Day: 4 May 2022

Italian stainless long steel producer Cogne’s German distribution subsidiary, Cogne Edelstahl, located in Neuss, has completed the purchase of local stainless products distributor Edelstahl und Metallhandel (EMB), located in Stuhr near Bremen, Kallanish learns from the Italian company.

The merger will allow Cogne to develop its commercial presence in northern Germany, reduce delivery times, improve customer service and offer a larger range of products, the firm says.

“The integration of EMB into Cogne will offer customers located in northern Germany decisive advantages … The Stuhr office complements the sales offices in Düsseldorf/Neuss and Rudersberg … This means that delivery times for customers located here will be significantly improved, thanks also to the availability of our fleet,” Cogne Edelstahl says.

The Cogne Edelstahl distribution arm serves Germany, the Benelux and Austria. It operates from two warehouses in Neuss and Rudersberg, near Stuttgart, and now also the Stuhr site.

Natalia Capra France

Steel transport in the Sauerland region, in the German state of North Rhine-Westphalia, remains hampered by the closure of a crucial autobahn bridge since early December, following the detection of material fatigue.

The damage appeared on the main girders of the bridge, in 5mm thick metal sheets. A 3D scan showed these sheets had deformed by 12-17mm, compared to the permissible maximum of 5mm. In the 1960s, bridges were built with significantly lower material thickness, at a time when traffic on the route was a third of what it is today.

The A45 autobahn crossing over the Rahmede Bridge near Siegen is an important connection between the Sauerland, which houses many traditional small and medium-sized steel companies, and the Ruhr region. The largest player affected is Deutsche Edelstahlwerke (DEW), which has four mills making special bar qualities, two of them located in Hagen on the Ruhr and in Siegen in the Sauerland.

“The closure is a disaster for us,” Horst Tonn, head of logistics at DEW, tells Kallanish. “Our setup of four mills requires that we move quite a bit of semi-finished material between the plants, also by truck. In addition, we have disposal transports of slag from the Hagen and Witten works to Siegen and back. The plannability of loading space decreases significantly, the availability of loading space tightens and prices develop significantly upwards because the haulers can no longer manage their tours.”

Following further inspection, it has become clear that the bridge cannot be repaired. It will be torn down this year. The construction of the replacement bridge is expected to take five years.

Christian Koehl Germany

French miner Eramet forecasts global steel production to shrink this year because of the output limitations imposed by the government in China, as well as the continued components shortage.

Demand from the automotive industry is also seen slowing this year, while the consequences of the Russia-Ukraine war should remain limited, the firm says. Raw materials and semi-finished products supply from these countries is expected to be compensated by other geographical regions such as China and India. “However, the European embargo on Russian coal could significantly impact European steel production in H2,” Eramet forecasts in its first-quarter financial report monitored by Kallanish.

The company sees high sea freight and energy costs continuing this year. This and the shortage of manganese supply from Ukraine will keep global prices of manganese higher than in 2021, Eramet says. It confirms its manganese ore production target is at 7.5 million tonnes for 2022.

Global production of carbon steel in Q1 reached 463mt, down by 5.9% year-on-year and only slightly up compared to Q4 2021. This is due to falling Chinese output caused by the Chinese New Year, Winter Olympic and fresh Covid-19 lockdowns. While in the rest of the world, carbon steel production increased in Q1, it declined by 1.1% in Europe due to higher energy costs. In this context, global manganese ore consumption was down by 4.6% y-o-y in Q1.

Eramet posted strong revenue growth in Q1 of 80% to €1.2 billion ($1.26 billion).

Natalia Capra France

German steel producers, traders, and buyers expect price and production levels to weaken slightly in May with inventory sentiment mixed, S&P Global Commodity Insights monthly steel sentiment survey showed.

The pricing index stood at 42 for May, suggesting a bearish market sentiment, compared with April’s reading of 75.

Flat steel down in April, long steel stable

Flat steel prices fell over Eur100/mt on the month in April, while long steel prices were fairly stable. Participants were in a wait-and-see mode in the month due to muted demand and uncertainties created by Russia’s invasion of Ukraine end-February.

Buyer inventories decreased in April, with service centers and distributors preferring to sell from existing stock. Mills reported gaps in their orderbooks due to minimal demand and cancellations from key industries, including the automotive sector.

Demand was dull across the flat and long steel products during the month, with the Easter holiday reducing buying interest. Limited demand from end-consumers, uncertainties because of the war in Ukraine, sanctions on Russia, disruption of traditional supply chains and sliding import offers led the bullish trends to relax overall in April and even reverse in the flat steel market.

However, mill sources said rising production costs had put a potential floor under falling prices, as energy, logistics and raw materials drove input costs higher. Many participants interpreted the weakening prices through April as a sign of market stabilization rather than a correction. Some sources said they expect prices to “bounce back” later in the year.

“It’s important to remember these reductions are from record highs, following a historic rally,” said a distributor source. “A slight weakening isn’t unexpected; we see it as a stabilization rather than a correction. Prices may bounce back.”

May sentiment about inventories mixed, production weak

Producers were more bearish about prices in May with an index score of 40, compared with buy-side respondents at a reading of 44.

“We’re expecting EU domestic long steel prices to remain largely stable over May, but perhaps with some small corrections,” a Benelux-based distributor said. “Mills have a good order book. They are fully booked for May rolling and have no real import pressure.”

Producers and buy-side sources expect production levels to remain largely stable or slightly lower in May at an index score of 40, up 11 points from April.

Energy costs are the primary concern, with sources citing mills’ preference to reduce output over price cuts. Sources said they are worried about dramatic losses in production if Russian gas supply to Germany is cut off like Poland and Bulgaria.

Respondents had mixed expectations about market inventory levels. Buy-side sources scored 60 on the index, suggesting an inventory build in May, particularly among flat steel respondents, while producers expect a decrease at 31 points.

Long steel producers were comparatively more pessimistic about inventory levels in the month.

Buyers may look to rebuild depleted stock in May and order material for third-quarter coverage, while producers expect buyers to continue to exhaust inventories.

Sources said they expect prices to stabilize at a more acceptable level for buyers in May, as they look to restock.

— Benjamin Steven, Maria TanatarRabia Arif

Domestic prices for hot-rolled coil declined in Northern Europe due to limited buying activity, market sources said on May 3.

HRC in Northern Europe was assessed down Eur10 to Eur1265/mt ex-works Ruhr.

Although few official offers were heard at Eur1300-1330/mt ex-works Ruhr, they were viewed as not workable by the buyers. Market sources estimated achievable prices at Eur1250-1280/mt ex-works Ruhr. One source also said that a price of Eur1200/mt ex-works Ruhr would be attainable in the short run.

Buyers across Europe have been holding back from making new deals as they believe prices are likely to move further down.

“Buyers have sufficient stocks and they prefer to wait until prices drop before they make any deals. Demand of end consumers is low, particularly from automotive. Mills have been under greater pressure to give discounts compared to the buyers who can wait longer. Even with high energy and other production costs, the price of Eur1200/mt ex-works should be high enough to cover costs and give margin,” a Northern European trader said.

“It seems that all producers – European and overseas mills – are looking for orders, which means at the end same – lower prices. Currently demand is weak due to lower automotive consumption. But this situation was caused, among other reasons, by the fact that by end of last year automotive and related companies took in all available material due to rising steel prices. Buyers also still have good stock levels. Thus we have prices under pressure and it´s expected a further decrease,” a German distributor said.

HRC imported in Northern Europe was assessed at Eur1125/mt CIF Antwerp, unchanged day on day.

Domestic prices in Italy were stable on May 3, but the situation was similar to the one in the north and bearish sentiment prevailed in the market. Competitive import offers contributed to downward sentiment in Southern Europe.

HRC in Italy stood unchanged at Eur1175/mt ex-works Italy.

Official offers in Italy were at Eur1200-1250/mt ex-works and achievable prices were reported at Eur1150-1180/mt ex-works.

Import offers of HRC were heard at Eur980-1000 per mt CFR Italy ex-Turkey, India, South Korea and Japan.

— Maria TanatarBenjamin Steven