Day: 8 March 2022

Russia’s invasion of Ukraine has had a huge impact on the EU steel market and the European Commission should amend its steel safeguard to prevent a further supply squeeze.

The commission is currently conducting a review of the measures, which it started in December. Quotas for some products should be shifted to global, rather than country-by-country, to provide buyers access to sufficient imports.

Between them Russia and Ukraine accounted for almost 20pc of hot-rolled, cold-rolled and hot-dip galvanised strip imports into the EU last year, giving them a sizeable share that will be difficult to replace.

This is not accounting for large slab sales, which are the lifeblood for Metinvest-owned Ferriera Valsider and Trametal, and NLMK’s La Louviere and DanSteel, as well as independent re-rollers such as Marcegaglia. Russian and Ukrainian mills sold well over 4mn t of slab into the EU last year and represent a huge percentage of semi-finished imports overall.

Plate prices and potentially production could be heavily impacted by tighter slab supply, and Russia and Ukraine between them are more than 50pc of the EU import market here.

On other products, the need for a change to quotas is also clear. Take rebar, for example. Russia, Ukraine and Belarus — whose steel is sanctioned — together represented over 45pc of the import market last year, and just under 44pc the preceding year. These sources are for now unavailable, and the energy price spike caused by Russia’s invasion will undoubtedly impact domestic longs supply going forward: an Italian producer has already idled plants in response to higher energy costs, according to market participants.

The absence of Black Sea supply will also increase competition for material from other export markets, such as Turkey. A global quota would allow buyers greater access to material from other markets to compensate for the fall in Russian and Ukrainian tonnages.

Last week the commission said that the Black Sea market remains open and it is unlikely to make changes to its safeguard unless further sanctions are announced. The outcome of the current safeguard review is expected in April, with any new changes effective from 1 July.

By Colin Richardson

US domestic scrap prices, which are expected to settle this week, are likely to follow the ballooning trend seen in the international market amid Russia’s invasion of Ukraine.

Even prior to Russia’s attack, the US market was bullish for March trading, following three consecutive months of declines, but expectations have now exploded as the war in Ukraine is disrupting pig iron shipments from the CIS.

Scrap prices in Turkey increased by more than $120/tonne throughout last week. Turkish mills are receiving steel demand from markets normally served by CIS mills and have therefore increased their scrap requirement, with April-shipment bookings still unfinished. This, coupled with the interruption to CIS pig iron supply, caused scrap prices to jump last week.

Although no bookings from the US are heard, US suppliers are seen targeting to sell at above $650/tonne cfr Turkey.

A US exporter tells Kallanish: “Today’s price will not be valid tomorrow. I am hearing an EU-origin HMS 1&2 80:20 booking at $640/t cfr [Turkey]. If I can confirm this, maybe we will come with $680/t tomorrow. The market is changing by the hour.”

A US domestic supplier says: “Last week we were talking about domestic [scrap] price increases of around $30-40/gross ton. But today, I think prices will rise more than $100/gt. For prime grades, even more.”

One US exporter is heard to have cancelled its shipment to a mill in northern Turkey as the Ukraine war has impacted the Black Sea. There are talks that the vessel will be directed to another mill located in southern Turkey. Some vessel owners are also seen avoiding sailing to the Marmara region.

Later on Monday afternoon, there was a rumour of a US-origin scrap deal being done at $678/t cfr Turkey, though this was rejected by most US suppliers.

Export prices from the US West Coast also increased last week. In Taiwan, offers for HMS 1&2 80:20 container scrap from the US West Coast have increased to above $515/t cfr. Although the market remains bullish over near-term pricing, instability and uncertainty are troubling all market players.

Burcak Alpman Turkey

Long steel producer Pittini Group is idling its three facilities again this week, in Osoppo near Udine, Verona and Potenza, Kallanish learns from trade unions. This follows the initial stoppage and then resumption of activities on 2 March.

The repeated idling is caused by skyrocketing energy costs and difficulty in procuring raw materials, such as ferroalloys and hot-briquetted iron, as a consequence of the Russian invasion of Ukraine. Both the hot-end area and re-rolling facilities are affected by the production halt this time, with temporary layoffs also taking place, a source close to the company confirms.

Meanwhile, other rebar and specialty steel producers are suspending production a few days per week, either reducing shifts from three to one per day or resorting to producing at weekends when energy costs are lower.

Pittini employs around 1,800 workers and has a yearly production capacity of approximately 3 million tonnes across 18 production and logistic facilities. In Italy, the group includes Ferriere Nord, Acciaierie di Verona, Siderpotenza, Pittarc, La Veneta Reti and Siat.

Natalia Capra France

French rebar prices are skyrocketing, in line with other countries, as demand is said to be booming. End-users and distributors are requesting material and stocking up, with some fearing further price hikes.

A “panic-buying” attitude for all reinforcing steel products is now pervading in France, caused by procurement uncertainty and raw material shortages amid the Russia-Ukraine conflict.

Domestic rebar contracts are now at €1,000/tonne ($1,088) ex-works. This includes €260-270/t on average for size extras. Contracted prices for mesh have also increased to €1,050-1,060/t ex-works, sources tell Kallanish.

Cheaper Italian and Spanish material is not being offered in France as producers from these countries are also pushing up their prices. A rebar shortage is expected in these countries due to several production stoppages caused by the Ukraine war’s impact on raw materials supply.

No production stoppages are envisaged in France at present, as producers are well-stocked for scrap and raw materials, Kallanish notes.

Natalia Capra France

Scrap prices in the Benelux have reached €500/tonne ($543) on the back of restricted supply and strong demand.

Benelux exporters, which have been facing limited material inflow for a while and increased their prices sharply last week, have been forced to further increase their dock prices. On Monday, dock prices stood mostly at €480-490/t delivered in Belgium, and increased to €500/t delivered in the Netherlands. Flow, however, is yet to pick up, even at these levels.

A Dutch exporter tells Kallanish: “Domestic suppliers, in expectation of higher prices, are holding material. At €500/t, I could only source 5,000 tonnes today. No one can foresee where the peak will be. I guess they will start selling when prices start to go down.”

A Belgian exporter expects to see €500/t materialise sooner as he is struggling to buy material at €490/t.

In Turkey, sharp price increases are continuing amid strong demand. Following the latest confirmed EU-origin booking at $623/t cfr Turkey over the weekend, European suppliers were seen targeting to sell HMS 1&2 80:20 at above $650/t cfr on Monday.

Although there are talks about a higher-priced – above $640/t cfr – EU-origin HMS 1&2 80:20 booking, the seller and buyer are yet to be confirmed.

Multiple EU-origin bookings were concluded in Turkey last week. Initial bookings at the beginning of the week stood at $517/t cfr levels, while overall through last week prices ballooned by more than $120/t.

One US supplier is heard to have cancelled its previous sale to a Turkish mill in the Black Sea amid the war in Ukraine. A European supplier, meanwhile, is heard struggling to find a vessel to the Marmara region as most ships are also refusing to sail to Marmara due to its proximity to the Black Sea.

Prices in the Indian sub-continent are also increasing, though at a slower pace compared to Turkey. Following the latest containerised shredded bookings at $585-590/t cfr Nhava Sheva, offers are seen to have exceeded $595/t cfr. HMS 1&2 80:20 import prices stood at $530-540/t cfr in the latest bookings, meanwhile.

Burcak Alpman Turkey

Seaborne iron ore prices have surged to their highest since August last year. China’s new GDP targets imply a certain amount of stimulus, while the threat to supply chains is encouraging speculation in higher prices.

The Kallanish KORE 62% Fe index leapt $8.13/t to $157.64/dry metric tonne cfr Qingdao. The KORE 65% Fe index jumped $8.29/t to $188.33/dmt cfr, while the KORE 58% Fe index grew more modestly by $2.49/t to $131.29/dmt cfr.

On the Dalian Commodity Exchange, May iron ore settled CNY 29/t higher at CNY 841.5/t ($133.18/t), while on the Singapore Exchange April 62% Fe futures settled up $9.05/t at $165.88/t. The same contract for 65% Fe and 58% Fe futures settled up $9.85/t at $195.92/t, and up $2.42/t at $134.71/t respectively. 

6mm+ heavy scrap delivered to mills in the Yangtze River Delta jumped CNY 43/t to CNY 3,703/t. In Tangshan, billet prices increased CNY 60/t over the weekend and another CNY 70/t on Monday to CNY 4,810/t.

China is targeting some 5.5% GDP growth this year, the lowest in decades. Even this however will require stimulus, and this is what markets appear to be banking on (see separate article). They have been given additional confidence in this by the global tight commodity supply chain as markets react to the Russian invasion of Ukraine. This has a direct impact on iron ore supply, especially for pellet. It is also having a general inflationary effect through energy prices, which are driving the cost of almost everything higher.

Tomas Gutierrez UK