Day: 8 November 2021

The acronym OEE (Overall Equipment Effectiveness) originally comes from the automotive industry and refers to overall equipment effectiveness. With the now widely used industrial indicator OEE, operators of production and manufacturing facilities have an important tool at hand to measure and evaluate the availability and performance of technical equipment as well as the quality rate achieved with it. OEE is an important cornerstone for Industry 4.0, as it analyses the losses in effectiveness of production facilities and also shows the waste of resources and resulting effects.

Manufacturing companies can make well-founded decisions at any time on the basis of OEE key figures. Automated recording has the advantage that key figures such as throughput, set-up times or document capacities are always available in real time. An analysis by production units, products, time periods, defect types and sources continuously can generate optimization opportunities that compensate for the loss of time, performance and quality and significantly increase overall plant effectiveness. In the long term, this helps to ensure the company’s own value creation in the face of growing complexity. Efficient use of resources and equipment and optimization of processes make production sustainably profitable.

The introduction of the OEE indicator often fails due to the difficult and time-consuming determination of the necessary machine-specific reference value “specified quantity”. This reference value can now be determined in a short time with the help of digitally supported measuring devices such as the so-called BoosterBOX from KALTENBACH.SOLUTIONS GmbH on the basis of automatically measured process and setup times. The BoosterBOX can be easily connected to machines of all manufacturers via Plug&Play. During operation, it then collects relevant data and displays it in clear graphics. With the associated Timer app, the qualification of good and reject parts is possible directly at the machine and takes place in the further process with two clicks. This means that the OEE figure and the basic parameters of availability level, performance level and quality level are available online at the end of each shift.

kaltenbach-solutions.com

Near-term scrap and rebar futures contracts on the London Metal Exchange showed strong backwardation over the week to Nov. 4, while trading volumes surged.

Most near-term scrap futures contracts softened on week. Platts assessed the November contract up $2/mt on the week to $493.50/mt. Meanwhile, the December contract dropped $13/mt on the week to $473/mt. The January contract fell $4.50/mt on the week to $471/mt.

The backwardated structure for the November-December portion of the forward curve strengthened significantly, suggesting that futures traders continue to expect near term scrap prices in the physical market to weaken. The backwardation structure for the December to January portion of the curve softened on week.

Spot prices for physical imports of premium heavy melting scrap 1/2 (80:20) gained 50 cents/mt on the week to $500/mt CFR Turkey on Nov. 4, after dropping to $494/mt CFR Turkey on Nov. 2, as mills accepted higher prices for new bookings.

“The CFR Turkey price has bottomed. I think we will see it creeping up and maybe can see $510-$515/mt CFR as a near-term peak, though that could take some weeks,” a UK trading source said. “Mills might struggle on rebar sales though, and this could squeeze their margin.”

“Turkish mills should take a step back for a while in order to avoid more increases, because finished product demand is not that high,” one mill source said.

Weekly LME scrap futures trading volumes over the week to Nov. 4 totaled 37,030 mt, up from 30,790 mt recorded last week.

In contrast to scrap, most near-term rebar futures contracts saw gains on the week. Platts assessed the November contract up $15/mt to $729.50/mt on the week. The December contract gained $8.50/mt to $713/mt, while the January contract dipped $4/mt on the week to $705.50/mt.

The backwardated structure of the November-December portion of the forward curve strengthened on week, suggesting that futures traders’ expectations of softening near-term rebar prices are still firm. The contango structure of the December to January portion of the curve shifted into backwardation, albeit maintaining elevated levels.

Turkish physical rebar export prices jumped $10/mt on the week to $742.50/mt FOB on Nov. 4, as Turkish rebar exporters tried to stick to higher offers, but persistently low demand made a lasting price recovery questionable.

Raised energy costs for the industry in Turkey coupled with ferrous scrap pricing hitting $500/mt CFR Turkey, pushed Turkish mills to look for $750-$765/mt FOB for their rebar exports, the highest level since May. However, rebar demand did not follow to support the recent hikes in asking prices, multiple sources agreed.

Rebar futures weekly trading volumes this week on the London Metal Exchange totaled 11,150 mt, significantly higher compared to 2,310 mt traded volume last week.

The daily outright spread between Turkish export rebar and import scrap was assessed at $242.50/mt Nov. 4, up $9.50/mt on the week.

Elsewhere, Indian scrap futures weekly trading volumes over the week to Nov. 4 on the London Metal Exchange totaled 210 mt, matching the volume traded over the week to Oct. 28.

A total of 870 mt has traded so far on the contract, which settles basis the Platts CFR Nhava Sheva shredded scrap index, since its launch in late July 2021.

— Rabia Arif

The UK parliament’s Business, Energy and Industrial Strategy (BEIS) Committee called on the government to establish a steel sector deal to address long-running challenges to the industry’s competitiveness, including high energy prices and barriers to supplying steel for major public projects.

The deal should be made part of a strategic plan for decarbonizing the industry and protecting jobs, the committee said in a report published Nov. 5.

The UK steel industry is in urgent need of government support with long-standing issues such as electricity costs and improving the use of public procurement, but the government should go the extra mile by bringing forward a steel sector deal to help UK producers compete internationally and transition to a low-carbon future, the report said.

It notes decarbonizing the steel industry – given its significant contribution to greenhouse gas (GHG) emissions – is an important part of meeting the government’s target to bring all GHG emissions to net zero by 2050 and to cut them by 78% by 2035.

However, the government currently lacks a roadmap or overarching strategy for decarbonizing steel, the report said, identifying a range of technologies fit for the task, but adding that the steel sector was holding off from investing in them without certainty and direction from government.

The committee recommends the steel sector deal deliver a cohesive plan for decarbonizing the steel industry which should be announced no later than summer 2022.

This year’s soaring natural gas and power prices prompted Liberty Steel UK, part of metals and energy group GFG Alliance, to run its Rotherham electric arc furnace – one of the UK’s most electro-intensive industrial sites – at night (between 11 pm and 6 am) when energy tariff is lower.

Back in September, steelmaker British Steel said – because of the UK’s high dependence on gas for power generation – spiraling energy bills were putting the UK steel industry at an increasing disadvantage to its European counterparts.

Among other concerns, the report was prompted by the collapse in March 2021 of UK-based Greensill Capital, the main lender to GFG Alliance, and an interrelated cash squeeze felt at a few GFG Alliance-owned companies.

“The systemic issues at the heart of GFG Alliance has highlighted the vulnerabilities of Liberty Steel and its place in the wider steel sector in the UK,” Darren Jones, Chair of the BEIS Committee, said in a statement.

— Ekaterina Bouckley

German steel producers, distributors and traders were found to be bullish on pricing over November, following the BlechExpo fair, where participants left with expectations of higher prices for Q1, though the short term is still expected to be mostly stable, data from the S&P Global Platts monthly steel sentiment survey showed.

As automotive demand continues to weaken, most participants were also in agreement about higher inventories due to more previously agreed automotive volumes now back up for grab, with production therefore expected to be lower as several producers stop their galvanizing lines.

The survey, which is used to compile an index demonstrating pricing sentiment, was conducted at the beginning of this month and showed the overall expectation for steel prices at 59, up 34 points from October, with all participants largely in consensus over the bullish direction.

“It won’t be the higher prices we had in the last 12 months, but they will be firm,” a German distributor told Platts. “Stockholders and end-buyers have been trying to point out some negative trends, but the mills are very strong. You also have the US market opening to a certain extent and protectionism against imports.”

The US and EU decision to replace the US Section 232 tariffs on European steel and aluminum imports with a tariff-rate quota (TRQ) effective Jan. 1 sparked a wave of bullish sentiment. Market sources had been waiting on the outcome of EU-US discussions since the summer, with many buy-side sources fearing higher domestic prices if mills decide to send material overseas.

“Lead times are shorter, and from the Section 232 announcement for European steel into the US, a lot of material will disappear,” a second German distributor warned.

The aggregate yearly import quota volume under the TRQ system is set at 3.3 million mt and is country-specific, coming under 54 product categories.

There was also a hesitancy to buy from imports as foreign producers started increasing their prices, with Russian import prices having risen steadily to Eur910/mt CIF Antwerp this week. Concerns about Turkish material were also apparent, with European buyers weary of additional risks due to a weakening economy and political instability.

European inventories up, production levels dip

European mills have become inundated with unneeded automotive volumes and imports since cleared from over the summer. This coupled with quiet domestic demand has led to larger inventories.

Buyers are in no rush to buy as they look to exhaust the stocks they have built up due to the shortage from several months ago, and lead times having shortened to as little as three weeks.

Some major European mills were heard to be looking for spare warehouse space to accommodate the upwards of 30,000 mt of available HRC not taken by automotive manufacturers.

A Benelux-based buyer source said activity had been very muted due to “capacity problems,” with customers having bought more than they needed.

“For us there’s no reason to buy because the lead times are so short,” the buyer said.

The index for inventory sentiment stood at 55, suggesting a moderate rise in stored volumes, with an index of 50 denoting stability. This was down from the bullish period in October when the index stood at 77. Steel producers were the most bullish on inventory increases for November with an index of 60, while traders stood at 50.

Production outlook for November were bearish with the overall index at 49, suggesting a decrease as mills pause their galvanizing lines due to weakening automotive demand. Most bullish in this category were traders at 58, followed by producers at 40.

Sources told Platts the situation with automotive and rising energy costs was making some European producers reconsider their production plans.

“They [mills] are stopping galvanizing lines for lack of demand,” a European service center source said. “Can see in October production lines were stopped in automotive, there are also electricity issues with zinc smelters.”

— Amanda Flint, Laura Varriale

Although the gap between domestic and imported hot-rolled coil prices narrowed in Turkey in September, amid the sharp decline seen in domestic mill offer prices on low demand, Turkish buyers continued their imports from foreign suppliers in that month, particularly from India.

According to the latest monthly Turkish Statistical Institute (TUIK) data, Indian mills that were not traditionally one of Turkey’s HRC suppliers, sold significant volume to Turkey with competitive prices again in September.

Turkish buyers imported 120,000 mt of HRC from India in September, although no HRC cargo was imported from India in the same month the previous year. Turkey’s nine-months’ HRC imports from India reached 517,700 mt, up from zero in January-September 2020.

Turkey’s imports of HRC from CIS countries, traditionally Turkey’s largest HRC suppliers, remained strong year on year in September, the latest TUIK data showed. HRC imports from Russia reached 120,600 mt in that month, 87% higher on year, while imports from Ukraine rose by 85% on year to 95,900 mt.

Highlighting that the share of imports in Turkey’s total steel consumption reached as high as 48%, the Turkish Steel Producers’ Association (TCUD) said precautions should be taken to limit these imports, particularly from Russia, Ukraine and India, which were made within the scope of the inward processing regime (DIR) exempting exporters of finished products, such as pipe makers, from feedstock steel import duties.

Turkish buyers’ HRC imports from Japan totaled 24,600 mt in September, sharply down from 64,900 mt imported from that country in the same month the previous year, while imports from China reached 16,700 mt, compared to zero in the same month of 2020.

Turkish buyers also imported 13,700 mt of HRC from Brazil in that month, up from zero in the same month the previous year.

HRC imports from one of Turkey’s traditional suppliers, Romania, reached 12,200 mt in September, up 25% on year, while Turkish buyers’ HRC imports from France totaled 10,800 mt, sharply down from 33,100 mt imported in September 2020, the latest data showed.

— Cenk Can

Brazilian economy ministry has temporary reduced the import tariffs over a variety of steel products, aimed at easing the effects of coronavirus pandemic in the national economy, the ministry said Nov. 5.

The measure – valid until Dec. 31, 2022 – covers from raw materials such as pig iron, ferroalloys, to semi-finished ingots, billets, slabs and flats and long steel products, including tubes & pipes, the ministry said in a statement published in the official gazette. Specialty steels were also cited.

Carbon hot- and cold-rolled coils, rebar and wire rod had their 12% import tariff cut to 10.8%, the ministry said

Industry associations – such as for machinery and equipment, Abimaq; for automakers, Anfavea; and for construction, CBIC – have been seeking the tariff cut or removal since the jump in steel prices in mid-2020 and a period of restricted supply.

Aço Brasil Institute said earlier this year that rising raw materials costs such as iron ore, scrap and met coal were “the reason for the adjustments in steel prices in Brazil and in the world.”

According to the government, the measure does not harms regional agreements, as it was taken due to the urgency situation raised by the coronavirus pandemic.

Brazilian domestic hot-rolled-coil prices have increased 173.85% from January 2020 to date to Real 6,600/mt, ex-works, according to Platts’ Nov. 5 assessment. Before that, the price reached a peak of Real 7,000/mt on May 21.

Brazilian domestic rebar price increased 111.4% from January 2020 to Real 5,000/mt, ex-works, on Nov. 5. The price previously reached a peak of Real 6,050/mt in June 21.

According to national flat products distributors association Inda, a large number of ships is waiting to dock at Southern Sao Francisco do Sul Port, causing congestion and further delivery delays.

Moreover, a high volume of imported material was reported sitting at the port, much of it awaiting customs clearance, according to one trader who said there is no more space available at bonded warehouses.

“A part of this volume may now be nationalized, causing further pressure on domestic prices,” said the trader, estimating a normalization by the end of Q1 2022.

Another importer said that the ministry cut to tariffs would result in very little change, since the final product price will not “even have this 1.2 percentage points of discount in the end. It helps but it is not a solution,” he said. “Only the foreign exchange fluctuation resulted in a 10% raise in the last shipment we brought.”

— Jose Guerra

Seaborne iron ore prices slumped again on Friday, with the Kallanish KORE 62% Fe index breaking the $100/tonne barrier and hitting the lowest since May 2020. Prices are still trending lower with sentiment in Chinese steel markets very weak.

The Kallanish KORE 62% Fe index fell $2.99/t to $97.62/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index dropped $3.63/t to $115.90/dmt cfr, and the KORE 58% Fe index declined $2.30/t to $74.53/dmt cfr. 188,000 tonnes of FMG Super Special Fines sold at a floating price.

On the Dalian Commodity Exchange January 2022 iron ore settled down CNY 16.5/t at CNY 562.5/t ($87.89/t), while on the Singapore Exchange December 62% Fe futures settled down $2.46/t at $91.47/t. The same contract for 65% Fe and 58% Fe futures settled down $3.77/t at $109.08/t, and down $2.16/t at $68.64/t respectively. Tangshan billet remains stuck at CNY 4,770/t.

Seaborne iron ore prices fell below levels seen the previous two times that post-pandemic prices broke under $100/t, in July 2020 and September 2021. Prices now look set for a sustained fall under $100/t for the first time since early 2020. Chinese steel market sentiment has weakened to the extent that export traders are short selling material for early 2022 delivery, and domestic traders are expecting prices to fall further by the end of the year.

Chinese port stocks continue to tick higher, but at a slower pace than the previous week. Across 35 ports stocks hit 145.12 million tonnes, up 2.29mt over the week, according to SMM. Drawdown from port stocks, especially in northern China, remains very slow on restricted steel output.

Tomas Gutierrez UK

North American service centre chain Russel Metals’ earnings remain at record-high levels in the third quarter, Kallanish learns from the company’s latest performance results.

Russel earned CAD 132 million ($106m) on sales of CAD 1.11 billion in the third quarter, up from record-high second quarter earnings of CAD 118m on sales of CAD 1.07 billion. On-year, the company’s quarterly earnings remain up, above Q3 2020 earnings of CAD 18m on sales of CAD 615m.

According to Russel, metal service centres have experienced an 87% on-year increase in steel selling prices. Q3 steel prices are 19% above Q2, it adds.

“Over the past 15 months, we have significantly repositioned our business portfolio with the strategic objectives of enhancing returns, increasing margins and reducing volatility,” explains Russel ceo John Reid.

Zach Johnson USA

As it reports record quarterly results, service centre chain Olympic Steel says its shipments this year have been outpacing the rest of the industry. Despite supply chain disruptions, the company reports continuing strength in demand and shipping volumes.

Olympic sold 244,519 short tons of carbon flat products and 41,203 st of specialty flats in the third quarter. Compared to Q3 2020, shipments were up 9% and 22%, respectively. The carbon flats division reported a 121% on-year rise in average selling prices to $1,655/st and a 66% increase in specialty flats prices to $3,985/st during Q3.

The company posted Q3 net income of $44.5 million on sales of more than $668m. This compares to a Q3 2020 net loss of $1.52m on sales of $300m.

“Our third-quarter financial results represent the best quarterly performance in Olympic Steel’s history. Sales, net income and Ebitda significantly exceeded our previous records set in the second quarter of this year,” says ceo Richard Marabito in an earnings release reviewed by Kallanish.

During the quarter, Cleveland-based Olympic sold its carbon flatrolled distribution business in Detroit, then acquired stainless distributor and fabricator Shaw Stainless & Alloy. The company says it is continuing to make investments in processing and automation equipment while it also pursues its long-term strategy of diversifying its business.

Laura Miller USA

North American service centre chain Russel Metals plans to acquire the southern US metal service centre chain Boyd Metals in a $110 million deal, Kallanish understands.

Boyd Metals has five service centres operating in the southern US with two locations in Arkansas, one location in Missouri, one location in Oklahoma, and one location in Texas.

According to Russel, the recent acquisition is part of the company’s ongoing repositioning efforts to increase both its returns and revenues.

“We believe their culture, experienced management team and business platforms are very much aligned with our existing business as we look to further expand our US service centre footprint. We look forward to having all of the Boyd employees as part of the Russel family,” says Russel ceo John Reid.

Recently, Russel earned CAD 132 million ($106m) on sales of CAD 1.11 billion in the third quarter of 2021 (see related story).

Zach Johnson USA