Day: 8 July 2021

Merchant bar maker Beltrame will build an eco-friendly rebar and wire rod mill in Romania that will significantly cut greenhouse gases and suspended dust particle emissions. The facility will be built around the concept of a circular economy, minimising waste and water consumption through a treatment and recirculation system.

Kallanish learns from the company that the greenfield investment will be around €300 million ($354). A feasibility study is under way for the rolling mill, which will include a 100MW photovoltaic park.

The new facility will have a yearly production capacity of approximately 600,000 tonnes of rebar and wire rod, generating 250 new direct jobs locally and almost 1,000 indirect jobs.

“The challenge of the steel industry is to align with the environmental objectives set by the EU Green Deal, although the zero-emission or ‘green steel’ target is impossible to be achieved with existing technology,” says AFV Beltrame country manager in France and Romania Carlo Beltrame.

“I think today greenwashing is very common, with the simple result of inflating the word ‘green’ and/or zero-emission. The project developed by Beltrame Group will establish unprecedented progress in the steel industry due to the design and innovative technologies, which make it possible to minimise pollutant emissions generated during production activity,” he continues. “Through this investment, the group shows its commitment to achieving environmental goals and harnessing local resources.”

The new plant will boost domestic production, improving the country’s trade balance. The Romanian construction sector’s rebar and wire rod consumption is expected to increase over the next decade thanks to private and public investments in the country’s infrastructure. Current consumption from the construction industry is between 1.4-1.5 million tonnes/year. Romania is a net rebar importer.

Beltrame owns the bar and speciality steel Donalam Călărași plant. This supplies hot-rolled bars for use in oil & gas, agricultural machinery and equipment, large mechanical equipment and hydraulic equipment.

This year, Donalam is expected to double its turnover compared to 2019, reaching €130 million ($153.4m). The company sells about 120,000t of steel bars annually.

Natalia Capra France

The European Commission has issued the confirmation of definitive anti-dumping measures against EU imports of Turkish hot rolled coil. Duties have been slightly reduced from the provisional measures implemented in January.

Definitive duties are now imposed at a level of 4.7-7.3%, depending on the source; provisional measures had been set at 4.8-7.6%, Kallanish notes.

The biggest reduction was applied to Erdemir, for which duty is now set at 5%, against a level of 5.4% set in the provisional decision.

Despite the relatively low level of duties imposed, the effect of the AD measures has already impacted trade of HRC from Turkey to Europe. According to Eurofer data, this year Turkish suppliers are set to import some 1.5 million tonnes of HRC into Europe, 1.2mt less than in 2019. Overall HRC imports from all non-EU sources could reach a new record level of 8.7mt in 2021, above the recent peak registered in 2018 at 8.5mt.

Emanuele Norsa Italy

Mechel’s trading arm, Mechel-Service, posted a 10% on-year increase in shipments in the first half of 2021 to 797,000 tonnes, the company says.

Sales of hardware products grew by 135%, structural shapes by 44%, beams by 36%, and reinforcement and wire by 4% and 27%, respectively.

“This year we plan to increase our presence in the hardware and wire rope market and expect to continue creating sub-sorting warehouses in the regions, equipping covered hardware warehouses,” says Mechel-Service general director Leonid Polyansky. “We will continue our work to consolidate our share in the beam … market.”

Earlier, Mechel-Service supplied 5,000t of steel for the construction of an ice palace in the Russian city of Omsk (see Kallanish passim). It also supplied steel for the construction of the Kontinental Hockey League (KHL) Avangard hockey academy in Omsk.

Mechel-Service posted a 4% on-year increase in shipments in 2020 to 1.52 million tonnes despite the impact of the Covid-19 pandemic. The company continued to supply large infrastructure projects in Moscow, housing construction, construction of bridges and sports facilities.

Parent company Mechel saw first-quarter sales of long products fall 7% on-quarter and 13% on-year to 564,000t. Despite lower sales and output, revenue rose 10% on-quarter and 13% on-year to RUB 76.1 billion ($1.04 billion), while profitability rose to 24%.

Svetoslav Abrossimov Bulgaria

European domestic steel sections prices gained another week up to July 7, as sources cited limited supply.

S&P Global Platts’ European medium sections price (category 1, S235 JR) was assessed at Eur1,030/mt delivered July 7, up Eur15/mt week on week.

Domestic medium section prices continued to inch up to historically high levels as sources noted limited supply in the market.

One distributor source based in the Benelux region noted that most mills are currently holding back offers for beams, while some are only selling limited quantities. The source put a tradable value for Category 1 medium sections at Eur1,060/mt delivered.

Another Benelux-based distributor source put a tradable value at Eur1,000/mt delivered, with some mills targeting Eur1,100/mt delivered. Most mills are only selling to their regular customers and holding back offers from the spot market, he added.

The source said he does not expect prices to change a lot during the holidays as France and Belgium are set to enjoy an extended summer holiday period in late July and early August.

“Mills here are quite comfortable,” he said. “They pretend they have sold most part of September already. But most mills will close for two to three weeks in July and August for holidays. So, I don’t think their orderbooks are that good. I think European mills will produce less material and get higher margin.”

One European mill source also noted that market sentiment is still strong and there is not much slow down in demand expected in the near term as seasonal holidays vary from country to country.

— Rabia Arif, Staff

The European Commission’s planned July 14 announcement of a proposal for its Carbon Border Adjustment Mechanism is set to direct future trends in steel and aluminum sectors, which account for 8% and 2% of global carbon emissions, respectively.

According to draft proposals seen by market sources, the CBAM will replace the current system of free carbon allowances for metals sectors, and tighten allowances in the European Emissions Trading System generally, a bone of contention for some.

The mechanism, or tax, is expected to be fine-tuned before introduction in 2023 on imports into the EU of metals, electricity, cement and fertilizers.

While some call the initiative ambitious, the mechanism will certainly push up prices of both carbon and decarbonized metals.

“We expect some big announcements, given that the EU agreed in April-21 to cut the bloc’s emissions by 55% of 1990-levels by 2030, and that its economy’s arguably not yet able to achieve this ambitious goal,” Tom Price, analyst with merchant bank Liberum, said in a July 6 note, referring to the EC’s so-called Fit for 55 package.

The biggest changes will relate to the Emissions Trading System, “the EU’s primary agent of industrial change”, the analyst said. Carbon prices are up 260% since March 2020, to a record Eur58/mt but there is “much more upside,” according to Liberum, forecasting a Eur80/mt price by 2025. This increase will be a result of rising coal and gas prices, ETS allowance constraints and speculative positioning ahead of market restructuring.

“Operating since 2005, the EU ETS is now proactively testing the EU industry’s sensitivity to higher prices,” Price said. A 55% cut in carbon emissions needs a much higher carbon price and even more emitters to be regulated, following the recent inclusion of shipping, housing and transport in the list, he said.

Europe’s steelmakers, wishing to protect the value of their investments in EU steel decarbonization, tend to favor the idea of CBAM as a pathway to achieving Paris Agreement goals and to keep out steel produced in jurisdictions with less stringent environmental legislation.

EU steelmakers have calculated that to be “Fit for 55” by 2030, and achieve net-zero carbon production by 2050, they may need to invest as much as Eur144 billion, including in breakthrough technologies which could increase steel production costs and prices by between 35% and 100% above current levels. Some aluminum makers, meanwhile, do not believe the tax will halt carbon leakage and fear the global nature of their traditional supply chains may be comprised.

Steel – looking forward

“The Fit for 55 package is one of the most significant – and largest – groups of measures the EU has ever released in one go,” said a spokesman for European Steelmakers’ Association Eurofer. “It will completely revise the basis of EU climate policy in attempt to bring it into line with the EU’s political ambition to reduce emissions by 55% compared to 1990 levels. So there is a lot to look forward to, with potential opportunities and challenges across many of the dossiers.”

Steel prices worldwide recently hit record highs on supply tightness amid a stimulus-led market recovery from the impact of coronavirus pandemic. Consumers fear CBAM will bring more volatility. Distributors’ and importers’ association Euranimi’s executive board member Christophe Lagrange in the week starting July 4 labeled the CBAM “an ecological excuse for what in reality will become another common import tax, in the same line as anti-dumping duties,” and advocates a producer by producer approach.

Many producers, including in third world countries, have already bought and installed the most modern technology in the interest of sustainability, Brussels-based Lagrange argued.

“We believe that a system based on individual incentives/penalties would be much more effective to promote individual investments in more sustainable production than to create yet another general ‘green import tax’ on steel and aluminum.”

Fernando Espada, EUROMETAL president and managing director of Layde Steel, a service center and distributor subsidiary of Tata Steel, Europe’s second-largest steelmaker, said CBAM’s principle should be to “help implement new, more ecological technology, not give privileges to some players against others based on location or local influence…… we believe that the targets of CO2 reduction should be in line with available technologies, which sometimes looks very difficult to be achieved. Price of CO2 rights (ETS) should be monitored by the authorities and align with the objective of reductions, not on financial returns.”

Aluminum: carbon measurement snags

Gerd Gotz, director general of European Aluminium, a producers’ group, admitted July 5 that extending carbon pricing beyond Europe by obliging product carbon content declaration could have beneficial effects on the climate and industrial competitiveness.

However, the electro-intensive nature of aluminum, with significant exposure to indirect emissions from electricity production, complicates measurements. “Today there is no method that can verify aluminum’s actual carbon content in complex products from more than one plant and different countries,” partly due to the lack of transparency of electricity sourcing in third countries, Gotz wrote in an article published on Euractiv, a media website.

If the CBAM does not cover the entire value chain, there will always be carbon leakage, he claimed.

“CBAM could lead to additional costs for European producers of semi-finished aluminum products, sourcing primary aluminum from outside the EU, of more than 5% of the total value of products ranging from window frames to car parts.”

Even before the CBAM initial announcement, London Metal Exchange cash aluminum prices stood at more than a three-year high of $2,487/mt July 7.

— Diana Kinch, William Healy and Annalisa Villa