Day: 15 October 2021

As Turkish lira depreciation against the US dollar accelerated following the dismissal of Central Bank governors with a presidential decree on Oct. 14, Turkish mills’ lira denominated rebar list prices rose further.

The Turkish lira lost a further 1% value against the US dollar following the dismissals, hitting an all-time record Lira 9.18/$1, while all eyes turned to the next monetary policy meeting of the Central Bank, which will take place on Oct. 21, as it is known that President Erdogan is against high interest rates. Erdogan has changed the bank governors four times since 2019 for increasing interest rates.

New interest rate cuts could be possible at the Bank’s monetary policy meetings in the coming months.

The increasing trend in Turkish mills’ lira-denominated rebar prices accelerated Oct. 14 in this sentiment.

Major long steel producer, Icdas raised its 12-32 mm diameter rebar list prices by a further Lira 160/mt on Oct. 14 to 7,800/mt ex-works Biga, equivalent to $720/mt, excluding VAT. The exchange rate was Lira 9.18/$1.

With that hike, the rise in the Icdas rebar list price reached $50/mt since the beginning of October. The move also came amid the ongoing rise in imported scrap prices and strengthened market conditions.

S&P Global Platts assessed Turkish imports of premium heavy melting scrap 1/2 80:20 Oct. 13 at $480.25/mt CFR, up $12.75/mt on day to reach the highest level since July 19.

Other Turkish mills have also raised their rebar offer prices generally to the $720-$730/mt EXW range Oct. 14, depending on tonnage and region.

Although demand in the domestic market has been relatively strong in recent weeks in a rising market, accelerated depreciation in Turkish Lira could hamper trade in the domestic market in the coming weeks as winter approaches.

— Cenk Can

Seaborne iron ore prices picked up on Thursday as ferrous markets continued to bounce around a range driven by fluctuating sentiment. Chinese imports suggest steady supply, but sentiment will remain a key driver as data on the wider economic situation emerges.

The Kallanish KORE 62% Fe index increased $2.06/t to $125.81/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index gained $2.79/t to $149.25/dmt cfr, and the KORE 58% Fe index inched $0.92/t higher to $95.65/dmt cfr. 170,000 tonnes of Carajas Fines shipped on 5 October sold at $150.60/t, and 90,000t of Jimblebar Fines sold at a floating price.

On the Dalian Commodity Exchange January 2022 iron ore settled down CNY 27.5/t to CNY 730.5/t ($113.55/t), while on the Singapore Exchange November 62% Fe futures settled up $2.37/t at $123.58/t. The same contract for 65% Fe and 58% Fe futures settled up $3.82/t at $147.53/t, and down $1.22/t at $93.30/t respectively.

Chinese scrap prices began to feel the weight of falling prices in recent days, with some mills lowering purchase prices which had only just been hiked. Billet prices, however, took a pause amid an uncertain market. 6mm+ heavy scrap delivered to mills in the Yangtze River Delta fell CNY 11/t to CNY 3,821/t. In Tangshan, billet prices held steady at CNY 5,250/t.

China’s iron ore imports have been coming in fairly steadily over the last two months. Although September imports were down on-month, when adjusted to imports by day they were up slightly on-month. China iron ore imports in September were 95.611 million tonnes, down from 97.492mt in August and 108.55mt a year earlier, according to Chinese customs data. Over nine months, imports were 841.953mt, down 3% year-on-year.

The physical market is expected to loosen over the rest of the year, but this is one of the more predictable aspects of the market. Sentiment, about steel and iron ore markets in particular, and the Chinese economy more generally, is expected to be highly volatile. Monday will see a test of sentiment as economic data for September and the third quarter is released.

Tomas Gutierrez UK

Stainless steel scrap prices in France are increasing slightly compared to September, in line with international price hikes amid see-sawing nickel values this month.

Mills are now paying €1,630-1,650/tonne ($1,893-1,916) ex-works for grade 304 to be delivered in October. Buyers pay €20-40/t for transport depending on point of delivery and departure, sources say.

Grade 316 is hovering at €2,330-2,350/t ex-works on average, market participants tell Kallanish. This grade has increased approximately €100/t on September levels due to short availability and increasing prices of raw materials.

Demand is considered to be at good levels in France as finished stainless flat and tube product prices are also hiking in line with the tight supply of coils in Europe.

Nickel prices for cash buyers were at $19.850/t on 16 September and reached $19,235/t on 13 October, Kallanish notes.

Natalia Capra France

As a consequence of skyrocketing electricity prices, some steelmakers in Germany and its neighbouring countries are getting explicit about lifting their steel prices.

While, for example, Austria’s voestalpine was still reserved last week with commenting on its pricing policy in general, Swiss Steel came forward with wording the obvious. “We are currently examining various ways of reacting to the cost increase,” a spokeswoman tells Kallanish upon request. “This will inevitably lead to a corresponding increase of our steel prices,” she qualifies.

In a press interview, meanwhile, Swiss Steel chief executive Frank Koch stated that the group is pondering implementing a surcharge for energy that is linked to the fluctuation of market prices for energy.

Such considerations are still dismissed by Salzgitter. Surcharges as a tool for pricing “already failed in earlier times for iron ore and scrap,” a Salzgitter spokesman reiterates. However, with only one electric arc furnace mill among its production assets – the sections mill in Peine – Salzgitter feels less pain than Swiss Steel group, which produces entirely using EAFs, in Switzerland, Germany and France.

Like Swiss Steel with its special bar qualities, it will be also the makers of rebar that feel the cost sting the hardest. Feralpi has announced production stoppages in Italy, but not for Germany, where rebar sells better altogether. According to one mill source, rising energy prices should lift the rebar production cost by close to €20/tonne ($23). “We believe that mills will hand down this hike to the benders and other customers,” he says.

Christian Koehl Germany

Italian stainless scrap prices are increasing again by €50/tonne ($57) compared to September due to hiking nickel prices.

Scrap sales volumes in Italy are said to be sustained by a good level of demand. Some long mills, however, forecast that scrap prices will fall, dragged down by “a quieter market” this month.

304 grade is sold at €1,700-1,750/t delivered. Sales values for 316 also hiked significantly, reaching €2,380-2,400/t delivered. This grade is in short supply, sources suggest.

Nickel levels for cash buyers were at $18,870/t on 11 October, Kallanish notes.

Natalia Capra France

Fernando Espada, President of EUROMETAL, participated in the session “STEEL VISION: preparing fro tomorrow’s Steel” at the Made in Steel conference, Tuesday the 5th of October 2021.

Barbara Beltrame (Confindustria ), Gianpietro Benedetti (Gruppo Danieli), Mario Caldonazzo (European Steel Association – Eurofer) and Fernando Espada (EUROMETAL), interviewed by Stefano Ferrari and Lucio Dall’Angelo, debated on the evolution of supply chain in the next few years, the new aspects of internationalization, how will operators have to change and on which levers will it be necessary to focus for production and distribution.

The EU has retained its anti-dumping duty on imports of wire rod from China (PRC) after completing an expiry review requested by Eurofer last year.

The duty applies to products under HS codes 7213 10 00, 7213 20 00, 7213 91 10, 7213 91 20, 7213 91 41, 7213 91 49, 7213 91 70, 7213 91 90, 7213 99 10, 7213 99 90, 7227 10 00, 7227 20 00, 7227 90 10, 7227 90 50 and 7227 90 95. The rate is 7.9% for Valin Group and 24% for all other Chinese companies.

The move extends the duty originally imposed in 2009 and then extended the first time in 2015. The review investigation period (POI) of the latest probe covered 1 July 2019 to 30 June 2020. The duties have been extended despite the European Commission conceding that wire rod imports from PRC have almost “disappeared.”

“While Chinese imports accounted for 5% market share and 1.1 million tonnes in the original investigation period, they have, based on information from Eurostat, virtually disappeared from the Union market. In fact, imports from the PRC decreased from 556 to 75 tonnes over the period considered,” the Commission says in its findings monitored by Kallanish.

“The company with the 7.9% duty rate is related to the ArcelorMittal group and according to the complainants does not produce significant quantities of wire rod any longer. However, the other Chinese exporting producers also ceased to sell into the Union. The wire rod market appears to be very price sensitive and the 24% price increase caused by the anti-dumping duty in force made Chinese exporters to lose interest in the Union market,” the Commission concludes.

EU production of the products in question was 18.3 million tonnes in the POI, down 9% from 2017, with capacity up 6% to 27.3m t/year and utilisation down to 67% from 78%. Consumption in the bloc meanwhile fell 8% to 18.82mt.

Adam Smith Germany

Worldsteel has revised up its forecast for global finished steel demand thanks mainly to developed economies outperforming earlier expectations by more than developing economies.

Global steel demand will grow by 4.5% on-year in 2021 to 1.85 billion tonnes, after 0.1% growth in 2020, worldsteel says in its latest short-range outlook (SRO).

Developed economies, like the US, EU and certain Asian nations, have managed to minimise the impact of the latest Covid-19 infection wave on economic activity in 2021, using more targeted and localised lockdowns. After falling by 12.7% in 2020, developed economies’ steel demand will increase 12.2% in 2021 and 4.3% in 2022, reaching its pre-pandemic level, worldsteel says.

However, supply chain bottlenecks and the services sector still lagging behind are preventing a more robust recovery.

“The Chinese economy recovery has slowed since June, leading to a steel demand contraction of 13.3% in July and then 18.3% in August,” worldsteel director general Edwin Basson said during Thursday’s virtual SRO press conference attended by Kallanish. “The sharp deceleration is partly attributable to small waves of infections and the government cap on steel production. No growth in Chinese steel demand is expected in 2022.”

Steel demand in developing economies, excluding China, also recovered in 2021, aided by the recovery in commodity prices and international trade. However, new Covid-19 waves combined with low vaccination levels have restrained this recovery.

“Russia’s export duties for steel are in favour of the domestic steel sector, which we expect to continue to do well mostly due to state-funded construction activities in 2021,” Basson told Kallanish. “We expect Russia, Ukraine, Kazakhstan and other CIS countries to continue their positive recovery.”

Steel demand in Latin America has shown a surprisingly strong recovery in 2021 thanks to the construction and automotive sectors. However, in 2022, the region could see markedly weakened momentum as it will struggle with compounded structural issues including high inflation, heightened fiscal deficits and political uncertainty.

In 2022, global steel demand will see a further increase of 2.2% on-year to 1.89 billion tonnes, worldsteel says. The current forecast assumes that, with the progress of vaccinations across the world, the spread of variants of the Covid-19 pandemic will be less damaging and disruptive than seen in previous waves.

Svetoslav Abrossimov Bulgaria

The global automotive sector has rebounded strongly since the initial Covid-19 lockdowns last year but supply chain disruption is constraining further growth, worldsteel says in its latest short-range outlook (SRO).

“Those disruptions include not only semiconductor shortages, but also lack of containers, lack of shipping and lack of harbour capacities in some cases,” worldsteel director general Edwin Basson told Kallanish during Thursday’s SRO briefing. “This is a structural sign of a global economy that is trying to get back to the previous way of operating and there are still some problems that must be fixed in the system. Hopefully, by the early part of next year this will happen.”

In the US, light vehicle production regained its pre-pandemic level by the third quarter of last year, but it has been trending down since then, partly because of supply chain disruptions, worldsteel says.

“In the EU, a strong recovery is underway, and the European automotive sector is expected to rebound by 15.3% on-year in 2021,” the association comments in a note. “However, it is still far below its level when the manufacturing recession first started in 2018. The EU’s automotive sector faces uncertainty with component shortages and a weak prospect of demand due to general economic uncertainty.”

In China, automobile production soared in the first half of this year. In particular, new electric vehicle (EV) production increased by almost 200% from January to August 2021, accounting for 11.2% of total vehicles produced in the same period.

With pent-up demand dissipating, the growth in automotive production in 2022 will decelerate, though high order backlogs will provide some support, worldsteel says.

In general, the construction sector has remained more resilient than the manufacturing sector to the Covid-19 pandemic shock, the association observes. However, in many developing economies, construction activity was severely disrupted by a total stoppage of projects.

In 2021, the global construction sector is expected to show a robust recovery fuelled by low interest rates and governments focusing on infrastructure projects as part of their recovery plans, it adds.

Svetoslav Abrossimov Bulgaria

European HRC prices were heard stable in the market Oct. 14 amid greater availability in the market, with buyers now suddenly able to purchase volumes for the fourth quarter.

In Southern Europe, market participants mentioned healthy demand amid rising stock levels, which would restore some balance to the supply chain. Italians were bracing themselves for possible transport issues, with the Italian Green Pass proof-of-vaccination document set to be enforced on Oct 15 sources told S&P Global Platts.

“On Oct. 1, material was customs cleared and now its all coming to the market,” a German distributor said. “Stock levels will go down because demand will pick up. Stockholders are reducing prices levels.”

The discrepancy between West and Eastern European HRC prices was also still a hot point of discussion, with one UK-based trader having heard of spot prices from Eastern producers between Eur800-900/mt. In West Europe, prices were heard between Eur1000-1040/mt delivered Europe, but the trader expects this price level to soon dip below Eur1,000/mt once automotive contracts are concluded.

With the European steel market now making room for carbon surcharges, ArcelorMittal confirmed they will incorporate a gas surcharge of Eur50/mt to be applied to all new price agreements. The new cost is expected to be withdrawn once energy prices resume to “normal levels,” the company said in a statement Oct 6.

While most market participants have come to terms with the new costs and have put structures in place to accommodate its new position in the overall cost structure, some sources have felt the move is too sudden.

“Mills should have been investing [in green steel] already. I think they should have done this years ago,” a Benelux buyer said. “But now carbon is a hot item.”

In the Italian market, HRC offer prices were heard at Eur995/mt ex-works Italy, with workable prices between Eur930-940/mt ex-works Italy.

With Italy’s ‘Green Pass’ set to be enforced by Oct 15, an Italian service center feared it would become more difficult for truck drivers to enter his premises for collections and deliveries.

Italy is set to become the first European country to require a digital or paper proof of vaccination, immunity or a negative test in the past 48 hours — known as the green pass. This will become mandatory in all public and private work spaces.

— Amanda Flint