Day: 11 May 2021

Brazilian steelmaker Companhia Siderúrgica Nacional (CSN) says it has divested almost 50% of its preferred shares in fellow steel producer Usiminas.

Before the transaction, CSN held 20.29% of the preference stock following its acquisition in 2011. The company also has a 15.19% stake in the voting shares of Usiminas, Kallanish notes.

On 7 May, CSN sold 56,000,000 preferred shares issued by Usiminas, reducing its participation, directly and indirectly, to 10.07% of the preferred shares.

“The company will evaluate strategic alternatives for the allocation of financial resources from this sale,” CSN says in a stock exchange filing. No further information was disclosed by the steelmaker.

Nevertheless, according to sources from the Brazilian stock exchange, the transaction was worth BRL 1.3 billion ($248.7 million). CSN has pledged not to sell the rest of the preferred shares for a period of 45 days. After that period, a new divestment is expected to take place, suggest local media reports.

Todor Kirkov Bulgaria

French stainless steel producer Aperam has signed a purchase agreement with Franz Haniel & Cie. to acquire stainless steel scrap company ELG. This will provide backward integration and optimise costs, Aperam says. The acquisition, with a total value of €357 million ($433m) including €30m equity, will be completed later in 2021.

ELG processes 1.3 million tonnes/year of stainless steel scrap and high-performance alloys. The company’s Ebitda last year was €55m.

“The transaction will enable Aperam to improve its input mix and to expand into the supply of raw materials. Total minimum synergies of €24m are expected within three years … It will also accelerate Aperam’s expansion into geographies and industries that are complementary to its current portfolio,” says Aperam ceo Timoteo Di Maulo.

ELG will be run as an independent entity and continue to supply its clients, Kallanish notes.

Natalia Capra France

Fitch Solutions says the iron ore price rally has further room to run in the coming months – supported by global demand recovery and lagging supply – before stabilising in the second half of 2021. Its 62% Fe cfr China iron ore forecast for 2021 and 2022 has thus been revised up to $160/tonne and $130/t respectively.

The firm says iron ore prices will likely grind lower during H2 as supply improves and demand growth slows. China’s V-shaped economic recovery and major stimulus plan will start to produce consolidation towards H2, especially as summer – April-July – usually marks peak seasonal activity for the construction sector.

“We expect the demand impact from [Chinese] stimulus to start wearing off from late 2021 as construction projects reach completion and the pipeline of further new projects lessens, with the Chinese Government focusing on tightening credit lines,” Fitch Solutions says in a report sent to Kallanish. With Chinese mills’ margins at record highs, they can currently accommodate such high iron ore prices. “However, we believe this will not remain sustainable for long, especially as demand for steel wanes and steel prices ease,” it adds.

“On the supply side, improving production growth from Brazil and Australia will help to loosen tight supplies on the seaborne market, though Vale will take longer to return to pre-Brumadinho dam collapse capacity levels,” Fitch Solutions observes.

Beyond 2021, iron ore prices will follow a multi-year downtrend, falling to $75/t in 2025 and $63/t in 2030, driven by a combination of weaker demand growth and stronger supply. The weaker demand will be driven by China, which will rein in fiscal spending from late 2021 and shift to less-steel-intensive infrastructure and services investment. It will also focus more on decarbonised steelmaking using electric arc furnaces, which will lower iron ore requirement.

China will also bring its steel production more in line with demand. Fitch Solutions forecasts its steel consumption to grow by 2.5% in 2021 and 2% in 2022, compared with 6.5% in 2020 and the 2017-2019 average annual growth of 10.3%.

Adam Smith Germany

Tata Steel has adjusted the status of its subsidiaries in Thailand and Singapore from “held for sale” to “continuing operations” in its March-quarter earnings statement. This indicates the Indian steelmaker will not divest the units and is a show of confidence in the Southeast Asian steel market.

This move is due to the improvement in business performance in Southeast Asia since early 2019, Kallanish notes. Operating profit at Tata’s Southeast Asia business increased by 105% on-quarter to INR 2.95 billion ($40.27 million) in the fourth quarter of fiscal 2021, which ended March 2021.

Tata Thailand (TSTH) said last week it will focus on local market sales because Thailand’s national infrastructure investment and the Thailand-China high-speed rail project will stimulate domestic steel demand. TSTH chief executive Rajiv Mangal said: “Last year, steel consumption in Thailand reached 16.48 million tonnes and this year we are seeing positive signs that will drive steel demand.” 

The company had earlier predicted that Thai infrastructure projects would result in steel consumption increasing to 18-18.5mt in 2021.

Tata Steel’s Singapore steel plant, NatSteel, meanwhile produces rebar, wire rod, cut-and-bend rebar, pre-cages and steel couplers.

By Kallanish Team

As the European steel market finds itself in the midst of a crippling shortage, the incentive among stockholders and end-buyers to inquire about imports has increased over the last few months, with successive offers heard each week from South Korea, Taiwan and, most notably, India.

However, global supply tightness, a raging pandemic in India and the removal of the tax rebate in China have made it more challenging for European players to receive material from abroad, sources told S&P Global Platts.

As the domestic European market looks to wind down around the summer holidays, several sources said there would be more import offers into the region to make up for the shortfall in domestic supply — though keen buyers would need to be quick with their negotiations.

“There’s a lot of import material coming in [the summer], which will give some relief to the market. Everyone knows that it’s coming, so it’s basically sold out before it’s even arrived,” a Nordic buyer said. “We have a few months until the next delivery arrives again, so by end of June-July we’ll have some relief from the steel [shortage], but prices will still be high.”

HRC European import prices were heard at Eur990/mt into CIF Antwerp and CRC import prices at Eur1,200/mt CIF Antwerp.

Further to this, a European service center source said import prices were between Eur1,150-1,200/mt to “any European harbor.”

On the viability of import material from India, an Italian service center said he did not receive any offers from sellers because of the rampant coronavirus pandemic in the country.

“India is very important for Europe,” the same source said. “Usually we buy 25% from imports, but we would like to increase. We are hoping to get some good news about the safeguards. We need softer regulations.”

HRC import quotas

Options for imports of hot-rolled coil material from Russia and Serbia for the April-June quota are still available, with remaining quota allowances at 48% and 58% left, respectively, and South Korea’s quota allocation ample at 84%. Meanwhile, India’s quota balance is now exhausted and considered critical with just 950 mt left, European Commission data showed May 10.

Once a quota balance dips below 10%, importers are obliged to deposit with customs authorities a 25% bank guarantee to cover any potential duty liability.

The data also showed the “non-country specific” quota stands practically unused at around 2.74 million mt left, or 98%, with 769,002 mt awaiting allocation at European ports.

In the fourth quarter of a year, named countries that have exhausted their own allocations are permitted to utilize the “non-country specific” available balance.

CRC import quotas

In the Italian market, the same service center source cited a deal for Eur1,175/mt for cold-rolled coil from the Far East May 10.

“We need cold-rolled coil from imports because in Italy we have no availability, and also because it is difficult to succeed in buying volumes from North European mills,” the service center source said.

For cold-rolled coil imports, Ukraine’s quota balance is now exhausted, with most other countries’ balances fairly plentiful. India’s quota for April-June was still available with 89% left and Brazil’s allocation practically unused at 99%, or 131,987 mt.

South Korea’s quota balance was also still ample at 78% and Serbia’s stood at 32,616 mt, or 66% left.

Lastly, the removal of the tax rebate on Chinese material was also putting a damper on the possibility of more imports throughout June-August, coupled with the Chinese transition from net exporter to importer.

“The Chinese don’t want to export material. They want to import, so it’s a big change,” the service center source said. “In the past it was the reverse, so we can imagine in the next month it’ll be an important impact on the market. When they move in China, the whole world moves with it.”

— Amanda Flint