Day: 15 March 2022

Ukrainian steel association Ukrmetallurgprom has appealed to worldsteel to exclude all Russian ferrous companies from the organisation, Kallanish notes.

“We are asking you to exclude all Russian metallurgical enterprises, because they are unworthy to occupy a place in the global metallurgical community and enjoy the benefits of membership in the association,” says a letter from Ukrmetallurgprom addressed to worldsteel chairman Sajjan Jindal and director general Edwin Basson. “Your support will be a contribution to our victory and the triumph of justice for metallurgists and all the people of Ukraine.”

Evraz, MMK, Metalloinvest, NLMK Group, TMK, Severstal and the Russian Steel Association are worldsteel members.

Meanwhile, on 13 March Metinvest’s Avdeevka Coke Plant was subjected to massive shelling by Russian troops, the Ukrainian steelmaker says.

“The shells hit the first and second coke shops, the second tar distillation and coal preparation shops, and the warehouse. There were no casualties,” the statement says. “As a result of the shelling, the factory thermal power plant, which supplies heat to Avdiivka, has stopped. However, production at the plant continues.”

Metinvest said last week its iron ore mines in Kryvyi Rih are operating at 30-40% of their capacity, while pellet producer Ferrexpo continues to produce and ship product by rail to customers in Europe.

Svetoslav Abrossimov Bulgaria

ArcelorMittal Poland (AMP) produced 4 million tonnes of crude steel in 2021, inching up from 3.9mt in 2020. However, this was still down from 4.8mt in 2019, with the Krakow plant’s hot-end being decommissioned for good in 2020, Kallanish notes.

AMP said in January it is investing PLN 100 million ($25.2m) to modernise the cold rolling mill at its Krakow site by year-end, with a view to increasing production capacity but at stable electricity consumption (see Kallanish passim). The firm appointed Frederik Van De Velde its new chief executive from 1 January.

ArcelorMittal’s sales in Poland meanwhile surged 64% on-year in 2021 to $5.3 billion, putting it in fifth place in the list of ArcelorMittal’s highest-earning countries versus fourth in 2020. These sales represent an acceleration in the 50% growth seen after the first half of 2021 and a strong recovery from the 19% on-year slump reported in 2020.

AMP’s long product sister mini-mill ArcelorMittal Warszawa produced 600,000t of crude steel in 2021, up from 500,000t in 2020.

Neighbouring Czech Republic meanwhile saw ArcelorMittal sales rebound 81% in 2021 to $1.36 billion.

Adam Smith Germany

ArcelorMittal says the imposition of extensive sanctions on Russia by the EU, UK and US affects the company’s sourcing of raw materials and also, potentially, the markets for sales by the group’s operations in the CIS. In 2021, the group recorded $1.6 billion of sales to customers in Russia.

The group’s main CIS operation in Kryvyi Rih has been suspended after Russia invaded Ukraine (see Kallanish passim). It produced 4.9 million tonnes of steel in 2021 and 11.7mt of iron ore. The related property, plant and equipment had a carrying value of $2.3 billion on the company’s balance sheet at end-December 2021. Steel shipments in 2021 were at 4.6mt, generating $4.1 billion of sales, including $0.9 billion of sales to customers located in Ukraine.

“The Company cannot predict the duration of the idling as it will depend on the remaining course of the conflict and the establishment of safe and stable operating and logistical conditions thereafter, as well as potential repairs of any damages sustained,” ArcelorMittal says in its 2021 annual report.

The war could have a material adverse effect on the overall macroeconomic environment, potentially affecting steel and iron ore demand and prices as well as increasing energy costs, ArcelorMittal notes. The conflict, sanctions imposed and Russian reaction could have further destabilising effects on financial markets.

“In addition, sanctions may remain in place beyond the duration of any military conflict and have a long-lasting impact on the region and globally, and could adversely impact the Group’s results of operations and financial condition,” ArcelorMittal concludes.

Adam Smith Germany

There was less optimism in the EU coils market March 14 as market participants struggle to find alternatives in upstream supply chains.

A northern buyer source reported reduction in demand, against the bullish pricing trend.

“Prices are rising very quickly but who is buying? Demand seems to be vanishing with the automotive industry and now customers are cutting reserved material – it is difficult to be optimistic,” the buyer said.

Demand may not be as strong given relatively high inventories in the northern market, a service center source said adding they were forced to delay or cancel orders due to supply chain illiquidity.

“It really is a mess. Slab is in such tight supply and even where it is offered there is no guarantee it will arrive,” said the source. “Last week we revised our orderbooks to inform customers of what material will arrive, arrive late, or not at all.”

Liberty Ostrava announced a Eur125 surcharge on all flat-rolled products in the week ended March 11, and sources reported a similar dynamic energy surcharge received from a major producer on the day.

Price increases are consistently tied to supply-side factors, such as energy costs, rather than end-user demand.

A Spanish trader source reported on the day that customers were “fed up” with re-negotiations, preferring to find new sources or take up firm offers.

Import offers were reported as withdrawn by multiple sources, with Asian mills reported by a service center source as postponing offers daily. The source speculated profit maximization as the primary factor, given rapid price developments across Europe.

S&P Global Commodity Insights’ Platts assessed hot-rolled coil for northern Europe up Eur20 on the day at Eur1325/mt ex-works Ruhr. HRC in the south was assessed stable at Eur1300/mt ex-works Italy.

— Benjamin Steven