Day: 28 February 2022

ArcelorMittal Europe – Flat Products says new orders and contracts will be assessed in the coming days after markets were thrown into turmoil following Russia’s invasion of Ukraine last Thursday.

Kallanish learned from informed market sources on Friday that the division of ArcelorMittal Europe has told customers it has stopped offering product as a result of the war in Ukraine.

“Given the current market volatility caused by the crisis in Ukraine, ArcelorMittal Europe – Flat Products is focussing on fulfilling existing orders,” the company told Kallanish on Friday, before adding new orders will be assessed once there is more clarity.

Following the suspension of ferrous trade in the CIS region precipitated by Russia’s invasion, questions have arisen over the impact of steelmaking raw materials and flat steel supply into Europe. Many of Europe’s blast furnace-based producers depend on Ukrainian iron ore and coking coal, while Russian and Ukrainian flat steel has a significant share in the EU import market. Potential shortages will likely drive up prices and lead to EU buyers scrambling to find alternative suppliers.

The Kallanish northern European hot rolled coil price index jumped for a third consecutive week to €920-980/tonne ($1,024-1,091) ex-works on Friday, after diving throughout January.

Adam Smith Germany

Italian plate producers have either stopped sales completely or are deliberating longer over quotes amid the market uncertainty caused by the situation in Ukraine.

Given slab feedstock deliveries from Ukraine may not be completed, plate producers tell Kallanish they do not know what price to quote at present. This is all the more so considering the continuing escalation in gas prices and uncertainty over how much non-CIS slab alternatives will cost in the coming weeks. Italy is a net slab importer and local plate processing is fed in large part by Ukrainian slab.

As a consequence of the Russian-Ukrainian conflict, on 24 February the Dutch TTF Natural Gas Index showed an increase of 50.18% on the previous day, after rising by 11% on 23 January. From a level 70, the gas price index ballooned to 134 on 24 February.

This, combined with the uncertainty over slab procurement, is causing companies to freeze their sales activity and rush to replace slab usually bought in Ukraine with other supply sources. A similar situation is evident in Italy for other products, such as coil (see separate article) and raw materials like HBI and pig iron.

Before the war started, Italian heavy plate contract prices were steadily climbing following the latest hikes announced by mills in February. Demand for S235, the very basic grade, and premium 355 grade throughout Europe is sustained and plate mills are quoting lead times for the second quarter, in April and May.

Domestic plate contracts have attained the level of €1,000/tonne ($1,117/t) for S235, with €50/t extras for the premium 355 grade.

Distributors have expressed concern regarding plate procurement and lead times, which are expected to lengthen further as end-user demand remains robust. Some are concerned they will not be able to procure plate in Italy because of the conflict, as import offers are few and not always competitive.

Natalia Capra France

Italian hot rolled coil producers have stopped sales due to uncertainty related to the Russian-Ukrainian crisis. They are expected to return to quoting in the first March week at considerably increased prices compared to February levels, sources tell Kallanish.

The war in Ukraine and future sanctions on Russian steel will cause slab and coil shortages in Italy. Availability of both heavy plate and HRC is expected to shrink as producers are grappling with procurement issues. Some buyers in Italy are rushing to find alternative sources of supply in other European and non-European countries.

This is also touching raw materials such as pig iron, for which prices are seen increasing in the short term on shortages (see Kallanish 25 February). Meanwhile, producers of cold rolled and hot-dip galvanized coil are also suspending quoting due to uncertainty, and preparing significant increases.

HRC contracts in Italy currently remain at €880-920/tonne ($983-1,028/t) base ex-works, amid a few uncompetitive import offers starting at €880/t cfr Italy.

Demand for domestic HRC is expected to be strong when producers return to quoting, Kallanish hears. Italian steelmakers were asking for €920-930/t base ex-works for HRC before they stopped sales.

ArcelorMittal in Italy is also said to have halted sales, together with most Italian service centres who are expected to go back to selling on Monday or Tuesday.

Meanwhile, some Italian end-users that sell truck and tractor components in the CIS region are expected to experience deliveries and sales difficulties as a consequence of the war.

Elsewhere in Europe, other coil makers are either stopping sales or increasing quotes. Liberty Galati has pushed up HRC prices for April delivery to €1,000/t ex-works. The company says prices of CRC and HDG, as well as organic coated sheet will also be amended upwards (see separate article).

Natalia Capra France