Day: 4 August 2021

Germany’s Saarstahl says it hopes to complete the acquisition of Ascoval and Hayange from Liberty Steel by the end of the summer. This comes as informed sources tell Kallanish the Paris Commercial Court has approved the transaction.

According to a union source, the takeover will give the troubled France-based mills stability. It will also allow for new investments to respond to the current strong demand, as a result of which both plants report full order books. “This closes two and a half years of work and will give the two sites stability and power,” French industry minister Agnès Pannier-Runacher told the country’s press.

Last month, an agreement was signed between Liberty Steel and Saarstahl for the takeover. Both Ascoval and Hayange have faced a significant reduction in working capital support since the collapse of Liberty’s main lender, Greensill Capital.

Ascoval produces continuous cast rounds and forged products at a production facility in Saint-Saulve, France. It recently started the production of blooms and square billet for a variety of applications, including rail blooms, which are supplied solely to Liberty Rail in Hayange.

Saarstahl and parent company Stahl-Holding-Saar (SHS) confirmed on Monday they obtained on 1 July an agreement in principle from Liberty Steel France Holding to purchase the plants.

“This is another important step that paved the way for SHS to take over the two steel plants, Liberty Ascoval and Liberty Rail Hayange,” says Saarstahl. “The group is fully mobilised alongside all parties and the Ascoval and Hayange teams so as to achieve a final agreement by the end of summer 2021.”

SHS and Saarstahl have proposed an industrial concept for the Ascoval and Hayange plants that ensures the economic and social security, as well as further development of the two French sites, the German steelmaker adds.

Natalia Capra France , Svetoslav Abrossimov Bulgaria

German railway company Deutsche Bahn (DB) says heavy rains in mid-July have caused “historic damage” in two German states, most prominently along the Ruhr river, where many steel companies are located.

Slope and embankment slides as well as track undercutting and overtopping have led to massive destruction. “Our infrastructure has never been destroyed on this scale in one fell swoop. We are facing an enormous feat of strength,” says board member Volker Hentschel of the company’s grid operator subsidiary DB Netz.

The damage to over 50 bridges is particularly serious, Kallanish learns from DB. In addition, the flooding severely hit stations and stops as well as technology. 180 level crossings, almost 40 signal boxes, more than 1,000 overhead line and signal masts, power systems as well as lifts and lighting systems in the stations have been affected. “According to initial estimates, the water masses have caused damage of around €1.3 billion ($1.54 billion) in the network and at stations,” DB states.

Thyssenkrupp and several cold-roller companies in the area have declared force majeure, mainly because of logistic impairments due to disruption to the transport ways.

DB’s goal is to have 80% of the damaged infrastructure back in shape by the end of the year. “However, the picture on the ground shows very clearly: some tracks are still flooded or completely gone today. It will take months, if not years, to repair all this,” Hentschel says.

Christian Koehl Germany

China’s Ministry of Industry and Information Technology and the Ministry of Ecology and Environment will work with relevant parties in the near future to jointly formulate a plan for restricting steel production in autumn and winter 2021-2022. This will be the main measure to ensure crude steel output reduction in the second half of the year, Kallanish notes.

Wu Xianfeng, deputy director of the Department of Atmospheric Environment of the Ministry of Ecology and Environment, has publicly stated that the main task of China’s steel industry has shifted from reducing production capacity to reducing output. The reduction of output will be carried out through the principle of “Two limits, Two unrestricted, and Three possible”.

“Two limits” means to focus on restricting steel production in key areas and to focus on restricting the production of companies with low environmental performance ratings and high capacity utilisation rates. “Two unrestricted” means two types of enterprises are not restricted. One is firms that meet the ultra-low emissions standard and have an environmental performance rating of A. The other is electric arc furnace steelmakers. “Three possible” means that the output reduction measures are operable, verifiable, and statistical.

For steel companies that have completed ultra-low emissions transformations, the government will increase policy support and implement differentiated environmental management policies. These include enjoying environmental tax concessions, preferential environmental protection equipment purchase tax concessions, and differentiated water and electricity price concessions.

According to data from the National Bureau of Statistics, China’s crude steel output in H1 was 563 million tonnes, an increase of 11.8% year-on-year. Crude steel production in 2020 was 1.065 billion tonnes. In order to ensure that output of crude steel will not increase this year, H2 production must be controlled within 502mt. This would mean output needs to be reduced by at least 61mt compared with H1.

By Kallanish Team

Japan’s Nippon Steel expects to produce about 11.60 million mt of crude steel in the July-September quarter on a consolidated basis, projecting a 36.8% year on year increase from 8.48 million mt in the 2020 quarter, the steelmaker said Aug. 3.

Non-consolidated output is similarly expected to reach 10.30 million mt for Q3, up 38.3% from 7.45 million mt the year before.

The large year-on-year increase reflects the fact that the company’s blast furnaces suspended production a year ago due to market conditions brought about by the coronavirus.

In August 2020, half of its 16 BFs were out of production, accounting for about 32% of its overall production volume. Currently, only three BFs are offline.

For the period of April-June 2021, the first quarter of its 2021-2022 financial year, Nippon Steel produced 11.88 million mt of crude steel on a consolidated basis, up 43.1% year on year.

Of this, 10.18 million mt of crude steel was produced on a non-consolidated basis, which was up 41.4% from 7.20 million mt the year before.

Summing up its latest projections for July-September, Nippon Steel expects its crude steel production for the six months ending Sept. 30, 2021, the first half of its 2021-2022 fiscal year, to total 23.50 million mt on a consolidated basis and 20.50 million mt on a non-consolidated basis.

Nippon Steel also reiterated its forecast of producing 46 million mt of crude steel on a consolidated basis for the whole fiscal year ending March 31, 2022, an increase of 22% from FY2020-2021.

It expects domestic steel demand to recover to 56.5 million mt for the current fiscal year, close to the 59.1 million mt recorded for the year ended March 31, 2020, before the COVID-19 pandemic.

Citing higher prices for steel, Nippon Steel also swung to a net profit of Yen 172.3 billion ($1.58 billion) for Q2 versus a net loss of Yen 41.4 billion the year before.

Overseas, Nippon Steel reiterated its plans to double the production capacity of its ArcelorMittal Nippon Steel India venture (AM/NS India) to 14 million mt/year while a new 1.5 million mt/year electric arc furnace at its AM/NS Calvert venture in Alabama will be completed in the first half of FY2022-23. Currently AM/NS India is undergoing debottlenecking to boost output to 8.4 million mt/year from 7 million mt/year.

The company anticipates record-high profits from its overseas business, citing robust steel demand and its withdrawal from unprofitable businesses in Malaysia, China, the US and Brazil since FY2019-2020.

Emphasizing carbon neutrality

On its goal to be carbon-neutral by 2050, the steelmaker plans to cut its carbon dioxide emissions down to 70 million mt/year by 2030 from its 91 million mt in 2019.

It plans to achieve its “Vision 2050” goal through a mixture of mass-production of high-grade steel in large EAFs, 100% hydrogen use in the direct reduction process, higher use of scrap, and using carbon capture, utilization and storage, or CCUS, technologies.

It cited factors that may hinder its progress, such as huge costs stemming from research and development, sizeable capex for implementation, and an increase to operational costs, and stated that government level support would be required to achieve zero-carbon steel, in terms of R&D, and the development of infrastructure for large scale hydrogen and carbon-free power supplies.

Policy would also need help the Japanese steel industry secure equal-footing amid international competition, as Japan pushes for net-zero carbon production.

On July 27, Nippon Steel said it succeeded in developing a process to produce polycarbonate diols from carbon dioxide without the need for dehydrating agents by using a catalytic process it developed with Osaka City University and Tohoku University. The process can be applied to “the synthesis of carbonates, carbamates, and ureas, which are useful additives for lithium-ion batteries and/or raw materials for polymer synthesis.”

— Clement Choo, Samuel Chin

European HRC prices have been in stalemate the last few weeks, with the coils market riding out the lag seen in overall demand, and with cheaper imports still playing a role in domestic price development. However, market sources have said prices were mostly regulating after the record-breaking peaks seen one month ago, sources told S&P Global Platts Aug. 3.

“If you refer to a price that no one paid in a difficult situation of sourcing allocation, prices have been correcting from a high peak that was not reflected on the market,” an Italy mill source said. “People paid very high prices for some allocation but again these were small volumes.”

The source recalled Arcelor Mittal’s last increase in HRC prices to Eur1,200/mt ex-works Ruhr as a “peak no one paid.”

The objective from producers has been to maintain high prices throughout the slow demand period, betting on increased activity in September and reluctance from customers to buy imports due to increased protectionist measures.

HRC import prices were heard at Eur985/mt CIF Italy Ports from the Far East.

Sources were awaiting the outcome of impending anti-dumping investigations on hot-dip galvanized material from Turkey and Russia.

“Turkey and Russia has been a good opportunity to buy HDG in Europe, but with ant-dumping it will be difficult to buy. There is more CRC availability from import,” the same Italy mill source said.

The European Commission announced June 24 that it has opened an investigation into hot-dip galvanized coil imports from Turkey and Russia, saying imports of certain corrosion-resistant steels originating from these countries were being dumped.

— Amanda Flint

As the gap between domestic mill and imported hot-rolled coil prices has remained high at around $100/mt and above in Turkey, the pressure on domestic mill prices has been ongoing.

No offers were heard from Indian suppliers this week, which sold significant tonnes to Turkey in the previous months with competitive prices, but offers from some Ukrainian and Indian suppliers were still in the range of $935-$950/mt CFR, depending on origin and tonnage, sources told S&P Global Platts Aug. 3.

Although slowed demand in domestic and export markets, due to holidays, has been putting pressure on Turkish mill quotations – in addition to low-priced import offers and lower imported scrap pricing – Turkish mills have been keeping their offers generally stable at $1,030-$1,060/mt EXW for November rollings, depending on producer and volume, as they were expecting demand to recover gradually as of September.

A possible Chinese HRC export tax could also determine the price direction in the coming months, some sources observed.

A Turkish HRC producer executive told Platts Aug. 3 that their HRC offers were stable on week at $1,050-$1,060/mt, with demand improving gradually.

Confirming that domestic producers’ overall HRC offers remained stable at $1,040-1,050/mt EXW, a manager of a Turkish pipe producer said they have been receiving HRC import offers at around $950/mt CFR.

“We are expecting prices to remain at these levels for a while. EU demand could revive following the holidays. If China will postpone output cuts, it could pressure prices. Chinese possible HRC export tax is also important for HRC pricing,” the manager observed.

A coated coil producer source told Platts Aug. 3 that domestic mills were keeping their HRC offer prices flat at around $1,040/mt EXW.

“Import offers from Ukraine and Russia were at $930-$950/mt CFR,” he said, noting that demand remained slow due to holidays. He is expecting August to be a slow month and demand to recover in September.

— Cenk Can