Day: 12 March 2021

The Italian Council of State has ruled that ArcelorMittal Italia will not have to shut down the hot-end of ​​the Taranto plant within the timing given by the Apulia regional tribunal. This is a temporary decision pending the court hearing on 13 May, Kallanish learns from sources and ArcelorMittal Italia.

Last month the Tribunale Amministrativo Regionale (TAR) Puglia gave the company 60 days to shut down the hot-end at Taranto due to excessive emissions (see Kallanish 15 February). ArcelorMittal and Invitalia, 50-50 partners in the joint venture controlling the former Ilva steelworks, appealed immediately against the closure order.

The Council of State “ordered the suspension of the ruling of the TAR Lecce n.249/2021 with the consequence that ArcelorMittal is not forced to start the procedure to idle the hot end area of the Taranto plants,” ArcelorMittal comments. “The production activity of the plant is going to continue as normal.”

Production, however, remains restricted to below 50% of capacity, a major factor behind the coil supply shortage in Italy that is driving up prices.

Several German IT start-ups do not agree with an-all-too critical view of the steel industry as taking a conservative attitude towards progress in digitalisation and related aspects.

At the annual “Zukunft Stahl” conference organised this year by business daily Handelsblatt and Euroforum, representatives of IT companies talked about the predominantly positive experience they have had so far.

An apparent reservation to implement new technology would be understandable given the complexity of a steel mill, said Falk Florian Henrich of Smart Steel Technologies (SST). “Mills need to make sure that they will not run into sudden outages. Once this has been cleared, they are very open to innovation,” he observed.

SST provides artificial intelligence-based solutions for the production process, in use already at the mills of ArcelorMittal and others. Henrich noted that the first lockdown due to Covid-19 one year ago did not at all harm the implementation of AI solutions at customer mills. Instead, customers “kept pushing the progress of the implementation full-power”, Kallanish heard him say at the conference.

Covid-19 has actually helped promote the acceptance of digital channels, other speakers concurred. Metalshub, a sales platform for ferroalloys, saw sales treble in 2020 compared with 2019, “and we expect the same degree this year”, said its founder, Sebastian Kreft. “Covid-19 brought considerable momentum; it opens companies up to take digital paths,” he commented.

Christian Koehl Germany

Following the commissioning of the “Wind Hydrogen Salzgitter – WindH2” project, Salzgitter AG has started to make green hydrogen with electricity generated by wind power on the site of its Salzgitter strip mill.

The newly built facilities were presented to the public on Thursday, with political representatives and other industry members attending, The cost of the entire project, which has been carried out in partnership with Avacon and Linde, amounts to around €50 million ($60m), Kallanish learns.

Avacon, a member of the E.on Group, operates seven newly built wind turbines with an output totalling 30MW on the premises of the mill. It has installed two Siemens 1.25MW PEM electrolyser units at its site, which are capable of producing around 450 cubic metres per hour of ultra-pure hydrogen.

Today’s steel production already harnesses hydrogen for annealing processes as well as in the hot-dip galvanizing lines. Industrial gas producer Linde is currently delivering hydrogen by truck for use in the annealing and galvanizing processes, and will continue to secure coverage of hydrogen. A test run is currently being made at all the facilities.

Christian Koehl Germany

Eurofer has welcomed a vote in the European Parliament in which a vast majority supported a carbon border adjustment mechanism resolution.

The resolution marks a step forward towards a legislative proposal expected to be presented in June, aimed at protecting European borders from carbon leakage. While the outcome of the process towards an effective carbon border adjustment tax is not yet sure, Eurofer again voiced its support for it.

“The measure must fill the gap of the carbon cost differential with global competitors and imports instead of replacing or reducing current levels of carbon leakage protection,” Eurofer head Axel Eggert tells Kallanish. “Higher climate ambition for 2030 and 2050 requires strengthened, not weakened, carbon leakage protection. This can only be achieved if the carbon border measure is implemented as a complementary tool to buttress existing carbon leakage measures. We welcome that elected MEPs recognised this.”

European steelmakers are worried that free allocations of CO2 certificates are being faded out and they could face further competition if a scheme to protect Europe’s borders from carbon leakage is not implemented.

Emanuele Norsa Italy

Russian coking coal miner and steelmaker Mechel maintained crude coal and steel output last year and boosted sales of high value-added products, including of pulverized coal injection (PCI), rails and sections, according to the company’s operational results released March 11.

“Amid the backdrop of the coronavirus pandemic, last year was extremely mixed and the most complicated for industries since the 2008 financial crisis,” CEO Oleg Korzhov said in a statement.

“Mechel coped in this context fairly well — we did not halt any of our facilities, we kept our staff and did not make any substantial cuts to our production plans,” said the CEO.

He noted that economic activity in most parts of the Asia Pacific region had started to pick up in Q3 2020, and that currently there is solid demand for the company’s coking coal products supported by incremental growth in steel output in the region.

The rise in the spot market in Q4 2020 had influenced Q1 quarterly contract prices, he said.

Mechel mined a total of 16 million metric tons of crude coal in 2020, up 10% year-on-year, with the growth supported by increased stripping and mining fleet upgrades.

A 1% year-on-year decline in coking coal concentrate sales to third parties (to 3.96 million mt) was due to a slump in business with Japan, as the country’s steelmakers adjusted their production plans. Some volumes meant for Japan instead went to South Korea.

Increased PCI output at Southern Kuzbass company drove Mechel’s overall sales of the product higher by 31% year on year to 1.85 million mt in 2020, all of which was sold outside the group with sales to Asia accounting for most of the growth.

Anthracite sales to third parties almost doubled (up 92%) to 1.1 million mt due to increased mining at Krasnogorsky open pit.

Last year, Mechel sold externally just 39,000 mt of iron ore concentrate, 80% lower year on year; the company noted poorer ore grades as one of the reasons behind a weaker production.

Coke sales to third parties remained broadly stable last year at 933,000 mt.

Sales of major products up

In H2 2020, with lockdown measures being lifting, construction companies and steel fabrication plants were among the first to restore steel uptake, Mechel noted.

Mechel said it focused on making products with high profit margins during the year.

It achieved a 3% year-on-year rise in rail sales to 290,000 mt and ramped up sales of beams, channels and other sections by 14% to 326,000 mt, which was a result of both positive market trends and the company’s prompter response to customer demand.

Compared to 2019, Mechel also maintained and improved sales of long and flat-rolled steel, which climbed 1% and 2% to 2.55 million mt and 456,000 mt, respectively.

“The 6% decrease in ferrosilicon sales was due to the blowing out for modernization of ore thermal furnace No.3 at Bratsk Ferroalloy Plant, as well as negative trends in the global ferrosilicon market,” it said.

Hardware sales remained largely unchanged year on year at 556,000 mt, despite a small dip in sales of wire used in reinforced concrete and ropes.

Mechel also produces and sell forgings and stampings.

— Ekaterina Bouckley

Steel producers association Eurofer has welcomed the European Parliament’s vote backing the principle that the EU should place a carbon price on certain imports from less climate-ambitious countries to raise global climate ambition and prevent “carbon leakage.”

Parliament on March 10 adopted a resolution on an EU carbon border adjustment mechanism (CBAM) with 444 MEPs voting for, 70 against and 181 abstentions.

The resolution underlines that the EU’s increased ambition on climate change must not lead to “carbon leakage” as global climate efforts will not benefit if EU production is just moved to non-EU countries that have less ambitious emissions rules.

The European Commission is expected to present a legislative proposal on a CBAM in the second quarter of 2021 as part of the European Green Deal.

According to an EC statement, “MEPs therefore support to put a carbon price on certain goods imported from outside the EU, if these countries are not ambitious enough about climate change.”

MEPs stressed that the CBAM would create a global level playing field and be compatible with World Trade Organization rules, and therefore would be not a form of protectionism. Revenues generated should be used to help meet targets under the EU’s Green Deal.

“The new mechanism should be part of a broader EU industrial strategy and cover all imports of products and commodities covered by the EU ETS and it should cover the power sector and energy-intensive industrial sectors like steel, aluminum, oil refinery, cement, paper, glass, chemicals and fertilizers, which continue to receive substantial free allocations, and still represent 94 % of EU industrial emissions,” the EC said.

Eurofer’s director general Axel Eggert said in a statement: “Higher climate ambition for 2030 and 2050 requires strengthened, not weakened, carbon leakage protection. This can only be achieved if the carbon border measure is implemented as a complementary tool to buttress existing carbon leakage measures. We welcome that elected MEPs recognized this.”

“The straight replacement of free CO2 certificates with a border measure and full exposure to the costs of the EU Emissions Trading Scheme would be bad policy. Primary steelmaking makes up three-fifths of European production, and such producers would face carbon costs at least 20 times higher than global competitors exporting to the EU,” he added.

“This vote shows that the Parliament intends to defend manufacturing and jobs in Europe.”

— Annalisa Villa

Making green steel commercially available and attractive for buyers in Europe will need more financial and regulatory support from governments, mill executives said March 11.

At the annual steel conference of German business daily Handelsblatt, steel producers said the adoption of green steelmaking is rather hampered by the regulatory framework and costs than technological challenges.

“Technologies that are being viewed as ‘the future’ have already been implemented,” said Frank Schulz, CEO at ArcelorMittal Germany. ArcelorMittal already has a direct reduced iron, or DRI, plant in Hamburg running on natural gas and is developing a hydrogen pilot DRI plant, with plans to produce 100,000 mt of green steel by 2024.

“We have a lot of customers who are interested [in green steel products] but as soon as you talk about pricing, it’s getting into a debate,” said Schulz.

Mill sources said previously to Platts that particularly automotive customers are pushing for green steel making to have a “carbon-free” end-product.

The question, however, was raised at the conference on how to make green steel commercially viable with higher costs and the large-scale investments that need to take place at blast furnace operated mills particularly.

“The complete switch [from blast furnace] to electric arc furnace or DRI is going to cost billions in the Saarland region and we are only 10% of Germany’s steel production,” said Karl-Ulrich Köhler, CEO of South German mills Saarstahl and Dillinger. Saarstahl and Dillinger recently teamed up with Liberty Steel Group and Paul Wurth on a project to incorporate a 2 million mt/year DRI plant, with an integrated 1 GW capacity hydrogen electrolysis production unit, next to GFG’s ALVANCE Aluminium Dunkerque site in France.

There was, however, no guarantee that mills will have enough hydrogen to run their green steel operations. There was also the issue that mills will have higher operating costs based on a higher energy bill, which they would need to pass on to the cost of green steel.

“There is no market that is willing to pay for green steel at the moment,” said Köhler, adding politics will need to establish a competitive industrial landscape for the steel industry.

Scaling up the EU’s hydrogen sector by 2030 would cost around Eur430 billion including around Eur145 billion of public support, trade body Hydrogen Europe said last year. Of this, Eur8 billion was seen necessary to support 20 million mt/year of green steel production — around 15% of the EU’s current production.

— Laura Varriale

UK-based industrial group GFG Alliance said late March 11 that it had resolved a temporary supply issue of hot-rolled coil to subsidiary Liberty Steel’s plants in Belgium and Italy. The statement follows reports that production at some Liberty works may have been reduced amid a cash squeeze after GFG financier Greensill Capital (UK) Ltd. entered administration March 8, deterring raw material suppliers.

“We can confirm a temporary issue with one of our HRC suppliers to LIBERTY Liege-Dudelange and LIBERTY Magona has been successfully concluded using our normal commercial dispute procedures,” a Liberty Steel Group spokesperson said in an emailed statement.

The two works are known to be supplied with HRC mainly by ArcelorMittal, which did not comment on the issue when approached by S&P Global Platts.

Liberty Magona is described as the Italian market leader for flat galvanized and pre-painted products. Liege-Dudelange produces galvanized steel and packaging products.

A German buyer expressed anxiety March 11 about contracts with Liberty Poland although this works was continuing to dispatch products.

GFG Alliance took over the lease for Huta Czestochowa, or Liberty Poland, one of Poland’s largest steel mills, in January this year. It restarted production at the formerly troubled mill, which is rolling plates from feedstock supplied by Liberty Ostrava in the Czech Republic.

A German plate supplier said it had been approached by various UK customers asking for supply as it was thought Liberty might have difficulty in meeting supply commitments.

GFG Alliance said March 10 that that some of its UK businesses will be operating intermittently.

The situation has heightened nervousness about potential further disruptions to steel supplies in Europe, where prices for products including HRC are at multi-year highs following recent product tightness in some areas.

— Diana Kinch, Annalisa Villa and Amanda Flint

Six companies, including German mills Dillinger and Saarstahl, have joined up to develop a green hydrogen economy in the border region of Saarland, France and Luxembourg, Kallanish learns.

The cooperation also involves energy company STEAG, plant manufacturer Siemens Energy, grid operator Creos Deutschland, and public transport company Saarbahn.

The partners are combining their respective hydrogen projects – “HydroHub Fenne” (STEAG), “H2SYNgas” (mills) and “TraficHdeux” (Saarbahn) in the Saarland, and the Saarland-French hydrogen project “mosaHYc” (Creos Deutschland). In response to a call from the German Federal Ministry for Economic Affairs and Energy they have applied for funding as an “Important Project of Common European Interest” (IPCEI).

Within the scope of H2SYNgas, Dillinger and Saarstahl are developing technology at a blast furnace at their joint pig iron plant, Rogesa, using the company’s own process gases together with hydrogen.

The mosaHYc project, jointly undertaken by the distribution grid operators Creos and GRTgaz, aims to use existing gas infrastructure to develop a cross-border high-pressure grid for the transport of hydrogen.

The HydroHub Fenne project by STEAG and Siemens Energy is to be the first PEM (proton exchange membrane) electrolysis plant of significant scale.

TraficHdeux aims to build up the infrastructure for operating cross-border public transport with hydrogen-powered fuel cell trains and buses.

Christian Koehl Germany