Day: 23 July 2021

European stainless steel cold and hot rolled coil, sheet and tube prices are increasing again this month due to persistent shortages, market participants tell Kallanish.

European mills are quoting CRC for January and February 2022 delivery at €3,300-3,550/tonne ($3,890-4,185) delivered, depending on material quality and volumes. HRC is offered at €3,100-3,300/t delivered. Buyers are not negotiating prices, instead focusing negotiations on delivery. The higher point of the range is usually paid by service centres for high grades.

The short supply situation is not helped by imports being uncompetitive, particularly Chinese CRC material that is proposed at €3,700-3,800/t cfr southern European port. As a consequence, European stainless CRC is particularly tight, sources say.

The worst has yet to come in September and October, as little material is being bought on the import market. Buying coils from countries outside the EU has become a challenge also because of the shortage of vessels. Freight companies prefer shorter voyages where they can charge and leave in one day.

Meanwhile, distributors and service centres across Europe are also increasing prices for their products, in line with coils values. Sources report delivery delays caused by European mills’ long lead times, together with relatively low stocks in western European countries, Kallanish notes.

Natalia Capra France

The Indian government has listed six state-run steel plants, including Rashtriya Ispat Nigam Limited (RINL), for sale, according to the finance ministry.

The ministry confirms that no state steel plant has been sold during the last five years. The disinvestment of central public sector enterprises (CPSEs), including steel plants, was guided by the new public sector enterprise policy for Atmanirbhar Bharat (Self-reliant India), Kallanish notes.

“As per the new policy, the existing PSEs were broadly classified as strategic and non-strategic sectors,” says union minister of state for finance Bhagwat Kishanrao Karad. “In the strategic sector, the existing PSEs at the holding company level would be retained under government control. In the non-strategic sector, including steel plants, the PSEs would be considered either for privatisation or closure”.

RINL, Neelachal Ispat Nigam Limited, NMDC Integrated Steel Plant, Alloy Steel Plant, Visvesvaraya Iron & Steel Plant and Salem Steel Plant are the steel companies earmarked for sale. This has been approved by the federal cabinet of ministers.

RINL, a 6.3 million tonnes/year capacity integrated state-run steel plant, posted a turnover of INR 5,223 crore ($701.11 million) in the fiscal first quarter ended 30 June.

Sayed Aameer India

Steel inventories at German stockholders declined in June for both flat and long steel, according to data from German steel stockholder association BDS.

Average flat steel stocks in June fell 1.8% month on month to 1.08 million mt, following a brief uptick in May. Year on year, flat steel stocks declined 18.6%.

Long steel stocks in June fell 4.6% compared to the previous month to 771,477 mt and were 2% lower year on year.

Sales for both product types increased in June. Average flat steel sales grew 8.9% on the month and 18% on the year to 532,288 mt. Demand was still lagging in June 2020 due to the first wave of the pandemic.

Sales for long steel were up 15.7% on the month in June to 323,824 mt, rising 8.9% on the year.

S&P Global Platts monthly German sentiment survey conducted at the beginning of July showed the short-term expectation for inventories stable at an index of 50. However, this was up almost 20 points from the June index at 30, suggesting market participants turned more bullish from June to July for stock levels as more imports become available over the summer.

This is expected to remain short-lived as bullish sentiment and short supply are likely to return following the summer slump in activity.

Overall activity has been low over the past two weeks in the market due to the summer slowdown. Sources in the distribution sector said that fewer inquiries for material were intensified by the recent plateau in prices, especially for flat steel and customers waiting for future price direction in the spot market.

— Laura Varriale

Germany’s crude steel production in June jumped 38% on the year, supported by rising demand, steelmakers’ association WV Stahl said July 22.

Crude steel production rose to 3.42 million mt in June, of which 2.27 million mt was produced by the blast furnace/basic oxygen furnace route and 1.15 million mt by the electric arc furnace route, the association said.

Pig iron production rose 45.3% from a year previously to 2.1 million mt, while hot rolled steel products output was up 45% to 3.04 million mt.

German steel volumes have been in recovery for the first half of the year, with crude steel output rising to 20.62 million mt, up 18.1% on the same period in 2020, WV Stahl said. However, steel production in H1 remained overall below 2018 levels, it said.

Of the H1 crude steel total, production by the BF-BOF route rose 20.6% from a year ago to 14.12 million mt, while EAF-based output rose 13.1% to 6.51 million mt, it said. Pig iron output grew 19.4% to 13.02 million mt, while output of hot rolled steel products was up 20.4% to 18.29 million mt.

Steel volumes are being supported by global steel users who are increasing their production and global steel demand is also supported by investment programs, the association said.

Prices for some steel products rose to record levels during H1 on stimulus-led demand as European economies recovered from the COVID-19 pandemic, causing a tightness in some product areas.

S&P Global Platts assessed Northwest European hot-rolled coil down Eur2/mt at Eur1,170/mt July 22 ($1,378.14/mt) ex-works Ruhr.

No significant spot availability was reported for Q4 in the Ruhr region July 22. Stock levels are expected to increase as more imports arrive during the summer months.

— Laura Varriale and Diana Kinch

Brazil’s crude steel production in June advanced 45.2% on the year to 3.12 million mt, according to industry institute Aco Brasil on July 22.

From January to June, the production rose 24% on the year to 18 million mt.

Finished steel shipments to the domestic market increased 32.8% on the year, or about 44% in the first half, to 2.86 million mt.

The data showed a rise of 41.1% in consumption of steel products in June at 2.486 million mt from last year.

Furthermore, imports of finished steel totaled 420,177 mt in June, 124.9% more than the same period of 2020. On the other hand, sector exports were down 14.1% to 916,000 mt.

“The entire production chain suffered a shock in April. We saw the rock bottom, but as of June we were already supplying the domestic market,” said the Aco Brasil’s President Marco Polo de Mello Lopes.

Lopes shared the new per capita consumption projections for steel products in the country for 2021, which stood at 123.6/kg as against 100.9/kg in 2020.

He also announced the value of new investments in the steel sector until 2025 at $8 billion. From 2008 to 2020, Brazilian mills invested $28.2 billion.

For the institute, crude steel production in July should increase 14% on year, as well as domestic sales (18.5%), imports (119%) and apparent consumption (24.1%), all compared to July 2020.

‘Out of reality’

The Aco Brasil data announcement took a different tone this month.

Lopes said that the narratives made by the local civil construction sector in recent months, specifically by CBIC, that Brazilian mills have delayed the shutdown of their blast furnaces, exponentially increasing exports with the aim of reducing supply and increasing pricing in the domestic market do not correspond to reality.

For him, the construction players aimed only at lowering the import tariff. And he called a myth the idea that steel prices hamper the growth of the sector.

In a study carried out in partnership with the Fundação Getulio Vargas, the institute showed that the impact of rebar inflation in the last 12 months until June 2021 would be only 0.177 percentage points.

“The weight of rebar in the basket of essential inputs for the sector would be just 0.2097 percentage points,” the executive said.

And he added, “supplying the domestic market is an absolute priority for the mills, following free market rules. Imports are being carried out normally without the need to reduce the tariff.”

Last week, a misunderstanding with the Brazilian economy minister Paulo Guedes shook the market. According to Guedes, the steel sector would have committed to keeping prices stable in the second half, given the importance of the input for other sectors. Aco Brasil denied such claim.

— Mayara Baggio

The European market is seeing a consequential squeeze in finished steel supply following moderate ramp-ups from mills earlier in the year amid the COVID-19 pandemic, with additional shortages felt across the supply chain.

Other limited materials include paper, wood and plastics needed for steel packaging, and most crucial, there is a shortage of trucks and haulers made worse by the recent flooding disaster in Germany and the Benelux, forcing several mills to declare force majeure, sources told S&P Global Platts July 22.

Sources said acute shipment delays brought on by the flooding and lack of available trucks could incite upward pressure on prices following the summer lull in September, when most buyers are expected to inquire about new orders.

The daily S&P Global Platts assessment for hot-rolled coil stood at Eur1,170/mt ($1,382.60/mt) EXW Ruhr July 21, up by Eur2/mt on the day, stabilizing for several weeks following hefty price increases due to supply tightness, which pushed HRC prices to Eur1,190/mt EXW Ruhr in June.

Prices were at their lowest ever recorded in June 2020 at Eur396.50/mt EXW Ruhr following the deterioration in demand during the pandemic’s first wave.

Additionally, the prioritization of transporting material yielding higher fees, combined with added protectionism in Europe, has added significant pressure on regional resources and transport logistics.

To combat the shortage in drivers, governments around Europe have introduced new policies aiming to increase the number of drivers on the road and increase the amount of time drivers spend on the road.

Government intervention

The Spanish government has lowered the minimum age required to drive commercial heavy goods vehicles to 18 years, and the British government has temporarily relaxed drivers’ maximum daily hours from nine to 10 hours.

“Some of our clients are having to use their own vehicles to collect. This will continue for at least six months, with the UK exacerbated by the Brexit situation,” a UK-based mill source lamented.

“A lot of lorry drivers can’t get their visas, and travel is a lot more difficult. We are speaking to the International Steel Trade Association to hear about a possible extension of drivers hours, but it doesn’t look likely.”

While the flooding in Germany and the Benelux has not directly hindered the UK, the mill source said the impact on stretched lead times would have a rippling effect across the Continent, putting more pressure on other producers like Arcelor Mittal and Marcegaglia to step up and deliver.

The extent of the flooding damage, coupled with chronic transportation issues, was made clear by one Benelux service center source who called it a “catastrophe.”

“Transport is already a big problem. I am collecting material from Italy, the volume we would like to have loaded is limited due to the number of trucks, and thus we need to calculate 3-5 days extra for delivery,” the source said.

“There’s a shortage of 35,000 truck drivers. The average age of a truck driver in Germany is 62, and to get a license it costs Eur6,000. E-commerce activity has also increased the demand.”

Hauler shortage effects on other markets

On the bulk ferroalloy side, traders were heard planning for a “chaotic” fourth quarter. One trader told Platts that the situation was turning into a perfect storm.

“You have everyone producing at maximum, this will continue through the year, and then with the Christmas rush on top of that, we’re going to have some serious problems,” he said. “It is definitely going to impact our ability to properly service our customers.”

An aluminum trader told Platts that this issue has been under the surface for a long time and systematic changes were needed to combat the shortage. “Driverless trucks are the only way this is fixed, no one wants to be a truck driver these days,” he said.

The same woes were felt in the longs market, with a European trader citing difficulty locating trucks during periods of peak demand.

“There might be some delays in order delivery and some potential orders requiring ultra-prompt shipment might be missed as a result,” he said. “I don’t see an obvious solution to it.”

— Amanda Flint, William Healy, Wojtek Laskowski