Day: 24 March 2022

Automaker Volvo Cars reduced its sales expectations for 2022, due to a temporary worsened production situation in the second quarter caused by the ongoing semiconductor shortage.

“Over the past year, the auto industry has been impacted by the shortage of semi-conductors and Volvo Cars has previously communicated that it sees a gradual improvement in the supply of semi-conductors and production output month over month,” it said, although it added that, due to a lack of a specific type of semi-conductor, it expected “a temporary deviation from that trend.”

It didn’t specify any number for 2022 growth projection. Volvo sold 698,693 vehicles in 2021, up 5.6% year on year.

It said the shortage was not related to the war in Ukraine, as it had “very limited direct relationships” with suppliers in the country.

However, the war had resulted in increasing costs for raw material, energy and freights in the auto industry and it was continuing to work with pricing to mitigate the effects, Volvo said.

“The supply chain constraints, including the ongoing impacts from COVID, are expected to remain a problem for the industry throughout 2022,” it said, adding that it would work with suppliers and partners to resolve any impact on production and to deliver vehicles to customers as soon as possible.

The ongoing semiconductor shortage has continued to impact some automakers, despite others expecting the situation to improve in 2022.

Fellow automaker BMW said previously that it expected supply chain issues, particularly the shortage of semiconductors, not to ease before the second half of 2022.

Earlier in March, Japan’s Toyota Motor Corp. said it expected to start its fiscal year 2022-23 (April-March), with a vehicle shortfall of 150,000 units globally in April, due to the semiconductor chip shortage and the effects of the coronavirus pandemic.

New passenger car registrations in Europe fell 6.7% year on year in February to 719,465 units, due to supply chain disruptions faced by automakers, according to data released by European automobile manufacturers’ association ACEA.

In addition, the chip shortage also contributed to Turkey’s vehicle output dropping 9% year on year in February to 105,644 units.

— Jacqueline Holman

All of Spain’s steel companies are seeing their operations affected by an ongoing transport workers’ strike leading to “serious interruptions,” Spain’s steel industry group Unesid said March 22.

“At the moment, not one manufacturer in the sector is operating normally, as plants have been obliged to either reduce or halt production due to the lack of raw materials or the ability to deliver products to clients,” the group said in a statement, without providing figures.

The latest impact was announced by Spain’s largest stainless steel maker Acerinox, which said March 22 it agreed for a temporary lay-off plan with workers at its 1.1 million mt/yr Campo de Gibraltar, Spain plant with a potential duration of one year, having already wound down production since March 9 due to the impact of high energy prices.

Spain’s steel sector is Europe’s fourth-largest behind Germany, Italy and France with production of 13.1 million mt in 2021.

A strike by transport workers that started March 14 in reaction to rising energy prices has seen its impact increase as it goes on.

“The halt in (steel) production is not only harmful to the companies, but also the workers and affects the whole supply chain … seriously damaging the whole industrial production sector,” Unesid said, as it called on the strikers to “reconsider their action.”

Besides Acerinox, ArcelorMittal in Spain said March 17 it had halted several units at its Gijon, Spain site with 4.5 milllion mt/yr capacity as the result of the transport workers’ strike, while Unesid has reported reduced rates or halts for other producers Megasa (3 million mt/yr capacity), Grupo Celsa (2.5 million mt/yr capacity), and Siderurgica Balbao (1.3 million mt/yr) among others, with the strike impact compounding the negative impact of record high energy prices during the first quarter.

Spain’s government said it will announce a raft of measures March 29 to tackle the record energy prices with the measures likely to come into force in April.

— Gianluca Baratti

Northwest European domestic rebar prices continued to strengthen on week to March 23, amid supply constraints and high costs.

S&P Global Commodity Insights assessed Platts TSI Northwest Europe Rebar at Eur1,230/mt ex-works March 23 up Eur55 week on week, surging to a record since the index began January 1998.

As the Russia-Ukraine crisis greatly disrupted the supply chain in the market, pushing prices up to record highs, mills were offering long steel products at elevated levels while customers resisted buying at the record-high prices.

“The reference [mill offers] in Germany today are around Eur1,285/mt delivered from local German suppliers and this is the highest level,” one Italian mill source told S&P Global. The source added that the mill was offering rebars to Germany at Eur1,200/mt delivered and was booking orders around that level.

“Almost all producers were out of the market when price levels reached Eur1,300/mt base price for rebars,” one seller source said. The source put current offers for rebars at Eur1,360-Eur1,435/mt delivered, adding that demand should become active soon at these levels.

One European trader put a workable level for rebars at Eur1,100/mt delivered in France and Belgium and indicated that prices higher than that might be workable for Germany, while one EU market source indicated a tradable value for domestic rebars in Northwest Europe at Eur1,220-Eur1,260/mt delivered.

Meanwhile, European domestic steel sections prices also continued to strengthen significantly during the week ending March 23, as mills held back offers amid high costs and supply constraints.

S&P Global’s assessed the Platts European medium sections price (category 1, S235 JR) at Eur1,425/mt delivered March 23, up Eur50 week on week, reaching a record since the index began January 1998.

One Benelux-based distributor source cited a tradable value for category-1 medium sections at Eur1,350-Eur1,450/mt delivered. The source noted that there is around Eur150-Eur300/mt difference in domestic and import prices for long steel products, depending on the product. “Buying activity has calmed down a bit, but demand is still good,” he said, adding that current weather conditions are also favorable for construction projects.

One European mill source put tradable value for medium sections category-1 at Eur1,425/mt delivered.

— Rabia Arif, Staff

German scrap prices skyrocketed in March due to the Russian invasion of Ukraine and short supply, according to German scrap market participants. Most sources expect uncertainty to cloud the market going forward.

Prices in southern Germany and in most other parts of the country surged by €80-110/tonne ($87-120/t) this month, a Bavarian buyer tells Kallanish.

Nationwide average prices for old thick scrap sort 3 are up from €450/t to €550/t. The price for new scrap sort 2/8, meanwhile, has reached €600/t.

The price for E40 shredded scrap has reached €590/t.

In Austria, scrap prices have also increased significantly, for old thick scrap sort 3 to €515/t and new scrap sort 2/8 to €540/t.

“New exports to Turkey and some European countries had an impact on the German scrap market in the first two weeks of the month due to the Russian invasion of Ukraine,” another German market participants notes. “However, in the last ten days, exports to Turkish steel mills have decreased because of high prices.”

“Despite the onset of spring, collection rates for scrap in Europe are declining due to high transport costs and other logistical problems,” a merchant observes. “Meanwhile, the limited output of automobiles and at manufacturing companies is limiting the production of basic scrap. In addition, the lack of pig iron from the CIS has increased demand for new grades of other raw materials.”

Increasing the amount of base scrap used in furnaces can compensate for the reduced availability of pig iron, the merchant adds. “However, the availability of quantities is still very low.”

Market participants describe the situation as very turbulent and even chaotic, making longer-term or even medium-term forecasts impossible.

Svetoslav Abrossimov Bulgaria

Reiner Blaschek is the new chief executive of ArcelorMittal Germany, succeeding Frank Schulz who retired at the end of 2021. Blaschek has held the position since the beginning of the year already, Kallanish understands, but the group announced the appointment only this week.

Schulz had been with the company and its predecessors for more than 37 years. He is a native of Frankfurt-on-the-Oder, the city next to which the East German government built steel town Eisenhüttenstadt in 1951. The mill’s original name was EKO (Eisenhütten-Kombinat Ost), which it kept when it later became a unit of Cockerill-Sambre, which was then acquired in the late 1990s by France’s Usinor. Some big-time mergers later, it was renamed to ArcelorMittal Eisenhüttensadt.

Blaschek has a university degree in process technology, and has been with the steelmaker and its predecessor companies for 25 years. He worked for the group in France and Brazil, and was head of flat steel distribution in northern Europe. In addition to his new position, he will remain the ceo of the strip mills in Eisenhüttenstadt and Bremen.

Christian Koehl Germany

The US and UK have reached an agreement on steel and aluminium trade to replace Section 232 measures. US imports of UK-origin steel will from 1 June be subject to the in-quota rate under the applicable tariff rate quota (TRQ) for UK steel, allowing for 500,000 tonnes/year of tariff-free imports. The steel must be “melted and poured” in the UK.

The UK has agreed to provide to the US an attestation in the case of any producer owned or controlled by a company registered in China or a Chinese entity that exports steel to the US under the TRQs. The attestation will be based on an annual strategic audit conducted by an independent third party, to ensure there is no market distorting practices by that producer in the UK that would materially contribute to non-market excess capacity of steel.

Although not specifically mentioned, this point is thought to refer mainly to British Steel, which was acquired by China’s Jingye Group in March 2020, Kallanish notes.

The audit will include an assessment of the steel producer’s and its – if any – UK parent company’s financial records, including any subsidy provided by any government controlled or directed entity in China.

The attestation must be provided by 1 December each year, failing which the US reserves the right to temporarily deny access for the UK steel producer to the in-quota rate for the applicable TRQ.

The US-UK agreement also includes customs cooperation, trade remedy cooperation, shared monitoring of trade, and cooperation on non-market excess capacity and carbon intensity. Both countries will continue measures such as antidumping, countervailing duty, and safeguard measures, and consult each other regarding import surges.

In return, the UK will suspend the additional tariffs imposed on US goods in response to the Section 232 action.

UK Steel director general Gareth Stace says the deal “removes long-standing export barriers and opens up access to this important market once more”. He adds: “Without this agreement UK producers would have remained at a significant competitive disadvantage in US markets to competitors in the EU and Japan, with their exports severely curtailed. From June, UK steel producers will benefit from tariff-free access to customers across the US – from the Atlantic to the Pacific.”

Adam Smith Germany

Italian plate prices have continued to escalate in recent contracts, in line with increasing slab values and energy costs. Producers are seeking strong increases for new orders but some are still not quoting, sources tell Kallanish.

Some mills are delaying orders due to disrupted slab procurement. They are waiting to receive slab bought in March mostly from the Far East. While before the Russia-Ukraine war they were quoting May lead times, delivery times now stretch well into the third quarter.

Demand throughout Europe for S235, the very basic grade, and premium 355 grade is strong, and apparent demand has rebounded in the Italian market with distributors and end-users restocking.

Domestic plate contracts have increased some €200/tonne ($220/t) compared to last week and are hovering at €1,500-1,650/t for S235, with €50/t added for the premium 355 grade, sources suggest.

Some producers are now quoting at €2,000/t ex-works for the basic 235 grade, Kallanish hears. Distributors are buying and selling sizeable volumes at high prices, and reporting a high turnover.

Natalia Capra France