Day: 27 July 2021

Steelmakers ArcelorMittal, Nippon Steel, POSCO, Severstal and industry associations have set industry recommendations for steel emissions cuts, to help meet net-zero targets over coming decades and contribute to the Paris Agreement on emissions.

The steel industry participants plan to adopt science-based targets in frameworks for moving toward net-zero emissions, ResponsibleSteel said in a statement, unveiling the broader group’s new report July 26.

Fifteen international steel companies, Brussels-based World Steel Association and Germany’s WV Stahl participated in the Net-Zero Steel Pathway Methodology Project, or NZSPMP’s, final report and recommendations, steel benchmarking organization ResponsibleSteel said.

No Chinese steel industry groups individually participated in the report, while worldsteel includes several major Chinese steel companies as members. Steel is the second-largest industrial contributor to emissions, with over half global steel production in China, and the country accounting for two thirds of emissions-intensive pig iron production via blast furnaces, using iron ore and metallurgical coal.

The report “sets out a framework for developing robust guidance for those in the sector who wish to make a realistic and credible commitment to the Paris Agreement, with a net-zero or ‘science-based target’,” ResponsibleSteel said.

The steel industry “has to reduce its net greenhouse gas emissions to zero within the next 30 years,” ResponsibleSteel CEO Anne-Claire Howard said in the statement. “Every steel company needs to plan its own pathway to achieve this, and to do so urgently.”

The NZSPMP report’s recommendations will help steelmakers in consistently measuring and setting company level emissions reduction targets, it said.

A greater usage of ferrous scrap, and new hydrogen-based iron and steel production plans, which are expected to slash emissions, may need to be complemented by industry process optimisation. New recycling measures, such as carbon-based byproducts, as well as cutting-edge iron ore processing and molten oxide electrolysis, may be pursued.

“To decarbonize the steel industry, we have to decarbonize the primary industry,” ArcelorMittal’s EVP Brad Davey said. “That is really what will drive the path to net zero as there is not enough scrap available to move to a truly scrap-based industry until the end of this century.”

Key recommendations

The key recommendations for greenhouse gas emissions reduction targets are to “differentiate between primary and secondary steel; set a consistent scope and system boundary; establish a consistent steel sector budget and trajectory; and acknowledge greenhouse gas emissions reduction from using co-products made by the steel industry.”

Further, the recommendations include integrating the influence of regulatory policy when setting a science-based target, leveraging existing standards and methods into a dedicated steel sector decarbonization approach, and developing unambiguous guidance related to different types of steel products.

Steelmakers with operations in Europe, Asia-Pacific and the Americas regions, including steering group members Tata Steel Europe, ArcelorMittal, GFG Alliance and BlueScope Steel, as well as JSW, Ternium, Voestalpine and NLMK, contributed over the past year to help define the report’s recommendations, it said.

“These recommendations are urgently needed as the steel sector currently emits between 7%-9% of global CO2 emissions annually,” ResponsibleSteel said. “However, steelmakers will not be able to achieve net-zero on their own. Significant support will be needed from both investors and policy makers to create the right environment for the massive and long-term investment required to make the structural changes needed.”

Tata Steel Europe, which targets reducing steel emissions in Europe by 30%-40% by 2030, over the coming years plans to make “significant investments” to decarbonize, said Tata Steel Europe’s director for sustainability Annemarie Manger.

The Paris agreement aims to substantially reduce global greenhouse gas emissions, limiting global warning to 2 degrees Celsius above preindustrial levels.

“We are preparing various decarbonization options including hydrogen-based steel production technology and, especially in support of more rapid decarbonisation, carbon capture, storage or utilization,” Manger said. “Decarbonizing the steel sector will need action not just from us and other steelmakers, but governments, policy, makers, markets and other stakeholders, including civil society, who will all need to work together to solve the challenge.”

— Hector Forster

Turkey, Europe’s second-largest steel producer, increased its crude steel output by 17.9% on year in June 2021 to 3.4 million mt. This output figure was also higher than 3.2 million mt produced in May.

According to the latest World Steel Association data, Turkish mills’ crude steel output totaled 19.7 million mt in the first half of the year, 20.2% higher on year.

The Turkish Steel Producers’ Association (TCUD) is expecting Turkey’s crude steel production to exceed 39 million mt this year, notably higher than 35.8 million mt produced in 2020 amid the COVID-19 pandemic. This expected output figure for 2021 would be an historically high level.

This target is in line with the expected 2021 growth in Turkish steel consumption and a rise in export volumes on strong global demand with the easing of the pandemic.

Turkish mills have also revised upward their 2021 steel export target. Turkish Steel Exporters’ Union, is targeting to exceed 23 million mt of export volume in 2021, around 2.5 million mt higher on year. The revenue generated from these exports is expected to reach $17.5 billion, up 40% on year.

New Turkish steel investments announced in recent months could carry Turkish crude steel output above 40 million mt in the coming years, industry sources observed.

— Cenk Can

Global steel output may hit a new record in 2021, on a recovery after the pandemic slashed rates outside China last year, according to analysts, including Commerzbank.

Strong steel growth in the first half in China – up 11.8% year on year to 563 million mt – and elsewhere has driven the market’s rebound, after scores of blast furnaces idled a year ago in Europe, Brazil, the US and Japan restarted.

Steel producers accelerated restarts from the second half of 2020, to capture steel demand and record high prices.

“If the pace of steel production does not slow, more than 2 billion mt of steel could be manufactured in one year worldwide for the first time,” Commerzbank analyst Daniel Briesemann said in a July 26 report.

Commerzbank said is “fairly certain that a new record will be achieved,” exceeding 2020’s 1.83 billion mt, and annual high of 1.87 billion mt in 2019, according to World Steel Association data. Other analysts are factoring in a steel rebound, with expectations of over 1.9 billion mt.

However, pig iron output is already slowing down in China, falling 2.7% in June on a year earlier, spelling potential weaker forward demand for iron ore and coking coal in the biggest steel market. Pig iron has not kept pace with crude steel growth in China, spelling a bigger share for ferrous scrap and metallics in driving growth to date.

China’s policy is to keep 2021 crude steel output below record 2020 levels, ordering output cuts and restrictions which may hit the market in the second half. China’s crude steel production will have to decline by 59 million mt, or 11%, year on year to 502 million mt over July-December, according to estimates by S&P Global Platts Analytics.

Excluding China, global first-half steel output rose at a faster 17.9% rate, to 440.6 million mt, from H1 2020, according to calculations using World Steel Association data. Over 1 billion mt of steel was produced globally in six months, up 14.4% on H1 2020, while global first half pig iron output rose 6.8% to 684 million mt.

Worldsteel’s June global steel production data at 5.6 million mt/day, is just short of a record in April, and follows a strong base after China broke through 3 million mt/day high in June 2020, Commerzbank said.

“The slight decline in the last two months is being attributed to the efforts of the Chinese authorities to curb local steel production for environmental reasons,” the report said. “According to the WSA’s data, the year-on-year production growth was driven not by China this time (+1.5%), but by countries outside China (where growth rates of over 40% were recorded in some cases).”

Annual steel growth rates outside China need to factor in that most countries outside China were in lockdown in Q2 2020, while China had exited from a lockdown centered in Wuhan and restrictions in other major cities during March 2020.

China scored a swift recovery to steel and pig iron output growth since Q2 2020, and into the first-half of 2021, while rates are starting to slow down.

Even with China’s pig iron output in June contracting year-on-year, daily output was stable from May. Pig iron rates in Germany and the European Union, Japan and South Korea fell in June from May, on a daily basis, according to worldsteel data.

Brazilian iron ore exports to Europe doubled to 3.6 million mt in June, the highest rate since May 2019, “reflecting an annual gain in the continent’s crude steel output in January-May of almost 16%,” shipbrokers SSY said in a July report.

— Hector Forster

Italy and Belgium emerged as the number one and two destinations for India’s finished steel exports over April to June, pushing Vietnam to third place, latest provisional data from India’s Joint Plant Committee showed.

The quarterly exports to Italy surged by more than 4.6 times year on year to 546,900 mt, while shipments to Belgium spiked by more than 3.5 times to 496,800 mt from Q2 2020. A year ago, China was the leading destination for Indian exports, followed by Vietnam and the UAE. Exports to China plummeted to 2,400 mt in Q2 from 965,000 mt as the country rebounded from the COVID-19 pandemic and reclaimed its status as a net exporter of steel in October 2020 after being a net importer over June to September.

Unlike its European counterparts, Q2 exports to Vietnam sank 55.3% from the year before to 420,700 mt. The fall was due to local steelmaker Hoa Phat, which started up a new 3.5 million mt/year hot-rolled coil mill in May 2020, and 2021 will be the first year that the mill is operational for an entire year.

However, shooting up to fourth place was Turkey, which skyrocket more than 44.8 times annually to 233,000 mt as Indian HRC prices were much lower than Turkish prices.

S&P Global Platts reported on June 24 that Turkish mills were trying to keep their offers firm above $1,100/mt EXW, while Indian suppliers had lowered their HRC offers to as low as $980-$990/mt CFR, from $1,020-$1,030/mt CFR at the end of May.

Monthly Turkish Statistical Institute data shared with Platts on July 1 showed Turkish mills imported 130,000 mt of HRC from India in May, although no HRC cargoes were imported from that country in the same month of 2020.

JPC’s data showed 220,600 mt of HR coils/strips were shipped to Turkey over Q2, while Italy and Belgium received 308,300 mt and 112,000 mt, respectively.

As for other flat steel products, India exported 3,600 mt of cold-rolled coils/sheets and coated steel products to Turkey in Q2, a far cry from the 176,300 mt and 329,600 mt sent to Italy and Belgium.

Flat steel exports to Vietnam could fall further in Q3 as Maruichi Sun Steel Joint Stock Co., or Sunsco, started operations of its No. 2 cold-rolling mill at Binh Duong province on July 1.

Nevertheless, when combined, Italy and Belgium accounted for 29.3% of India’s overall Q2 finished steel exports of 3.56 million mt, while Vietnam was responsible for 11.8% and Turkey made up 6.6%.

— Clement Choo

US raw steel production inched up again in the week ended 24 July, Kallanish learns from the American Iron and Steel Institute.

Raw steel production stands at 1.868 million short tons at 84.6% capacity utilisation, up 0.5% from the prior week, when utilisation was 84.1%, and up 38.4% from the equivalent week last year, when utilisation was just 60.3%. 

The South led production by region with 802,000 st, followed by the Great Lakes with 642,000 st and the Midwest with 200,000 st. The Northeast produced 149,000 st, while the West produced 75,000 st. 

Year-to-date production stands at 52.655m st at 79.8% utilisation, up 18.4% on-year, when utilisation was 66.7%.

Dan Hilliard USA

From January to June, Germany’s mills produced 20.62 million tonnes of crude steel,  18% more than in the first half of 2019, when the industry was under shock from the first coronavirus wave.

The gap shows clearly in the months of the second quarter, with June (3,42m tonnes) up 38% year-on-year, and May even 43% higher y-on-y, Kallanish learns from national steel association WV Stahl.

When looking at the sequence of the recent months, June stays slightly behind May with then 3.66m tonnes, which might be attributable to the start of the summer slowdown. Production of pig iron dropped somewhat more pronounced, from 2.54m tonnes in May to 2.10m tonnes in June.

The association points out that the output remains below the first half of the “normal“ year 2018, but does not say by how much, or cites other factors that could play a role. However, WV Stahl does strike an optimistic note as it states that steel users worldwide are ramping up their production, and that demand gets an additional boost from infrastructural investment schemes.

Christian Koehl Germany

Russian stainless steel imports increased in June and the main supplier was again China, says national special steel association USSA. Russian stainless intake was up 6.1% on-month and 43.6% on-year to 42,580 tonnes, Kallanish notes.

June imports of stainless cold rolled flat products decreased 11.8% on-month and seamless pipes by 13.5%. However, hot rolled flats intake fell by 7.5%.

Russia increased imports of stainless steel in 2020 to 383,200t, up by 3.8% on-year.

The leading manufacturers of imported stainless products in June were again companies from China, whose share in the total volume was 63.1%. India’s share was 10.9%, followed by Indonesia with 3.1% and Ukraine with 2.8%.

However, China announced that some steel products will see their export tax rebates cancelled from 1 May, which will lead to export price increases (see Kallanish passim).

“The first half of 2021 was not easy for Russian stainless steel market,” USSA says. “A slight increase in the supply of both imported and Russian product could not meet the high demand. The growth in real consumption in many items was compensated by warehouse stocks, but this did not affect the entire range.”

According to experts, traders are afraid that the imposed restriction on steelmaking by China will affect stainless steel market and are trying to replenish their stocks, the association observes.

“The rise in prices in China, naturally, will be reflected in the export prices of the entire Asian region and this means that Russian importers will again face rise in prices for purchase,” USSA says.

Svetoslav Abrossimov Bulgaria

French construction industry managers’ confidence over future activity held up in July, according to a l’Institut National de la Statistique et des Études Économiques (Insee) report monitored by Kallanish.

This month French construction companies’ general outlook for the sector improved sharply as business managers are more optimistic regarding their activity over the next three months. In July more business managers than last month consider that the level of their order books is higher than normal as their order books provide 8.5 months of work, significantly above the long-term average of 5.8 months.

The capacity utilisation rate this month also increased, and stands above its long-term average. At the same time, production bottlenecks have increased as almost half of the companies surveyed have reported bottlenecks. “The share of business managers who consider that they are unable to increase their production due to a lack of staff is stable, at a high level,” Insee reports.

This month however the cash-flow position of construction companies has slightly deteriorated despite the balance of opinion on payment periods from their clients remaining stable. More business managers than last month also announced that they will increase their prices over the next three months.

French rebar and reinforcing steel prices remain stable after they increased slightly this month on costlier scrap. Long product sales activity is now becoming quiet as the summer break starts in France at the end of this week.

Natalia Capra France