Day: 31 March 2022

Michigan-based US service centre chain Alro Steel will acquire the assets of New York-based steel supplier and processor Klein Steel, Kallanish understands.

According to a notice published by Alro, the company has entered into an agreement to acquire Klein Steel’s operations in Buffalo, Rochester, and Syracuse, New York.

“We are excited to welcome the Klein Steel team to the Alro family. Klein Steel has a great reputation in the metals industry for over 50 years and will enable Alro to continue our growth strategy in the Northeast, offering a wider range of products and processing capabilities in the Klein Steel footprint,” says Alro ceo Randy Glick.

Alro expects to close on its acquisition of Klein Steel by the end of April. Financial details were not disclosed.

Earlier this month, Alro Steel appointed Randy Glick, whom previously served as executive vice president, to the position of ceo and chairman of the company’s board of directors.

Zach Johnson USA

Tosyali Algerie, a subsidiary of one of Turkey’s largest steel producers, Tosyali Holding, recently started building a direct reduced iron plant with a production capacity of 2.5 million mt/year and a flat steel mill with 4 million mt/year capacity in Algeria, Tosyali said in a statement March 29.

The facilities are expected to come online within two years and take Tosyali Holding’s total steel production capacity in Algeria to 8.5 million mt/year from the current 4.2 million mt/year.

The company will focus on meeting automotive and white goods sectors’ steel demand, the statement said.

Tosyali Algerie has a 4 million mt/year iron ore pelletizing plant in Algeria to feed its direct reduction plants. The company’s iron ore beneficiation plant is also scheduled to come online in mid-April this year, according to a statement by Alp Topcuoglu, director of Tosyali Algerie.

Tosyali Algerie is currently producing long rebar and wire rod with a capacity of 3.8 million mt/year. It also started production at its 400,000 mt/year helical submerged arc welding pipe mill, Tosyali Algeria Pipe, in early 2019.

Tosyali Holding, which produced 2.28 million mt of direct reduced iron in 2021, is also continuing its investments in Turkey. The company is currently building a new flat steel mill with a capacity of 4.5 million mt/year in Iskenderun, southern Turkey.

Tosyali targets to reach total steel production capacity of 15 million mt/year with new investments both in Turkey and abroad in the coming five years, the company said.

Turkish mills’ flat and long steel prices jumped in March following the collapse of the supply chain from the Commonwealth of Independent States. Turkish rebar prices hit $965/mt on March 29, up more than $200 on the month, according to Platts assessment from S&P Global Insights. Turkish mills’ HRC prices also reached $1,295/mt on March 25, a $350 jump compared to mid- February, according to Platts assessments.

The latest investments announced by Tosyali and some other major Turkish long steel producers are expected to ease the local markets’ dependency on imports, especially in flat steel.

“Our new second DRI facility [in Algeria], which will have a production capacity of 2.5 million mt/year and the 4 million mt/year capacity flat steel facility to be placed in front of it, with its much lower carbon footprint, will be one of the best practices in the world steel industry,” Fuat Tosyali, chairman of Tosyali Holding said.

— Cenk Can

Ukraine has temporarily lost up to 40% of its overall steelmaking capacity following Russia’s fierce shelling of Mariupol in the last three weeks in an attempt to seize the port city, Yuriy Ryzhenkov, the general director of Metinvest, said in an interview with Ukrayina-24 television aired late March 29.

Mariupol, a strategic port on the Sea of Azov, is home to Metinvest’s Azovstal and Ilyich steel works.

Ilyich is Ukraine’s second-largest steelmaker followed by Azovstal.

“Mariupol plants represent more than a third of Ukraine’s overall steel output,” Ryzhenkov said. “In other words, Ukraine has lost between 30%-40% of its steelmaking capacity.”

Metinvest indicated that it would rebuild the steelmaking facilities, but only if Mariupol survived the assault and remained in the hands of Ukraine.

The company is seeking to restart its Zaporizhstal steel works, which has shut operations due to disrupted logistics, as all Black Sea ports remain blocked.

Metinvest also accounts for about 60% of Ukraine’s overall iron ore output, which remains unaffected, and has increased its iron ore exports via rail to Europe almost twofold and plans to supply at least 1 million mt of iron ore to Europe in March.

The group controls three major Ukrainian iron ore producers in the Kryviy Rih region — Pivnichniy HZK, Tsentralniy HZK and Inhuletskiy HZK — and these remain operational, as does its Dneprovsky iron and steel works.

However, Metinvest is finding alternative slab suppliers for its mills in Italy and the UK, after supplies from Mariupol were halted.

“The most difficult situation will be at our Italian and British plants, as they were completely dependent on slabs supplied from Azovstal,” Ryzhenkov said.

The company plans to arrange supplies of slabs at its European plants from China and Brazil, but it will take up to two months to readjust the supplies, according to Ryzhenkov.

“This is a serious shock for European steel industry, which was integrated with the Ukrainian one,” he said.

Metinvest is in talks with the state-owned railway company UkrZaliznytsia to supply raw materials and to ship steel products for exports.

The company increased output of steel by 15% on the year to 9.53 million mt in 2021, while output of iron ore concentrate and pellets rose 3% on the year to 31.34 million mt, it said in a Feb. 1 statement.

Metinvest is not the only steelmaker impacted by the conflict, with ArcelorMittal Kryvyi Rih previously having halted underground operations on Feb. 24 and idled steelmaking on March 3.

No impact to Ferrexpo operations

However, other miners in central and western Ukraine are continuing to work normally.

Iron ore pellet producer Ferrexpo has not had any impact to its operations, which are located near Kremenchuk in central Ukraine, although has experienced some logistical disruptions.

“Initially … our operations continued, but we saw a lot of supply lines and even the services that were being provided either stop momentarily for some days as people assessed what was going on, but we haven’t really seen anything significant in terms of supply of our regular materials that we use,” a Ferrexpo spokesperson told S&P Global Commodity Insights.

Although some of Ferrexpo’s materials have come through the Black Sea, most of its suppliers had found alternative routes or the company was actively sourcing alternatives for certain items, the spokesperson said, such as using rail or road from other unaffected ports.

“We haven’t really seen any disruptions as such – we’ve seen some delays initially, but most of those have been rectified now and we have no real concerns at the moment around the supply of anything that we need for our operations and that’s in terms of gas, power and diesel down to consumables that we’re using in the process,” the spokesperson added.

The company has also had some issues getting products out.

“Approximately half of our materials went out via the Black Sea and we were regularly railing across the border every day and that’s continued, so we’ve been able to get our material across into western Europe and deliver to our customers and some additional material has gone that way as well,” the spokesperson said.

Keeping industry operating and revenues and salaries as normal was also important for the defense of Ukraine, the Ferrexpo spokesperson said.

“We keep the business operating … we keep paying our taxes, we pay those suppliers that are continuing to support Ferrexpo and we support through the humanitarian effort,” he added.

Miner Avellana Gold’s operations had also continued normally as they were situated at Beregovo in far west Ukraine, a spokesperson told S&P Global.

“Our biggest problem is restrictions on imports – only critical is allowed and that halted some of our projects in that we were caught in the middle of modernization and underground mining preparation,” they said.

Meanwhile, Volt Resources’ Zavalievsky Graphite division suspended its graphite mining and processing operations at Zavallya on Feb. 24 as a caution and also relocated management, accounting and marketing personnel from Kyiv to Lviv.

The company did not respond to S&P Global’s request for a comment.

— Jacqueline Holman, Alexander Bor

Germany’s SHS/Saarstahl Group is to invest €7 million ($7.7m) this year into its French subsidiaries Saarstahl Ascoval and Saarstahl Rail to reduce the sites’ carbon footprint and boost their efficiency.

“Our long-term goal is to produce top-quality carbon-neutral steel at the Saint-Saulve site, despite the sharp increase in energy costs, and to position Saarstahl Rail as a key plant for sustainable products for the mobility revolution,” Saarstahl Ascoval and Saarstahl Rail president Klaus Richter says in a note seen by Kallanish.

“Since taking over the mills in August, we have already been able to significantly improve shift output and thus boost performance,” he continues, adding that the company is planning additional investments in the French sites this year.

The SHS/Saarstahl Group employs approximately 1,500 people in France.

Natalia Capra France

Metinvest’s European mills are in talks to find alternative slab suppliers, for example in China and Brazil, after feedstock supply dried up from the Ukrainian parent plants due to war, says Metinvest general director Yuriy Ryzhenkov.

The group’s Italian and UK rolling mills are traditionally heavily dependent on Azovstal slab. “In principle, the main suppliers of slabs to the European market, not only to our plants, but also to the plants of other companies in general, were Azovstal and Russian companies,” Ryzhenkov told the Ukraine 24 state television channel. “Thus, two large suppliers have simply disappeared from the market today, and this creates a difficult situation on the market.”

Ryzhenkov believes it will take at least two months to diversify supplies and the necessary products can be bought on the open market. “Now, we are working with plants to diversify supplies, buy slabs on the open market, from China, for example, or in Brazil,” the general director noted. “I think it will take a couple of months to rebuild, but we will succeed. But, of course, this is a serious shock for the European steel industry, which has been deeply integrated with the Ukrainian one.”

Ukraine has lost around 30-40% of its pre-war steelmaking capacity due to the Russian invasion, Ryzhenkov said. “The Mariupol plants are more than a third of Ukraine’s steel production,” he observed. “These steel plants will definitely be rebuilt after Russian troops are expelled from Ukraine. I have no doubt that their work will be resumed, but for this the city must remain Ukrainian.”

According to him, the two idled metallurgical plants, Azovstal and Ilyich Steelworks, are currently under the control of the Ukrainian army, Kallanish notes.

Until now, only 5,000 employees of Metinvest, or a little more than 10% of the company’s employees, have been able to get out of Mariupol, which has been under siege by Russian forces for a month, Ryzhenkov said.

Metinvest’s Kametstal plant is operating at approximately 80% of its capacity, he added. At the same time, Metinvest’s mining and processing plants in Krivoy Rog operate at 35-40% of their capacity. In addition, the Pokrovskoye mine and Metinvest’s assets abroad continue to work.

Svetoslav Abrossimov Bulgaria

While essentially supporting the economic sanctions that have been introduced against Russia, Germany’s steel industry explicitly warns against the consequences of an embargo on Russian natural gas, Kallanish notes.

“Without natural gas from Russia, steel production would not be possible at present,” industry federation WV Stahl said in a position paper issued last week. “An import ban on natural gas supplies from Russia without secured alternatives would expose companies in the steel industry to the risk of forced shutdowns,” warns WV Stahl president Hans Jürgen Kerkhoff.

An immediate Russian gas import ban would not only lead to production stoppages in the steel industry, but also to the collapse of industrial production in Germany and the EU, WV Stahl says. The German steel industry consumes about 2.1 billion cubic metres of natural gas annually. The nation’s industry overall consumes a total of 38 billion cubic metres. The gas is used as a fuel for temperature generation and as a reducing agent in various steps of pig iron and steel production and further processing.

WV Stahl adds that the steel industry stands behind “the responsible policy of economy minister Robert Habeck not to jeopardise security of supply with a delivery ban”.

Meanwhile, the minister has already been exploring alternative forms and sources of energy by visiting several Middle Eastern nations. One result was a long-term supply deal for liquid natural gas from Qatar. Critics note that this is a switch of dependence from one autocratic regime to another.

A factor not mentioned in WV Stahl’s statement is the double pipeline set Nord Stream and Nord Stream 2. The second line, especially, has been a political bone of contention in recent years, receiving major criticism from Eastern European countries that found sympathisers among German policymakers. Nord Stream 2 was of the biggest steel consumers of the last decade, with more than 2 million tonnes of pipe supplied mainly from Germany’s Europipe and Russia’s OMK.

Construction of the second line has been completed, but it now seems it will not go on stream at all.

Unlike Nord Stream 2, which is owned by Gazprom alone, Nord Stream owner Nord Stream AG is a joint venture of Eon, Gasunie, Engie, Wintershall and Gazprom.

Christian Koehl Germany