Day: 29 July 2021

European domestic steel sections prices remained stable on week to July 28, as mills continued to hold offers at elevated levels.

S&P Global Platts’ European medium sections price (category 1, S235 JR) was assessed at Eur1,050/mt delivered July 28, unchanged on week.

“The lowest available price is Eur1,050/mt delivered, but it’s a high price to buy at in a quiet holiday market,” a distributor in the Benelux region said. “Prices are relatively high, so I don’t see much more upside.”

Some European mills were heard to target Eur1,080-1,100/mt delivered for August shipment, while one German mill was heard to offer as high as Eur1,150/mt delivered for September shipment.

One European producer said deals had been confirmed at Eur1,050/mt delivered but that they would not be “surprised if someone tried to offer Eur1,100/mt even though the market is quiet.”

A second distributor source noted that domestic lead times remain around 4-6 weeks, with some mills undergoing a longer summer maintenance period than usual.

Turkish import offers for category 1, S235 JR material were heard to be much cheaper than domestic material at Eur850-900/mt delivered, but for delivery in October and November. This would mean the material would be cleared for the fourth quarter of the EU steel import safeguard quota, with the long lead time considered unattractive for distributor sources.

The EU import quota for non-alloy and other alloy merchant bar and light sections of Turkish origin for Q3 totaled 65,582.60 mt and was already exhausted by July 13. The Q4 2021 quota has the same tariff-free volume.

— Viral Shah

European HDG prices were stable July 28 as a lack of automotive demand due to the shortage of semi-conductor and chip supply and overall quietness in the market kept activity steady, sources told S&P Global Platts.

Given softer demand, there was supposedly more room to negotiate on HDG prices in Italy, with cheaper imports from the Far East playing a major role in price discussions, although these were few and far between.

“Demand is quiet but we are selling every week, its unnormal. We see inquiries, but its calm,” a European mill source said.

One mill was heard to be offering Eur1,450/mt ex-works Ruhr, though Eur1,330/mt ex-works Ruhr was more likely in the market.

The flooding was still having a severe affect on HDG supply, with few possibilities to buy prior to the disaster, with prices expected to increase.

“Stockholders not affected by the water, I expect they will raise prices very quickly and drastically because they are the winners in this situation,” a German distributor said.

Around 80-100,000 mt of steel has been damaged by the flooding, sources have said, with much of it to now be made into scrap.

“We have a quiet market, in middle of summer holidays, we see automotive closing plants earlier than expected due to semiconductors, we expect less production in some branches,” the same distributor said.

The lack of market activity in Italy during August was also expected to keep prices stable, with short HDG supply still a major issue in Europe.

— Amanda Flint

The Russian Steel Association says the Carbon Border Adjustment Mechanism (CBAM) that the EU plans to implement in 2026 entails significant risks for the global economy and ferrous metallurgy in particular, Kallanish notes.

“The inclusion of the steel sector in the scope of the EU border carbon regulation may have a significant negative impact on the development of the industry,” Russian Steel claims. “The current project of the European Commission (EC) is selectively approaching the selection of goods within the sectors included in the scope of the new collection, including metallurgy. We believe that this approach does not pass the test for compliance with the declared climate goals of the EU and can lead to a significant market imbalance.”

The extent of the impact of the tax on Russian exporters remains unclear. The EC must develop by-laws to regulate carbon footprint calculation, says the association, which represents major Russian steelmakers like NLMK, Evraz, Mechel, MMK, TMK, Severstal, IMH, OMK and Metalloinvest.

“Until this information is received, no industry will be able to assess all the potential effects of EU border carbon regulation,” Russian Steel observes. “However, it is already obvious that calculations using a complex European methodology and mandatory external verification of emissions can become a serious administrative barrier for supplies to the EU.”

The association therefore believes that after the measures are imposed, EU trading partners will initiate a WTO dispute resolution procedure in order to force deregulation. “It should be borne in mind that, firstly, the procedure for resolving disputes at the WTO usually takes more than two years, but today the Appellate Body does not work,” Russian Steel says. “Secondly, the ultimate goal of the WTO dispute resolution procedure is to eliminate the violation … [while] winning in a dispute does not create the right to claim compensation for losses incurred by the business.”

Even if the carbon tax is revoked following the dispute, suppliers to the EU would suffer irreparable losses and, most importantly, irreversibly lose their position in a highly competitive market, the association adds.

Russian Steel concludes that it would be prudent for Russian government representatives to promptly begin negotiations to protect the interests of domestic exporters, including ferrous metallurgy products, from the EU carbon tax impact.

Svetoslav Abrossimov Bulgaria

Some Turkish mills have decreased their domestic scrap buying prices, while imported scrap prices also continue to decline.

Slightly heavier supply than demand is causing scrap prices to continue declining. With Turkish mills confidently halting their purchases, the pressure on scrap prices is rising.

One Turkish mill bought 10,000 tonnes of HMS 1&2 80:20 at $475/tonne, 25,000t of shredded at $495/t and 15,000t of bonus grade at $495/t cfr Turkey at the end of last week. With this booking, US-origin HMS 1&2 80:20 recorded a $10/t decrease on-week.

Some suppliers were subsequently heard to have further lowered their prices to Turkey. European offers for HMS 1&2 80:20 are heard to have decreased to below $470/t cfr.

A Turkish mill tells Kallanish: “Almost all suppliers have at least one cargo. Some even have August-shipment cargoes. We know we can easily achieve lower levels this week. Under the current situation, there is no need to rush. We prefer to wait and gauge the situation in rebar sales before buying scrap.”

A mill is heard to have bought ex-Romania scrap at $439/t cfr. Russian offers for HMS 1&2 90:10, meanwhile, are at $475/t cfr.

Demand for domestic scrap remains moderate and supply is also plentiful. Some Turkish mills have decreased their domestic scrap buying prices, while others have kept their prices unchanged since early June.

Rebar prices, meanwhile, decreased further on Wednesday in Turkey’s domestic market. Despite a slight increase in demand compared to Tuesday, mills have decreased their prices to $700-730/t ex-works.

Turkish shipbreaking scrap prices are seen varying between $455-480/t delivered, depending on mills’ requirements. New cutting (DKP) scrap prices in the Aegean region stand at TRY 3,640-4,200/t ($424-490). The lira was at 8.57 per dollar on Wednesday.

Burcak Alpman Turkey

French stainless producer Aperam has increased August alloy surcharges for its austenitic range of flat stainless steels for Europe by over €100/tonne ($118) on average versus July, Kallanish learns from the company.

The surcharge for grade 304 (1.4301) has gone up from €1,910/t this month to €2,056/t effective 1 August. For grade 316 it has increased from €2,928/t to €3,167/t. Grade 309S, a heat-resistant stainless steel used in high-temperature applications, has hiked from €2,558/t to €2,752/t from 1 August. The surcharge for the most popular ferritic grade, 409, has also risen from €764/t to €823/t, the company reveals.

Offers for nickel cash buyers were at $18,611/t on 25 June and reached $19,368/t on 27 July, Kallanish notes.

Natalia Capra France

Tata Steel Europe is in the process of increasing its carbon surcharge by a further €4/tonne ($5) on the back of higher costs for EU Emissions Trading System (ETS) allowances, Kallanish learns from sources.

The surcharge was initially introduced by the group back in April. Tata was the first to apply such a surcharge in its new contracts, but other suppliers are expected to soon follow. Following the latest increase, the surcharge is now calculated to be at €16/t for new sales.

EU ETS prices reached an all-time peak of around €58/t at the beginning of July; prices are now at €50-55/t, Kallanish notes. Earlier this month the European Commission confirmed the intention to cut free allocations of ETS more rapidly than previously expected, further raising concerns over ETS prices going forward.

Emanuele Norsa Italy