Day: 6 August 2021

GFG Alliance has reached an agreement in its legal dispute with Tata Steel, it tells Kallanish. The group’s Liberty Steel UK (LSUK) unit is developing a business plan to allow it to resume production, which remains intermittent at the Rotherham plant.

Tata Steel launched court proceedings earlier this year against Liberty Speciality Steels, Liberty House Group PTE, and Speciality Steel UK over non-payments relating to the sale by Tata in 2017 of Speciality Steel to Liberty Steel (see Kallanish passim).

LSUK has developed a new organisational structure under new chief executive Subhajit Roy Chowdhury. The new management composition will oversee the separation of the Stocksbridge, Brinsworth Narrow Strip, and Performance Steel assets.

Liberty’s Newport mill achieved its best-ever financial results in the first quarter, with the outlook looking even brighter for Q2, GFG says. The business improved profitability last year despite challenging market conditions caused by Covid-19.

In the EU, Liberty’s Ostrava and Galati plants posted record quarterly performance recently (see Kallanish passim), while the sale of France-based Ascoval and Rail Hayange to Stahl-Holding-Saar has been completed (see separate story).

GFG is also now back in control of its 41% stake in sustainable energy generator Simec Atlantis Energy. This follows the cessation of the receivers’ appointment over the shares of Simec UK Energy Holdings Limited in Simec Atlantis Energy and the resignation of the receivers as directors of Simec UK Energy.

GFG Alliance Chief Restructuring Officer Jeffrey S. Stein says: “It is encouraging that discussions with creditors continue to progress well and our global restructuring plans continue to develop. In many cases, refinancing options have been oversubscribed. Our core markets in steel, aluminium, and iron ore are performing beyond expectations, bolstered by high demand and record prices. This in turn has led to our core assets achieving strong financial results. While there remains much to do, we are pleased with the progress made to date and confident in the resilience of the business going forwards.”

Adam Smith Germany

Outokumpu has confirmed its approval of the latest extension of EU safeguard measures for three years, as well as the imposition in May of provisional anti-dumping duties on stainless cold rolled coil from India and Indonesia.

The company calculates that CR imports into Europe reached an import penetration of 25% in the second quarter, in line with Q1 but below the peak of some 30% in Q3 last year, Kallanish notes. Indonesian imports saw an important decrease following the imposition of AD duties.

“The second quarter was eventful in terms of trade regulation,” says Outokumpu president and chief executive Heikki Malinene. “We were pleased to see that the EU safeguard measures were extended for another three years until June 2024. In addition, the EU imposed provisional anti-dumping duties on cold rolled stainless steel from Indonesia and India. These regulatory measures are important steps to ensure a level playing field in Europe for sustainable stainless steel.”

Regarding safeguard quotas, Outokumpu reported stainless CRC utilisation in Q3 so far has been 37% and for HRC 34%. The only supplier close to reaching a critical level of safeguard utilisation rate for stainless CRC is Turkey, having used some 75% of the allocated volumes.

The company also welcomed the first steps initiated by the European Commission on the Carbon Border Adjustment Mechanism (CBAM), which will include stainless products but not ferrochrome.

Emanuele Norsa Italy

Northwest European mills have in recent months successively increased price targets for spot deals, while simultaneously making very little volume available. Meanwhile, buyers are often deferred to next year, without a tangible proposal for volume, time or price.

In most cases, mills are not taking orders for delivery months down the line because of the unclear development of prices. According to a buyer of considerable volumes, this behaviour, especially by the market leader mill, is a novelty, and it is unusual. In the past, it was common to secure volumes for relatively faraway time slots without a price tagged to them.

“What’s really new and important to know is that we are seeing a change of parameters here,” he tells Kallanish. “For decades, you placed orders for a volume at a given date, and agreed on negotiating on the price at a time when rolling and delivery drew near,” he says of the customary way of doing business.

This habit seems to be defunct in times of unprecedented price fluctuations and supply shortages. Using a recent example, he says: “I receive [quarterly] contracts for cold rolled coil for €800/tonne [$947] ex-works these days. The spot price given by mills now is at €1,300. So, those are the two positions when we sit down in, say, November to come to a deal. Both figures are likely unreal by then. But we do strike a deal at, say, €1,150. That’s how it has worked for ages.”

He points out he rejected the no-deal-without-price approach pushed by the mill, threatening to cut ties. “Eventually, I could place an order for January/February 2022, and they have accepted,” he concludes.

Christian Koehl Germany

US service centre chain Ryerson’s profits rose to record high levels in the second quarter due to rising metal prices and strong backlogs. The company’s second earnings are up from a loss in the second quarter of last year and remain significantly above the prior quarter’s earnings, Kallanish understands.

In the second quarter ending 30 June, Ryerson earned $112.9 million on sales of $1.42 billion which is up from a loss of $25.6m on sales of $771.8m in the second quarter of 2020. The company’s second quarter performance remains above profits in the first quarter, during which Ryerson earned $25.3m on sales of $1.15 billion. Ryerson expects sales in the third quarter in the range of $1.5-1.6 billion with average prices rising by 10-12%.

“Halfway through our 179th year in business, our future has never looked brighter…Looking back over the quarter and ahead, more signs are emerging that support a sustained manufacturing expansion featuring recyclable industrial metals that are at the epicenter of current and future societal needs. With supply still unable to meet current and anticipated demand, manufacturing order backlogs keep rolling over and extending, lending further support to favorable pricing dynamics,” says ceo Eddie Lehner.

Ryerson’s carbon steel selling prices rose by 26.2% in the second quarter from pricing in the previous quarter. Year-over-year, the company’s steel prices remain up 60.7%. In the second quarter, Ryerson shipped 428,000 short tons of steel, up 3.4% from the prior quarter and 18.6% on-year.

“Our second quarter results reflect the success of our financial transformation as we continued to effectively manage working capital, realised expense leverage and achieved a net debt leverage ratio within our long-term target range,” explains cfo Jim Claussen.

Zach Johnson USA

The UK has suspended some antidumping duties on some imports of Chinese steel wire, to avoid double taxation, according to the Department for International Trade.

Duties have been revoked because the products are also covered by the UK’s steel imports safeguarding measures, which were extended July 1 for one to three years, depending on product category, according to the department. However, once the safeguard’s tariff rate quota for these products is filled, the antidumping duties will be charged on any additional products of this type imported, it said.

Under these conditions, the anti-dumping duty on certain pre- and post-stressing wires and wire strands of non-alloy steel (PSC wires and strands) originating in China was revoked. The products concerned are subject to the following codes: 7217 1090 10; 7217 2090 10; 7312 1061 91; 7312 1065 91 and 7312 1069 91.

The duty was imposed on a definitive basis on June 4, 2015, it said.

“The trade remedies measure applied by Taxation notice 2020/03: is suspended and not to be charged if the goods to which the measure applies, on importation into the United Kingdom, are also subject to the charge of a safeguarding measure applied by Taxation notice 2020/06: safeguard measures on certain steel products – application of tariff rate quotas,” the department said in its Suspension notice 2020/03.

“The effect of this suspension is that anti-dumping duty is charged on imports of certain pre- and post-stressing wires and wire strands of non-alloy steel (PSC wires and strands) originating in the People’s Republic of China until such time as the relevant import quota is exceeded; after such time only the safeguard duty is charged or the portion of the anti-dumping duty where it exceeds the safeguard duty (together with the safeguard duty) is charged,” it said.

For material exported by Ossen Innovation Materials Co, Joint Stock Company Ltd, Maashan, and Ossen Jiujiang Steel Wire Cable Co. Ltd, Jiujiang, the original duty amount of 31.1% will be reduced to a duty amount of 6.1% once the safeguard duty (of 25% for out-of-quota goods) has been charged, the notice said.

Exports from Kiswire Qingdao, Ltd, Qingdao, will be subject to a 0% duty in both cases.

For exports from all other companies, an original duty amount of 46.2% will be reduced to a duty amount of 21.2% once safeguard duty has been charged, it said.

The UK produces around 7 million mt/year of crude steel, around 70% of its annual requirement of 10.2 million mt, according to UK Steel, a steel producers’ group. The group has used this figure – showing the UK’s relative dependence on imported steel – to lobby for a strong trade defense policy.

— Diana Kinch

Turkey’s largest integrated long steel maker Kardemir, which opened its order book for sections with competitive prices on Aug. 5, closed it on the same day after receiving significant orders from the domestic market.

Kardemir put its new sales price for IPE-NPUs 160-550 mm sections at $805-$870/mt EXW, while prices for HEA-HEBs 120-500 mm sections were set at $850-$950/mt EXW, depending on thickness.

Turkish mills have been reducing their long steel offer prices notably in recent days to spur demand in a sluggish market.

Imported scrap prices also declined notably in this sentiment. S&P Global Platts assessed Turkish imports of premium heavy melting scrap 1/2 80:20 Aug. 4 at $464.50/mt CFR. The index has dropped sharply in recent weeks, down from a high of $501.75/mt CFR on June 29.

Some Turkish mills also adjusted their domestic scrap buying prices downward in line with lower imported scrap pricing.

Turkish long steel producers pulled down their lira-denominated 12-32 mm domestic rebar list prices by a further $15-$20/mt this week to $700-$715/mt EXW, depending on region and volume, due to low demand and ongoing declines in imported scrap prices.

Some discounts are still available for sizable tonnages.

— Cenk Can

One of Turkey’s major steel producers, Colakoglu Metalurji, issued the final acceptance certificate (FAC) to Primetals Technologies for the first part of the modernization of the two-strand slab caster at the Dilovasi mill near Istanbul.

The modernization of existing systems has improved product quality and enabled the production of additional steel grades, plant supplier Primetals said Aug. 5, adding that extending the strands increased casting speed and therefore raised the production rate.

Commissioning of the second part of the order is scheduled for this summer.

Colakoglu operates an electric arc furnace mill in Dilovasi, which makes slabs for a hot rolling mill and billets for producing rebar and rock bolts.

The company has bar output capacity of 1 million mt/year and hot-rolled coil production capacity of 3 million mt/year.

— Cenk Can

Liberty Steel Group has completed the sale of its French steelmaking operations Liberty Ascoval and Liberty Rail Hayange to German steelmaker SHS — Stahl-Holding-Saar, Liberty and SHS announced Aug. 5. SHS said the purchase will support its move toward production of green steel.

The value of the deal was not announced. SHS, a producer of high-quality steel bars, wire rod, semi-finished and forged products, confirmed that its acquisition of the Ascoval specialty steel plant at Saint-Saulve, Nord, and the Hayange railmaking plant at Moselle has been formally validated by the French authorities.

The acquisition fits in with SHS Group’s growth and diversification strategy, at the same time aligning with its mission of safeguarding the Saarland steel industry model, it said.

SHS, founded in 2001, became an operational management holding company in 2010, which has been actively supporting the two major Saarland steel companies, AG der Dillinger Hüttenwerke (Dillinger) and Saarstahl AG.

Troubled recent times

Liberty Steel Group has been seeking to divest some of its assets, particularly those with weak performance, since the collapse in March of Greensill Capital, the major financier of its parent company GFG Alliance, which pushed the group into a cash squeeze.

Liberty Steel Group has grown rapidly in recent years to become Europe’s fourth largest manufacturer of steel products, with a 6 million mt crude steel capacity in the region. Of the group’s steel rolling production capacity of around 18 million mt/year, some 10 million mt/year is in Europe.

Ascoval had been in administration prior to the acquisition of both Ascoval and Hayange by Liberty Steel Group in 2020. Both Ascoval and Hayange steel mills had originally been part of British Steel, which entered compulsory liquidation in May 2019 and was purchased by China’s Jingye Group in March 2020.

In May this year, the French government loaned Eur20 million ($24.2 million) to Ascoval and Hayange to cover working capital and capital expenditure costs amid the cash squeeze, according to sources.

Other bidders for the two assets included major steelmaker ArcelorMittal and Italian long products maker Beltrame. As ArcelorMittal owns other steel rail production assets in Spain, Luxembourg and Poland, it is considered that the EU antitrust authorities might have stood in the way of the steel giant further bolstering its already dominant position in the EU rail market.

Green steel focus

Ascoval’s production is based on electric arc furnace technology, which emits considerably less carbon than the blast furnace-based steelmaking route.

Hayange, which produces railway infrastructure products, will contribute to Europe’s current drive toward sustainable mobility solutions, SHS said.

Both Ascoval and Hayange will now “gain access to new business fields, such as the automotive sector, and geographical markets, thanks to the SHS Group’s worldwide sales network,” SHS said in a statement.

Liberty Steel Group said in a separate statement that the two groups had recently collaborated to explore construction of an industrial scale hydrogen-based steelmaking project in France. “Liberty believes SHS/Saarstahl has a strong industrial concept similar to LIBERTY’s GREENSTEEL model that will help secure the future of the businesses,” it said.

SHS said it “focuses on the production of high-quality European green steel and is proud to be able to work together with the workforces of Ascoval and Hayange to realize this concept.”

— Diana Kinch