Day: 25 August 2021

Stainless steel is set to lose its position as the primary driver of global nickel pricing, concludes a report by Bank of America. 

Nickel is currently at a multi-year high, the bank says – or $18,895/tonne, according to the London Metal Exchange. Concurrently, global stainless output hit a record in the third quarter of 2020 “…and has continued to post a series of highs since,” the report states. 

However, while stainless currently enjoys a 70% chunk of the nickel market, that position is being challenged by the growth of the electric vehicle industry, Kallanish understands.

“While the rebound of stainless production has been key to the nickel market in recent months, electric vehicles (EVs) are set to become the key demand driver in the coming years,” Bank of America says. “Indeed, sales of electric vehicles should increase gradually, reaching a penetration rate of 51% by 2030E. Given the current battery technology, implications for consumption are relatively straightforward, with offtake expected to be increasing to just under 1.8 million t by 2030, compared to around 200,000 t this year.”

Much of that added nickel is likely to come from Indonesia, the bank adds. 

“Reduced consumption of Class 1 nickel by the stainless steel mills may make more nickel units available to car manufacturers; rising scrap usage is one way this could be facilitated,” it says. “That said, ultimately, miners will need to produce more Class 1 and perhaps less Class 2 nickel to make sure the metal will not turn into a constraint to the EV industry. Indonesia, with its resources, will likely remain key to accomplishing that.”

Dan Hilliard USA

Seaborne iron ore prices extended their rebound on Tuesday as recovering confidence pushed futures markets higher. Expectations for the Chinese economy have also bottomed out, and the level of pessimism in markets is easing.

The Kallanish KORE 62% Fe index gained $8.05/t to $149.70/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $7.83/t to $174.26/dmt cfr, but the KORE 58% Fe index slipped another $0.48/t to $118.51/dmt cfr. 170,000 tonnes of PB fines traded at a floating price.

On the Dalian Commodity Exchange January 2022 iron ore settled up CNY 17.5/t at CNY 787.5/t ($121.44/t), while on the Singapore Exchange September 62% Fe futures settled up $12.69/t at $148.10/t. The same contract for 65% Fe and 58% Fe futures settled up $12.25/t at $168.30/t, and down $1.01/t at $110.51/t respectively.

Scrap and billet prices also moved higher on Tuesday. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta regions gained CNY 5/t from Monday to CNY 3,717/t. In Tangshan, billet prices gained CNY 20/t to CNY 4,930/t.

In addition to expectations that the $25.55/t sell off in iron ore on 19 August was exaggerated, markets have been bolstered by expectations for domestic demand. Steel demand and production is still expected to be low in the second half-year, but expectations had become so pessimistic that they are also now readjusting.

China has said it will aim to support a healthy level of credit growth to stimulate the economy in the second half of the year. Although this is so far only a rhetorical support, it marks a shift from the previous focus on tight credit control.

Fears over China’s Covid-19 outbreaks meanwhile have also eased. More cities are easing restrictions and infection rates have slowed. Officials say they could achieve an 80% immunity rate by the end of the year, taking China very close to achieving heard immunity. Vaccination rates have increased as local governments provide new incentives for the vaccinated and penalties for those who do not accept the vaccine and go on to infect other people.

Tomas Gutierrez UK

Crude steel production in the 64 countries reporting to the World Steel Association (worldsteel) grew 3.3% on-year in July to 161.7 million tonnes. Growth slowed considerably from previous months as Chinese production declined for the first time in 16 months, by 8.4% to 86.79mt, Kallanish notes.

Global output fell 4% from June.

Indian output nevertheless rose 13% on-year in July to 9.85mt, while Japanese and South Korean production grew 33% and 11% respectively to 8.01mt and 6.13mt. Vietnamese output surged 62% to 2.23mt.

EU27 crude steel production meanwhile rose 30% to 13mt, thanks to a 25% surge in German output to 3.02mt and estimated 29% growth in Italian production to 2.25mt. Output in France and Spain is meanwhile estimated to have risen 47% and 88% respectively to 1.34mt and 1.3mt.

Compared to June, however, EU output fell 2%.

The UK saw output rise an estimated 15% on-year in July to 675,000t.

Turkish production grew 2.5% to 3.23mt.

US production surged 38% to 7.48mt, rising for the fifth consecutive month, while Brazilian output rose 14.5% to 3.01mt.

CIS production grew 11% to 9.23mt, with Russian output estimated up 13% to 6.67mt and Ukrainian production confirmed up 7% to 1.88mt.

Global crude steel production in January-July thus grew 12.4% on-year to 1.17 billion tonnes, slowing from 14.4% growth after six months.

Adam Smith Germany

Swiss-based Duferco International Trading Holding (DITH) has invested in Italian coil service centre Marcora, sources close to the company tell Kallanish.

With an annual production capacity of 300,000 tonnes, Marcora counts ten re-rolling lines at two production facilities near Milan. It processes coil with a maximum thickness of 6mm and width of 2,000mm.

Duferco, which has bought a 20% shareholding in Marcora, will boost the company’s international presence while expanding into the downstream sector.

In 2020 Duferco Group’s net profit was $112 million, increasing by 19% compared to $94m achieved in 2019. Revenue however decreased by 21% year-on-year to $11.7 billion due to lower energy prices, which affected Duferco’s energy trading division, and low volumes and steel prices.

Last year, the group’s investments stood at over €36m, mostly focused on the revamp of the San Zeno plant in Italy. Italy’s Duferco Travi e Profilati was earlier awarded a loan of €72m for the construction of a new, greener production plant at its San Zeno Naviglio site near Brescia. Duferco will install the new production line, provided by SMS, partly with a view to expanding capacity (see Kallanish passim).

Natalia Capra France

German steel inventory levels increased in July as purchases started to arrive at stockholders, while sales started to drop with the beginning of the holiday period, according to data from German stockholder association BDS Aug. 24.

Flat steel stocks increased 8.5% from June to 1.2 million mt in July, seeing a 9.8% year on year decrease as July 2020 was still heavily impacted by pandemic-related demand drop.

Stock levels for long steel products grew 2.6% on the month to 791,193 mt, while year on year they dropped 2.9%.

Though sources told S&P Global Platts that they were currently cautious not to increase stocks too fast amid an uncertain price and demand development after the summer holidays, the overall sentiment across the market remains largely optimistic for prices and demand to be around current levels.

The road towards price recovery started end of June last year when the Platts daily hot-rolled assessment was at it’s lowest point recorded at Eur396.5/mt EXW Ruhr and increased to an all-time high at Eur1,190/mt EXW Ruhr June 25 this year, before the summer lull set in. The HRC assessment stood at Eur1,140/mt EXW Ruhr Aug. 24.

Flat steel sales volumes dropped 1.3% on the month to 525,292 mt, recording a year on year increase of 6.7%. Long steel sales volumes decreased 7.3% on the month to 300,205 mt, with a year on year decrease of 3.1%.

With the summer holidays starting in July, a sales drop is not unusual, but some market participants said that they were trying to keep their ex-stock selling prices stable amid the demand lull which results in fewer sales volumes.

— Laura Varriale

World crude steel production rose 3.3% on the year to 161.7 million mt in July, marking a continued recovery by the sector from the impact of COVID-19, the World Steel Association said on Aug. 24. All regions and major producing countries registered higher production in July from the previous year.

China proved to be the exception, falling 8.4% on the year to 86.8 million metric tonnes in July and recording its first decline in 2021 in the process. The decline came amid an overall slowdown of China’s economy as well as production curbs imposed by the government in Tangshan to curb pollution.

India, the next biggest producer, had an output of 9.8 million mt of crude steel in July, up 13.3% on the year. Japan produced 8 million mt, up 32.5% on the year. The output in the whole of Asia and Oceania stood at 116.4 million mt in July, down 2.5 % on the year amid the fall in China’s production, worldsteel data showed.

In July, the total worldwide crude output stood at 168 million mt, while China alone produced 93.88 million metric tonnes in June.

The US output rose 37.9% on the year to 7.5 million mt in July. Russia is estimated to have produced 6.7 million mt in July, up 13.4% on the year. South Korea’s output rose 10.8% during the same period to 6.1 million mt.

Germany, the EU’s biggest producer, produced 3 million mt in July, a rise of 24.7% on the year. Europe produced 13 million mt of crude steel in total, a rise of 30.3% year on year. Brazil also produced 3 million mt in July, a year-on-year rise of 14.5%. Turkey produced 3.2 million mt in July, a rise of 2.5% on the year, while Iran’s production rose 9% during the same period to 2.6 million mt, worldsteel data showed.

In the first seven months of 2021, global crude steel production reached 1.165 billion mt crude steel, up 12.4% on the year.

Iron produced in blast furnaces worldwide in July amounted to 111.67 million mt, compared with 113.88 million mt produced in June. The production of direct reduced iron stood at 8.54 million mt in July and 8.31 million mt in June, worldsteel data showed.

The data released covers the 64 countries that report to worldsteel, accounting for around 98% of the world’s crude steel production in 2020.

— Annalisa Villa