Day: 30 July 2021

German industrial group Thyssenkrupp has sold its TK Mining business unit to Danish mining and cement technology provider FLSmidth, Thyssenkrupp said July 29.

The closing of the deal, valued at Eur325 million ($386 million), is expected within the next 12 months and is now subject to competition authority approval.

The divestment is part of a larger restructuring of Thyssenkrupp into a group of companies with independent businesses.

Part of the restructuring is also the sale of the Italy-based stainless steel plant AS Terni and associated distribution where Thyssenkrupp is in discussions with “several potential buyers”. Italian re-roller Marcegaglia said in April it would be “firmly” interested in acquiring Terni.

“We need to return to positive cash flow as quickly as possible. The sale of Mining Technologies makes an important contribution to this,” said Martina Merz, CEO of Thyssenkrupp.

In a separate statement, FLSmidth said revenue at TK Mining was at Eur780 million in 2020, with the company recording a negative EBIT margin, and is expected to return to profitability by 2024.

“The mining industry is characterised by sound fundamentals and a positive outlook, based on underinvestment over the past decade and increasing demand due to the clean energy transition,” said FLSmidth.

“TK Mining’s extensive active installed base, together with FLSmidth’s strong existing service setup, will provide additional aftermarket opportunities, while the joint R&D capabilities and combined portfolio will enable accelerated innovation in digitalisation and MissionZero solution,” said the Danish company.

— Laura Varriale

The European hot-rolled coil market showed further price stability July 29 as buying activity became more muted because of full order books and expectations of greater capacity coming into the market from imports, sources told S&P Global Platts.

Most buyers and distributors were waiting for material booked several months prior to be delivered, with order books already full for the year. Longer delays because of the severe floods in Germany and the Benelux countries were another factor contributing to the wait-and-see mode in the market, with buyers cautious of needing to wait even longer for already late orders.

“We are waiting for material to come in,” a German distributor said. “This was impacted by the floods. Trucks and trains can’t come through their usual routes. We don’t order now because we have enough. Sales are down, inventories are increasing. That’s why we don’t have necessity to buy.”

Travel logistics in Europe were still in dire straits, with a critical lack of available train wagons and trucks made worse by the flooding.

“They have produced the material on stock but they can’t get it to us,” the distributor said of mills. “It makes no sense to order new material.”

Steel capacity was also heard to be increasing, with greater availability from imports, specifically from Serbian mills and Brazilian producer Usiminas.

In the Italian market, market activity was already starting to slow ahead of August, when most steel outlets close for the holidays.

Most volumes changing hands were committed to contracts, with few spot transactions and the expectation of further softening on the horizon.

“We’ve had [cheap] offers from Korea, and then rerollers from Italy have also offered some discounted prices to customers,” a European mill source said. “We’ve been having stable prices, don’t see anyone with big deals.”

July was also reportedly a good month for sales in Italy, with stockpiles also relatively high and inquiries for Q1 material having already started.

“Customers are pushing for price decreases and are not buying,” an Italy-based trader said. “I am happy because they will pay more later. The gap between imports, Italian and European mills is still very high, but I have the feeling that customers didn’t buy much from imports.”

Overall, Italian sentiment pointed toward a decrease in prices, less demand and the possibility of more capacity available, with one major European mill having restarted a blast furnace and now heard to be offering competitive prices.

— Amanda Flint

Klöckner & Co generated record Ebitda in the first half of the 2021 financial year of €401 million ($477m), according to preliminary figures.

For the third quarter, too, the German-based steel distribution group says it expects operating income to be significantly stronger “than previously expected by the market”. In an ad-hoc release, it gives a range of €200-230m for Q3.

The group keeps cashing in on the continued positive dynamic of steel prices in its main markets, Europe and the USA. It also cites extremely strict networking capital management.

Notably, the flood damage in various German areas have not diluted Klöckner’s outlook. Although the company is headquartered in Duisburg on the Ruhr, none of its warehouses were flooded, a spokesman tells Kallanish. This applies also to mega service centre Becker in nearby Bönen, which was erroneously mentioned in some daily reports, he emphasises.

For the full year, the company now forecasts to achieve Ebitda of €650-700m, which it says is also above the previous market expectation. This would mark the group’s best operating full-year income since its initial public offering in 2006.

Klöckner’s statement continues a series of ad-hoc releases it has published throughout this year. In the course of both the first and second quarters, it announced upward corrections to its initial guidance.

Christian Koehl Germany

ArcelorMittal says it has signed a binding agreement with Condesa Tubos for the acquisition of the 67% shareholding it does not own in the Spanish welded tube manufacturer, Kallanish learns from the steelmaking giant.

ArcelorMittal has had a 33% participation in the company since February 2016, as a result of its restructuring within the framework of the so-called “Phoenix Project”. The balance of shares is owned by banks Santander, BBVA, CaixaBank, Kutxabank, Bankinter, Caja Rural de Navarra and Banco Sabadell.

“As part of this agreement, Spain’s Zalaín Transformados, Cold Profile and Condesa Fabri plants, as well as Germany’s SRW Schwarzwälder Röhrenwerk, will become part of the ArcelorMittal Europe – Tubular Products structure,” the steelmaker says. With the acquisition, ArcelorMittal will expand its market presence with a wide range of high-added-value products.

The acquisition now awaits approval from Spanish authorities, and other closing conditions, ArcelorMittal adds.

Todor Kirkov Bulgaria

NLMK has restarted production at its Belgian rolling mill of La Louviere since last weekend. The mill declared force majeure last week following a fire at the site.

“We have resumed the ramping up of the HSM [hot strip mill] and are already seeing benefits from the new capabilities as a result of the upgrade project,” an NLMK spokesperson tells Kallanish. “We are doing all we can to mitigate the impact on our customers.”

NLMK Louviere has a production capacity of some 1.7 million tonnes/year of hot rolled coil, currently being lifted by the latest investments at the site.

Emanuele Norsa Italy

ArcelorMittal has further improved its outlook for European steel demand, as the market continued performing strongly during the second quarter.

The group now expects regional demand to recover 13-15% year-on-year in full year 2021. The previous forecast was for 7.5-9.5% growth, Kallanish notes.

“Looking forward, we see the demand outlook further improving into the second half and have therefore upgraded our steel consumption forecasts for the year,” says ArcelorMittal Group chief executive Aditya Mittal. Meanwhile, ArcelorMittal registered increasing profit and production at its European units during Q2.

Operating income reached $1.2 billion in the June quarter; in the first half of the year operating income was $1.8 billion, against a loss of over $600 million in H1 2020.

Production at the company’s units continued recovering in H1. In April the group adjusted its calculation to take into consideration the reduced share of control of the former Ilva unit in Italy. Q2 adjusted crude steel production in Europe was up 6.5% on-quarter, supported mainly by the reopening of one blast furnace in Ghent, Belgium.

Emanuele Norsa Italy

China’s Ministry of Finance said on Thursday it has decided to cancel export tax rebates for more steel products from 1 August. These products escaped the last raft of tax rebate cancellations in April, which were meant to encourage the export of high-end products.

According to the announcement, 13% export tax rebates for 23 steel products will be cancelled starting 1 August, Kallanish reports. These products are mainly cold rolled coil, galvanised steel, silicon electric steel, rail and seamless pipe used for natural gas and drilling for oil.

They come under HS codes 7209.15.10, 7209.15.90, 7209.16.10, 7209.16.90, 7209.17.10, 7209.17.90, 7209.18.10, 7209.18.90, 7210.12.00, 7210.30.00, 7210.49.00, 7210.61.00, 7225.11.00, 7225.19.00, 7225.50.00, 7225.91.00, 7225.92.00, 7226.11.00, 7226.19.00, 7302.10.00, 7304.29.10, 7304.29.20, and 7304.29.30.

Last year, China exported 13.58 million tonnes of these products to overseas markets, down 15.53% year-on-year, according to customs data. Due to the recovery of overseas demand in the six months through June this year, total exports came to 10.53mt, up 42.8% y-o-y. This also exceeded the level of the same period in 2019.

In a separate document, the ministry announced an increase in export taxes on high-purity pig iron and ferrochrome. These will now be set at 20% and 40% respectively. The HS code for pig iron covered by the tax change is 7201.10.00, while ferrochrome comes under HS codes 7202.41.00 and 7202.49.00.

There is still no announcement about the rumoured export tax on hot rolled coil, however. Traders estimate this could be announced one month later and take effect from 1 September. “We don’t think China will abandon it, but September could be the possible timeline for the change,” a source opines.

By Kallanish Team

Damage from heavy rains on the Ruhr and in other German regions have to some extent raised concern among buyers further afield.

“I had mail from German mills that claimed some kind of force majeure, telling us there could be delay of deliveries. The damage is mostly affecting their transports, rather than the production plants,” a Benelux manager says.

An assessment in terms of figures cannot be given by anyone as of yet. On the waterfront, so-to-speak, companies are still very much busy cleaning up and re-organising their logistics, rather than taking stock. “I do not have any time to talk to you now; I ask for your understanding,” says a service centre manager and friend of Kallanish, summing up the prevailing sentiment.

As far as Austria, some are preparing for additional shortages of coil products due to the flood. “We did get force majeure notifications from the cold-rollers, too, so we will feel delays in deliveries later on,” one manager says. The shortage already seen for months will be aggravated because of a domino effect, he says. “Our competitors and large consumers will now be looking for alternative sources,” he forecasts.

This could mean more buyers queuing up at the local Austrian mill, which could cause new delays for other Alpine customers. “It remains to be seen how bad that will turn out after the summer break when the automotive crowd comes back.”

Christian Koehl Germany