Day: 22 March 2022

US hot-rolled coil futures on the London Metal Exchange pulled back slightly from recent highs during the week ended March 21 but traded steady, as rising input costs have triggered price increases from steelmakers, supporting futures further down the curve.

The structure of the forward curve tightened but still held at wide contangos as futures retreated from recent highs. Spot prices were stronger as US steelmakers announced price increases and service centers were committed to only buying what they needed to fill demand gaps in inventories, as buying activity slowed during the week with the higher mill offer levels.

The March contract settled at $1,165/st March 21, up $32.50 on the week.

The April contract settled at $1,477.50/st, up $10 from the March 14 close and up $262.50 from the start of the first quarter. Spot prices have recovered some of their recent losses, but were still down by $200 during the same period.

The spreads tightened during the week as trading volumes were steady week-on-week, and spot prices were firmer during the March scrap buy week, settling at $1,300/st March 21, up $80 on the week.

The spot-to-three month spread narrowed but remained in contango, last settling at $242.50/st. Second-quarter contracts started to receive support, and bids for spot volumes continued around the $1,300/st-$1,400/st level as mills scrambled to secure raw materials amid concerns of a possible disruption after Russia’s invasion of Ukraine.

The contract’s volumes saw 470 st trading. More than 632,000 st have traded since the contract’s launch in 2019.

Spot prices in the physical market have recovered as inventories, which have been the main driver of a price correction, remained at elevated levels, and some physical traders and importers have stopped quoting future tonnage due to uncertainties around input costs.

The average mill lead time for HRC ticked up to 4.7 weeks amid availability from several mills, according to S&P Global Commodity Insights data.

— Nick Ruggiero

German crude steel production in February increased 3.8% to 3.22 million mt from the year-ago month, with Russia’s war in Ukraine not having any impact on production that month, steel federation WV Stahl said March 21.

According to a WV Stahl statement, crude steel production from electric arc furnaces in February registered the largest increase, up by 7.5% to 1.07 million mt year on year. Production from blast furnace basic oxygen furnace went up by 2.1% to 2.16 million mt. February pig iron production rose 1.4% to 1.98 million mt , while output of hot-rolled steel products reached 2.82 million mt up by1.4% too.

Although the output went up “in the course of the year, so far the increase has only been moderate,” WV Stahl said.

“The first effects of the Ukraine war are not yet included in the figures, as the Russian invasion only began on 24 February,” a spokesperson later explained to S&P Global Commodity Insights.

— Annalisa Villa

Offer prices for coil products are rising unbelievably fast, according to northwestern European buyers, Kallanish notes.

“Prices are offered only on a daily basis, and sometimes in an hourly rhythm,” a manager at a German distributor says. He tells of recent offers for stainless strip that changed four times within three hours. “You cannot work like that,” he says. His own company keeps sales offers valid only for one day, and addresses only regular customers.

It is not only distributors who are limiting customers. A Dutch service centre buyer notes that this is also true for most EU mills, which have returned to the “own customer first” principle. “This means that when they return to the market, they will first serve regular customers and put potential new customers on hold,” he says.

Regarding last week’s increase by ArcelorMittal that has lifted hot rolled coil offers to €1,400/tonne ($1,548) in Europe, the German manager says this value may already no longer be valid.

One factor pointed out by the Dutch source is that service centres have relatively high stocks, given that the automotive industry is reserved with placing orders. Hence, “there may be increased competition between mills and service centres,” he says.

Christian Koehl Germany

Italian merchant bar prices are increasing again this week as scrap values in the country are set to climb further. Reduced production in the country due to the Russia-Ukraine war impact on raw material availability is contributing to pushing up prices.

Demand is reported to be strong for all long products in Italy as buyers are purchasing to replenish their stocks given the uncertainty in the market. Producers are asking this week for a further €50/tonne ($55/t), at €800-850/t base ex-works, after already increasing prices almost every week since the beginning of the month.

As demand is strong, contract prices are slowly following the increases. Domestic material is sold at €750-800/t base ex-works. Including size extras, values are at €1,170-1,220/t ex-works, sources confirm.

Paid prices for the first category of beams are also increasing significantly, with a base price of €1,050-1,080/t ex-works. Including €380-390/t average size extras, domestic beam contracts are hovering at €1,440-1,500/t ex-works, Kallanish notes.

Strong demand throughout the entire value chain is also reported for sections. Buyers are said to be in the process of restocking as some apparent demand is coming back to the market.

Natalia Capra France

Written by Jeremy Zabatta

In financial difficulty since the bankruptcy of Greensill, the main creditor of its parent company GFG Alliance, Liberty Steel will have to quickly find solutions to restore production rates in Dudelange and to pay all employees. Photo: Guy Wolff/Maison Moderne

Liberty Steel will not be able to resort to short-time working next April after an agreement with trade unions regarding a plan to maintain employment in Dudelange fell through.

Luxembourg’s economic committee refused the steelmaker’s application for short-time employment. In financial difficulty since the bankruptcy of Greensill, the main creditor of its parent company GFG Alliance, Liberty Steel will have to quickly find solutions to restore production rates in Dudelange and to pay all employees.

The economy ministry confirmed that the steelmaker did not succeed in agreeing a job maintenance plan with the trade unions. “In the absence of sufficient financial commitments from Liberty Steel, the negotiations between the unions, staff representatives and management on the conclusion of an employment maintenance plan for the Liberty Steel plant in Dudelange have reached an impasse. At its meeting on 21 March 2022, the economic committee therefore refused Liberty Steel’s request for partial unemployment for the month of April”, said the economy ministry.

The trade unions also deplored the failure of the negotiations on a job maintenance plan that began last December and that aimed to give the steelmaker time to restructure. “Today, Liberty Steel has a structural problem. And to be able to take advantage of partial unemployment, you have to have a plan to maintain employment. A project that did not come to a positive conclusion because of Liberty Steel, because they cannot give sufficient guarantees and we were obliged to refuse the project put forward by the management of Liberty Steel in Dudelange”, said Robert Fornieri, deputy secretary general of the LCGB.

Towards liquidation in Liège

In concrete terms, from April onwards, Liberty Steel will have to pay all of its workers’ wages. According to trade union estimates, short-time working at the Dudelange site represented around 15% of the wage bill for a workforce of some 250 employees.

The steelmaker has been experiencing liquidity problems for several weeks, which prevents it from obtaining enough raw materials to keep its Luxembourg site running at full capacity. The site is also being supplied by the steelmaker’s two sites in Liège, where Liberty Steel is also experiencing financial difficulties. After submitting a financial restructuring plan to Belgian courts, the steelmaker has not managed to honour its commitments and the Belgian courts will give their verdict at the end of the month on a possible liquidation.

A serious solution with an industrial buyer

The Belgian court’s decision will not have any judicial effect on the Luxembourg site but from an industrial point of view, the loss of the Liège sites would be a huge blow to the operation in Dudelange. 

Workers are holding out some hope for a solution with the arrival of an industrial buyer, provided that Liberty Steel finally agrees to sell. Behind the scenes, the unions are working to try to find such a buyer and they insist that “a serious solution exists”.

“We can’t reveal everything, but we are indeed working on an alternative solution with a partner. But Liberty Steel still has to be a seller. But we are afraid that Liberty Steel will be able to find the money to pay the employees of a plant that is almost at a standstill,” said Fornieri. He is also wary that the steelmaker could try to sell to the highest bidder and not to the most competent one from an industrial point of view.

Finally, the labour and economy ministries are also talking about “serious avenues” to “continue to work actively together with trade unions LCGB and OGBL to maintain steel manufacturing activity and preserve jobs at the Liberty Steel site in Luxembourg, taking into consideration all possible options, including a takeover by another industrial player”.

Less short-time working in April

At the beginning of the week, the economic committee issued a favourable ruling on 708 requests after analysing the 766 dossiers submitted by companies asking for partial unemployment for the month of April. This is 332 fewer than the previous month.

Out of all the accepted applications 640 are related to covid, 61 to manufacturing shortages, five to flooding and two to economic dependence. They affect a total of 14,860 employees, compared to 12,119 the previous month. There has been an increase in claims from large companies in the manufacturing sector as a result of the war in Ukraine.