Day: 13 May 2021

Klöckner & Co is striving to become the leading one-stop digital platform for steel by 2025, Kallanish hears from the German-based steel distribution group.

Klöckner claims a pioneering role in digitalisation, and in the next phase of its digital transformation intends to focus on automating internal processes. It says its aim is to link the physical and the digital side of the business more closely, thus greatly reducing manual interventions along the value chain, what it dubs “zero touch”.

This will also involve pooling key Klöckner & Co digital and IT competencies under the roof of its kloeckner.i unit. In this context, kloeckner.i will build up a second innovation hub in the US to better fulfil the local requirements for digitalising the business.

The company’s target is to more than double its pre-pandemic level of operating income, and sustain this, by 2025. Its new corporate strategy, “Klöckner & Co 2025: Leveraging Strengths”, was presented at Wednesday’s annual general meeting by incoming chief executive Guido Kerkhoff.  Kerkhoff, formerly ceo of thyssenkrupp AG, is assuming the position from 13 May.

The group’s board will also get an additional member in Bernhard Weiss, as chief executive officer Europe. For the past several years, Weiss has been ceo of the French country organisation, where his accomplishments include a successful restructuring. As of 1 June, the management board will thus consist of Guido Kerkhoff, ceo; Oliver Falk, cfo; John Ganem, ceo Americas; and Bernhard Weis, ceo Europe.

Christian Koehl Germany

Italian merchant bar and sections producers are stopping sales this week, following increasing prices of scrap and finished long products. All flat and long steel producers have withdrawn from the market as scrap prices are rising each day. Longs contract prices are surpassing quotes, amid a “frenzy” leaving mills and buyers baffled over which prices apply, sources tell Kallanish.

Merchant bar domestic values have reached €300/tonne ($364) base ex-works on average, or €720/t ex-works including €420/t size extras. On Friday last week some producers were asking for €360/t base ex-works for a short period of time, but all mills have stopped sales this week. Customers expect new asking prices to reach the level of €400/t base ex-works, sources say. Domestic demand is said to be at normal levels but stocks at distributors are low.

Beam producers are also stopping sales after the first category of sections increased in contracts to €360-380/t base ex-works. Including €380 size extras, beams now start at €740-770/t ex-works, a €20/t increase on average compared to the first week of May. Sections producers should start quoting again by the end of this week, sources say.

“Prices are changing every day,” a source comments. “Distributors lament a lack of stability and do not know what price to quote. Some are resorting to also stopping sales and waiting.”

Another distributor warns stability is essential as end-users cannot absorb continuously changing prices. Some customers are putting off their orders because “working in such a mad market is madness”, he exclaims. Buyers believe that if stability is not reached, a price collapse could be possible.

Natalia Capra France

NASS, the UK steel distributors and service centers association, is calling on the UK government to extend safeguards beyond their current June 2021 expiry date. The move comes just a week after UK steel producers asked for the same.

According to a spokesman from NASS, UK safeguard measures are essential to the UK steel market, particularly while the US, EU and other countries maintain their own tariffs and import quotas.

“Without these measures the UK would be exposed to trade diversion and potentially uncontrolled import surges with the resulting detrimental impact on market prices, which would of course have a very likely negative impact on the value of steel sitting in stock,” he said.

The UK government is expected to determine whether to maintain the safeguard by June, but it is understood no specific date has been decided yet. For the UK safeguards, the Trade Remedies Investigation Directorate (TRID) will make an independent determination which then goes to the Department for International Trade where the trade secretary will either accept or reject it.

For the EU safeguards the decision will be made by the European Commission and will likely be finalized after the UK, as it is expected in July. TRID did not comment on this when reached by S&P Global Platts.

Steel prices in Europe and the UK are at their highest historical levels.

The NASS spokesman said UK steel distributors and service centers have had a profitable 12 months and “stocks are at reasonable levels and imports continue to complement UK manufactured steel products in servicing key UK steel-consuming markets.”

Last week, as reported, UK Steel, the association of UK steel producers, called for keeping steel import quotas in place because of the continued problem of overcapacity and increased use of import restrictions around the world.

— Annalisa Villa

The supply of hot-dip galvanized steel in Europe is at critical levels with many mills severely delayed on orders or simply unable to offer. As producers prioritize demand from the automotive sector, other players without the assurance of contracts have been caught short and unable to accommodate the needs of their customers.

With back-to-back buying for some the only viable option to stay afloat, the market has looked to import for additional support, sources told S&P Global Platts.

Since the start of the first quarter, North European hot-dipped galvanized prices have risen Eur440/mt and in the South, prices have increased by Eur640/mt.

The shortage of semiconductors and chips has also influenced the supply chain, causing further delays from mills, sources have said. With no tangible material to back up such exorbitant increases, sources have said price increases initiated by market-leading mill ArcelorMittal are purely theoretical, so long as the steel giant does not offer HDG material.

The supply shortage in Europe has been a central fixture in the market for most of 2020-2021, mostly a product of stoppages due to the first and second lockdowns across the continent which coincided with a gradual slowdown in automotive production, as well as maintenance and weather delays. On top of this, mills are striving to keep prices buoyant after years of less than desirable margins, with a slow post-lockdown ramp-up fueling the supply tightness.

Mills including Voestalpine were set to be out of the market for the remainder of this year, according to a company source, with some mills now heard to be offering for 2021. As a result, European sellers are uncertain of workable prices, and the availability from imports is very sporadic.

One Benelux service center source said domestic mills were in no hurry to offer for this reason, with lead times from imports at October-December and foreign sellers more likely to sell anywhere else other than Europe.

“Non-European mills are taking their time to check the prices in the EU. They will send priority to the highest bidder, and the US market is positioned a bit higher than in Europe,” the source said. “We don’t see interesting import offers for HRC, and HDG offers are much more difficult to find. There are small deals of HDG, and EU mills don’t offer prompt deliveries. Import offers are not available for HDG.”

A Benelux-based trader cited an import deal at Eur1230/mt CFR Antwerp, with demand from his customers mostly geared toward inquiring about availability of HDG and CRC material.

Following the removal of the tax rebate on steel exports in China, a second Benelux-based service center source said China was now minimizing exports of HDG and CRC, and this was having an adverse effect on neighboring market prices.

“If we have less export from China, it’ll be a chain effect, Indian producers are already increasing their prices to the EU,” the source said.

According to data from the European Commission, India’s quota balance is still plentiful at 79% remaining, or 160,922 mt left of its 204,712 mt total May 12. China’s allocation was still relatively available standing at 83,151 mt, or 54% of its quota balance left.

The data also showed the “non-country specific” quota now stands at 91,437 mt, or 73% left.

In Q4, named countries that have exhausted their own allocations are permitted to utilize the “non-country specific” available balance.

For material falling under category 4a – material mostly used for non-automotive applications – the “non-country specific” quota balance currently sat at 548,902 mt, or 77% still available for import.

South Korea’s quota allowance for category 4a was on its way down, standing at 4,712 mt or 14% still available for import as of May 12, with India at a very critical 4,230 mt, or 7% allowance remaining. The UK’s balance, meanwhile, was still mostly untouched, with 78% of their 4a allocation left.

Over the last several weeks, sources have noted a gradual softening in demand from the automotive sector, likely attributable to a slowdown in their restocking efforts.

“I am concerned about the automotive demand,” the same service center source said. “I don’t see too many people in Belgium rushing to buy cars, most people hesitate whether to buy petrol or electric vehicles, and the sales don’t reflect the demand. [The demand] is contradictory; if they slowed down their forecast I wouldn’t be surprised.”

— Amanda Flint