Day: 25 May 2022

Global crude steel production totaled 162.7 million mt in April, down 5.1% from April 2021, according to World Steel Association data published May 24.

Output from January through April totaled 619.1 million mt, down 7.1% from year-ago levels, data showed.

April global production was 1.2% higher than March.

Platts assessed domestic HRC prices in Northern Europe at Eur1,275/mt ex-works Ruhr April 29, down from $1,390/mt at the start of the month, according to S&P Global Commodity Insights.

The largest producer, China, produced 92.8 million mt of crude steel in April, making up 57% of total global crude steel output. That is down 5.2% from April 2021, but up 5.1% from March.

Total steel produced in China from January through April was 336.2 million mt, down 10.3% from the same period a year ago.

The world’s second-largest steel producer, India, produced 10.1 million mt in April, up 6.2% year on year, but down 8.8% from March. India’s January-April output was 42.3 million mt, also up 6.5% year on year.

Turkey and Russia were the only other top-10 producers that saw production rises in April. Turkey’s output totaled 3.4 million mt, up 1.6%, while Russia’s production ticked up 0.6% to an estimated 6.4 million mt.

April production from Japan totaled 7.5 million mt, down 4.4% on the year and 6.1% from March, with January-April output at 30.5 million mt, down 3.3% from the same period of 2021, data showed.

April output from the US totaled 6.9 million mt, down 3.9% year on year and 0.2% from March, bringing the four-month total to 27.1 million mt, down 1.7% from the same 2021 period.

South Korea’s production in April totaled 5.5 million mt, down 4.1% on the year and 2.9% from March. From January through April, South Korean output was 22.4 million mt, down 4% from the same period a year ago.

European production declines

Crude steel production in Europe, including the UK, totaled 16.5 million mt in April, down 3.7% from April 2021, but up 1.1% from March. January-April output for the region totaled 65 million, down 4.2% from the same period in 2021.

Germany, the largest European steel producer, produced 3.3 million mt in April, down 1.1% year on year, but steady with March.

The European steel market has been affected in recent months by a lack of demand from the auto sector because of the ongoing semiconductor and chip shortage, which is restricting vehicle production.

Production of pig iron from 38 countries was 112 million mt in April, down from 114.2 million mt a year ago, but up from 108 million mt in March.

Direct reduced iron produced worldwide in April amounted to 9.4 million mt, compared with 9.3 million mt a year ago and 9.3 million mt in March.

Crude steel data covers the 64 countries that report to worldsteel, accounting for about 98% of the world’s crude steel production.

— Jacqueline Holman

Spanish steel distributor representatives anticipate certain market fluctuations in the following months, but price volatility is seen coming to an end, Kallanish heard during Tuesday’s EUROMETAL Iberia Steel Net Forum in Barcelona.

The new economic reality is seen requiring new solutions from both producers and the distribution chain in Spain. The sector says some old concerns remain, while it faces a challenging scenario amid high energy and transport prices.

“We have enough capacity to supply the market,” said Spanish distributors’ association Unión de Almacenistas de Hierros de España (UAHE) president Roberto González. “Almost 90% of the companies in the sector are small and must undertake an innovation process because the market demands it. Digitisation can improve the sustainability and profitability of services.”

According to the executive, there are concerns about plans by some steelmakers to improve their portfolio by including distributors’ main services.

Ignacio Mir Coll of distributor Hierros del Mediterráneo said good management by companies in the face of the challenging economic panorama does not consist only of selling steel, but also of supplying better and innovative services to customers.

“The end-user must understand that our service has a cost,” he observed. “The differentiation of these along with good pricing policy can guarantee our margins.” According to Mir Coll, both steel mills and stockists in Spain have a suitable role in the value chain, although “certain errors in distribution have not made it possible to see in a better way the value of the steel sales process by stockists”.

Sustainability must be an additional argument to grow the relationship with steelmakers, pointed out Fernando Moraga, executive director of Grupo Hierros Alfonso. “The distribution chain is an essential and fundamental link that completes the steel industry. Manufacturers need to start taking us into account when making their pricing decisions.”

According to Manuel Nobre, president of Portuguese steel distributor association Açomefer, Iberian service centres have been very important in giving stability to the steel market after the Covid-19 lockdowns, as well as in the current situation with the war in Ukraine. “We have been able to restore supplies and maintain the recovery. Customers are increasingly aware of the added value we are giving to steel. We must continue transforming the mentality in our business from being a simple merchant to providing high-value services. The factories cannot replace us,” Nobre commented.

During the conference, the organizers avoided talking about steel prices due to anti-competition regulations, although it was implied that these currently reflect market risks but are often supported by rumours. “False information plays against us, since the end customers know mills’ prices and put pressure on us. The speculative trend must be controlled with a more in-depth analysis,” Nobre concluded, with other participants agreeing.

Todor Kirkov Bulgaria

There is increasing demand for low carbon emission steel, SSAB business director Josu Pina Bilbao said May 24 during the EUROMETAL conference in Barcelona.

SSAB is aiming to commercialize fossil-free steel on an industrial scale to the market in 2026 and plans to largely eliminate carbon dioxide emissions from its own operations by 2030-45.

“We are following the timeline of our commercialization of the fossil free steel in 2026 and we are assessing a price mechanism,” Pina Bilbao told S&P Global Commodity Insights on the sideline of the conference.

“At the moment, we understand there is a premium applied for low carbon steel in the market by our competitors, but we have to see by 2026 what the market will be,” he said.

More companies wanted to be part of the journey to produce low carbon products, Pina Bilbao added.

Platts assessed domestic hot-rolled coil prices in Northern Europe at Eur1,060/mt ex-works Ruhr May 23, down Eur5 day on day.

SSAB also announced May 24 that Volvo Trucks would be introducing SSAB fossil-free steel in its trucks.

A small-scale introduction of the steel in Volvo’s heavy electric trucks will start already in the third quarter of 2022, with the first steel will be used in the truck’s frame rails and then will be introduced in other parts as fossil-free steel availability increases, SSAB said.

SSAB and Volvo Group have been collaborating on fossil-free steel since 2021.

In August 2021, SSAB produced and delivered the world’s first steel made of sponge iron reduced with hydrogen to Volvo and the automaker’s first machine — a load carrier made of fossil-free steel — was showcased in October 2021.

In 2016, SSAB, iron ore producer LKAB and energy company Vattenfall joined forces to create HYBRIT technology, replacing coking coal, traditionally needed for ore-based steelmaking, with fossil-free electricity and hydrogen.

— Annalisa Villa

The European Union’s safeguard measures are becoming increasingly detached from the current business reality of steel trading, according to Yuriy Rudyuk, the Brussels-based partner at law firm Van Bael & Bellis.

Safeguard measures are a hot topic as the European Commission’s update on the steel import safeguards are expected within days for the new regime to become effective by July.

The tariff rate quotas were introduced in 2018 to curb trade deviation following the former US President Donald Trump’s introduction of 25% tariffs on steel product imports under Section 232 legislation in March that year.

However, since the safeguards were put in place, the market has changed, with the EU and US not only reaching an agreement to eliminate the Section 232 legislation at the end of 2021 and agreeing on tariff-free quotas to trade steel and aluminum, but also increasing the use of anti-dumping measures, Rudyuk said on May 24 during the EUROMETAL conference in Barcelona.

Following Russia’s invasion of Ukraine, the EU redistributed volumes initially reserved for Belarus and Russia among all other exporting countries, and will soon suspend all safeguards and anti-dumping measures for Ukraine.

Considering the profoundly different market situation now compared to 2018 when the measures were first introduced, Rudyuk said there were three potential options that were likely to happen.

The first was the further softening of measures combined with major changes for some product categories which were mostly affected, for instance, replacing country-specific tariff rate quotas with global quotas for certain categories or increasing the liberalization rates for all products, in order to allow the new trade flow to form under the safeguard framework.

The second option was keeping measures without major changes but for a limited amount of time, and the third was repealing the measures.

“There are expectations in the market that for the first time since their introduction, the conditions are forming somewhat in favor for repealing the safeguard measures instead of their further extension, in one way or another,” Rudyuk said.

The current review of the EU’s system safeguard system is the fourth review and covers 26 product categories, including hot-rolled sheets and strips, cold rolled sheets, metallic coated sheets, tin mill products, stainless hot and cold rolled sheets and strips, merchant bars, light and hollow sections, rebars, wire rod, railway material, and seamless and welded tubes.

Platts assessed domestic HRC prices in Northern Europe at Eur1,060/mt ex-works Ruhr May 23, up 15% since the start of 2022, according to S&P Global Commodity Insights data.

— Annalisa Villa

Spanish steel distributor representatives have expressed optimism that steel sector confidence will soon recover. They believe construction and infrastructure sector demand is growing progressively, although the energy crunch persists. Energy supply and high price concerns should remain over the summer, delegates told Kallanish on the sidelines of the EUROMETAL Steel Net Forum Iberia in Barcelona on Monday.

“We’ve had a post-Covid-19 recovery at a higher level than expected, but the global crisis resulting from the war in Ukraine has caused a tremendous setback to steel-using sectors,” one participant commented. “The sharp increase in energy prices has put most mills under pressure. All industries were bottlenecked, while small steel users and manufacturers were at the edge of bankruptcy.”

According to another Spanish steel distributor, the energy crisis seems to be under control thanks to the latest government measures. However, the Iberian electricity market is still at a disadvantage compared to other European countries and this represents a great risk to the competitiveness of local producers.

A representative from the construction sector, meanwhile, commented that most distributors are trying to recover their profit margins, which could delay the recovery of demand at a time when steel prices are turning down. “The effort to recover margins may have a negative effect in the short term. If distributors use the difference resulting from the current price fall to increase their sales margins, the adjustment will not be really passed on to end customers and thus the recovery of demand, activity and investment in the construction sector will be once again postponed,” he observed.

However, maintaining lower margins to support the demand recovery is difficult to apply throughout the distribution chain, since contracts are also influenced by other factors such as logistics, a service centre source explained.

Steel traders confirmed that rebar prices are turning down. Currently, Spanish material stands at almost €800/tonne ($853.5/t). Including €262/t size extras, transaction values are at €1,062/t ex-works. Some offers have also been heard at €1,000/t delivered for 16mm rebar.

Todor Kirkov Bulgaria