on the move.

The effect of the crisis continues to impact orders, for which ArcelorMittal Italia has noticed a drastic fall, unions were told. The letter also talks about the difficulties encountered in closing orders and invoicing.

This comes in the wake of a significant coil shortage, particularly in Italy, and follows several rounds of coil price increases implemented by ArcelorMittal across Europe, Kallanish notes.

The company already extended layoffs several times last year. Furlough extensions have been granted by the government to all Italian companies in response to the Covid-19 crisis.

Natalia Capra France

Thyssenkrupp Steel has awarded a major revamp and new-build contracts for core units at its plants in Duisburg and Bochum to Primetals Technologies.

The projected technology upgrades are part of the steelmaker’s “Strategy 20-30” campaign, an investment in the high three-digit million-euro range (see Kallanish 10 February). The centrepiece of the campaign is the separation of the casting-rolling line at Duisburg’s Bruckhausen plant into a new continuous caster and hot strip mill with new key components. The switch from the existing casting section of the casting-rolling line to the new continuous caster will be carried out from September 2023.

At the Beeckerwerth plant, which is a different section of the larger Duisburg complex, continuous caster 3 is to replace the existing continuous caster 1, to provide improved surface quality. It will be built, after the revamp of the casting-rolling line, in 2024.

At the Bochum mill, a new double reversing stand is to significantly enhance the site’s capabilities for non-oriented electrical steel. With its back and forth reversing action, the mill will be able to roll particularly thin materials. This is particularly important for sheet used in electric motors and generators because it minimises magnetic losses.

The plan is for the new and revamped units to be installed with minimum disruption to production, the partners say in a press release.

Christian Koehl Germany

Salzgitter Flachstahl, the strip-making unit of Germany’s Salzgitter, has commissioned Primetals to replace the existing cycloconverter drive system for the crop shear installed on its finishing mill.

The aim of the project is to maintain the availability of the finishing, Kallanish learns from the plantbuilder. The new system will be switchable in parallel to the existing cycloconverter in order to ensure a risk-free replacement with short downtime. The scope of delivery includes a new control room panel, the creation of additional visualisation screens and diagnostic options. The project is scheduled to be completed in November 2021.

Salzgitter Flachstahl, with more than 5,500 employees, produced around 4.3 million tonnes of crude steel in 2019. The main customers for the flat products are carmakers and their suppliers, as well as tubemakers.

Christian Koehl Germany

• Der Containerumschlag-Index des RWI – Leibniz-Institut für Wirtschaftsforschung und des Instituts für Seeverkehrswirtschaft und Logistik (ISL) ist saisonbereinigt im Januar leicht von (revidiert) 119,1 auf 120,8 gestiegen.
• Insbesondere in den chinesischen Häfen ist der Umschlag deutlich ausgeweitet worden. In den übrigen Häfen ist der Containerumschlag nur moderat gestiegen.
• Der Nordrange-Index, der Hinweise auf die wirtschaftliche Entwicklung im nördlichen Euroraum und in Deutschland gibt, wurde ebenfalls stärker ausgeweitet als der Gesamtindex, von (revidiert) 114,8 auf 117,9. Auch dieser Indikator kehrt auf den Wachstumspfad von vor der Corona-Krise zurück.

Zur Entwicklung des Containerumschlag-Index sagt RWI-Konjunkturchef Torsten Schmidt: „Auch zu Beginn dieses Jahres stützt die steigende Nachfrage vor allem aus China den Welthandel und damit auch die deutschen Exporte. Der Welthandel scheint auf seinen vor der Corona-Krise eingeschlagenen Wachstumpfad zurückzukehren.“

Quelle: RWI – Leibniz-Institut für Wirtschaftsforschung

01.03.2021 von Hubert Hunscheidt