Day: 21 June 2021

Asian stainless cold-rolled coil prices rose in the week to June 18, supported by a firm spot market in China, strong prices for raw materials and positive market outlook.

S&P Global Platts assessed 304 grade 2 mm 2B stainless CRC at $2,800/mt CFR East and Southeast Asian ports on June 18, up $10/mt week on week.

The official nickel cash price on the London Metal Exchange settled at $17,287/mt on June 17, down $496/mt on the week.

In China’s domestic market, prices continued to fluctuate but rose modestly in the week-ended June 18 on the back of strong raw material prices, healthy sales and low inventory pressure, market sources said. This was despite some decline in the futures market after a strong rally in the previous week. The spot market prices in southern China rose by about Yuan100/mt ($16/mt) on the week.

Some major Taiwan-based mills had already sold out allocations for July shipment and new offers for August shipment were expected to be above $3,000/mt CFR, according to a regional trader. The supply from a Japan-based mill also declined as it was still delivering previous bookings, market sources said.

Prices are likely to be supported by the relatively tight supply and it seems a few buyers have even accepted the high prices, the trader said.

The most actively-traded July 2021 stainless steel contract on the Shanghai Futures Exchange was at Yuan16,155/mt on June 18, down Yuan 430/mt, or 2.6%, on the week.

— Analyst Yuelin Dai

US hot-dip galvanized and cold-rolled prices continued to rise June 18 as supply options remained limited for value-added sheet products.

The daily Platts TSI US HDG-HRC index rose $17.50 over the week to $1,897.50/st, while the daily Platts TSI US HDG-CRC index was up by $23.25 at $1,902.50/st within the same time frame. The daily Platts TSI US CRC index moved higher by $36.50 over the week to $1,916/st.

A Midwest service center source cited more limited supply options for tandem products, while HRC availability started improving slightly. He put the market at a minimum of $1,900/st for any CRC and HDG availability, but prices were even higher for any availability with a shorter lead time. An integrated mill was targeting $2,040/st for its August CRC and HDG availability, according to the service center source.

Another Midwest service center source confirmed transacting small tonnage orders of August production CRC and HDG at that level from the integrated mill. He also reported small orders of CRC and HDG from a Midwest converter at $1,920/st, but their lead times were late September.

Tight through year-end?

“I feel like HDG will be tight for rest of year, honestly,” a third service center source said. He needed to pay $1,990/st for 200 st of HDG with CRC-substrate from a Midwest converter with a September lead time. Extending HDG lead times, he was exploring his options in import markets and placed a 600 st HDG order at a base price of $1,920/st on a delivered basis for October production from a Mexican converter.

The third service center source also reported a small-sized CRC transaction at $1,920/st for late July production from a minimill in the South. On the imports side, he was able to book more than 500 st of CRC at $1,700/st Houston DDP from Korea with an August shipment time.

A Midwest buyer noted firmer HDG outlook with potentially higher automotive activity: “Auto demand should increase in the second half of the year as forecasts from auto customers are up.”

“The chip situation is improving but they are tied to more truck/SUV platforms, so their demand never decreased as much as others,” the buyer added.

Availability remains a challenge

An HVAC manufacturer noted persistent demand from customers and cited struggles in meeting that demand and covering steel needs in the spot market. He put the HDG market at a minimum of $1,900/st, but finding availability for needed products from domestic mills remained challenging.

The manufacturer decided to tap the import market and received an offer at $1,880/st East Coast DDP for 16GA G90 product from Turkey with early December arrival time. He was still trying to decide about that cargo.

CRC-HRC spread remained elevated, standing at $231/st June 18, according to S&P Global Platts pricing data.

With a firmer demand outlook for value-added sheet products, domestic mills have been targeting larger spreads. An integrated mill was reported to target a spread as high as $320/st between prices for its August HDG and CRC production and HRC availability.

The combined Platts TSI price index uses a volume-weighted-average calculation – according to TSI’s standard – to determine value on an ex-works Indiana basis.

— Ali Oktay

ArcelorMittal proposes to close its Tailored Blanks site in Birmingham due to considerably reduced EU demand for vehicles and lower levels of UK car production, a company spokesperson tells Kallanish.

A strategic review of the business has concluded the Birmingham site is not sustainable for the long term.

“I want to acknowledge the considerable efforts made by employees at the site in recent months, to secure the site’s future in a challenging market,” says Bertrand Jacquier, chief executive at ArcelorMittal Tailored Blanks. “However, we have reached the very difficult decision to propose the closure of ArcelorMittal Tailored Blanks’ site in Birmingham. Today marks the beginning of a consultation phase; we take consultation very seriously and will not make any final decisions until we have considered employees’ views.”

If the proposal to close the site is agreed, all employees will be helped with their employment search by specialist consultants, the spokesperson comments.

ArcelorMittal Tailored Blanks is a leading supplier of laser-welded and unwelded blanks for the automotive industry worldwide. In Europe, it has sites in Belgium, France, Germany, Slovakia, Spain and the UK.

Adam Smith Germany

High European scrap prices and strong demand will continue until the end of the year, with competition for high-grade scrap firm and market forecasts bullish.

Prices for high grades will remain strong for the next five years, with some degree of volatility and downward and upward corrections, Casier Recycling’s Alain Eeckman said at last week’s Kallanish Europe Steel Markets virtual conference.

The decarbonisation drive will add more constraint on scrap, which will gain a central role in low-carbon steelmaking. This will contribute to future high values and demand.

“Production of steel, particularly flat steel, went down last year because of Covid-19,” Eeckman said. “We should not forget that most of our domestic mills generate quite a bit of internal scrap usually of a high grade. The other main source is the automotive industry that has been struggling for quite a while even before Covid-19. Now with rampant steel output, there is less supply and huge demand.” The situation is worsened by protectionism which is causing a “self-generating” bubble in steel and scrap prices, he added.

Given the current need for scrap, Eeckman believes “it is a given” that an export ban on European scrap will be implemented. The strongest lobby to push for a ban on high-grade exports will be the flat steel mills.

Since supply of lower qualities is in excess, there is no need to ban exports of the lower grades. There is however a trend among European mills to use more HMS grades. ArcelorMittal is said to be actively looking into that, pushed by the structural shortage of new arisings E8 and E40 grades.

So far, China has been sourcing scrap in Asian countries but rarely in Europe. China is however going to provide a significant flow to international scrap trade. The country is forecast to increase its seaborne scrap imports massively as EAF capacities are being added, said Shanghai Metals Market chief executive Ian Roper.

In June contracts, northern European E8 stood at €450-460/tonne ($536-548) delivered on average. In Italy E8 and E40 are being transacted at €490-505/t delivered, Kallanish notes.

There will be an alignment with the higher Italian prices, “for the simple reason that it is all connected … Northern Italy and the flat steel mills are desperately looking for scrap and sourcing it in Eastern Europe and southern Germany,” Eeckman explained. If southern German scrap flows to Italy, there will be a shortage in Germany and players will need to adapt their prices or start looking elsewhere, he concluded.

Natalia Capra France

The European Commission’s proposal to extend steel safeguard measures for three years was adopted by EU member states on Friday, with 17 in favour, eight against and two abstentions, informed sources tell Kallanish.

Estonia, Latvia, Lithuania, Sweden, Denmark, the Netherlands, Malta and Ireland voted against the proposal, while Austria and Cyprus abstained. The 17 member states who voted in favour represent 88% of the EU’s population – the minimum condition for a qualified majority decision is 15 member states representing at least 65% of the population.

When approached by Kallanish for comment on Friday, a Commission representative said: “Member States supported the draft implementing act on the prolongation of the steel safeguard. The Commission intends to take a decision on the prolongation before the end of June 2021.”

On 11 June the Commission notified parties to the investigation as well as the WTO of its intention to prolong steel safeguard measures for three years beyond 30 June (see Kallanish passim). In its determination following the safeguard review, the Commission found evidence that the measures continue to be necessary to prevent or remedy serious injury or threat to EU steel industry.

Consultations on the proposal took place between 14 and 18 June.

According to the EC proposal, a relaxation of tariff-free quotas of 3% annually would be implemented during the 2021-2024 period. A review of how the measure is working would be carried out before the end of June 2022.

Adam Smith Germany