Day: 27 May 2022

Worldstainless, the new name for the International Stainless Steel Forum (ISSF), expects global consumption of stainless steel to rise 3.6% on-year in 2022 and a further 3.2% on-year in 2023, Kallanish notes.

This year will see cold rolled stainless flat steel use rise by the most, 4.1%, followed by semi-finished longs with 3.6%. The latter product category will see the highest consumption growth of 5% in 2023, followed by long products with 3.8%.

The Americas and Asia without China will lead growth in 2022, with 5.2% and 4.9% respectively.

The growth is a significant slowdown from the 11% on-year global consumption rise seen in 2021.

In 2021, global stainless steel melt shop production increased 10.6% to 56.29 million tonnes. CrNi (300 series) stainless steel increased its share in overall production to 56.7%. 400 series’ share remained unchanged at 20.8% but 200 series’ share fell to 21.1%.

Adam Smith Germany

Forecasts for global economic growth have deteriorated drastically due to a confluence of factors, Kallanish notes.

The Institute of International Finance (IIF) says the risk of global recession has risen significantly as the Omicron wave in China is more disruptive than previously anticipated, US financial conditions are tightening rapidly, and the Ukraine war persists and could escalate.

The IIF forecasts 2.3% on-year global GDP growth in 2022, with 2.5% and 1% growth respectively in the US and eurozone, while Russian growth should plummet 15%. This leaves little room to avoid an outright contraction of global GDP should downside risks materialise, it points out.

In the case of the eurozone, because the statistical carryover from 2021 into this year is 1.9 percentage points, this is in fact a recession forecast that anticipates falling GDP in the second half of the year, IIF warns.

The rise in real long-term US interest rates is now comparable to the 2013 taper tantrum, IIF observes. “This rapid tightening risks further destabilising the global growth picture, which is already teetering from Russia’s invasion of Ukraine and Omicron’s (re-)emergence in China,” it comments.

Nevertheless, “manufacturing from Russia and Ukraine will likely be relocated to ‘safer’ locations with still-reasonable production costs, especially in the automotive sector where missing parts are already causing disruptions. As a result, the CEE-3 [Poland, Czech Republic and Hungary] and Turkey could benefit from larger FDI inflows over the medium term,” IIF says.

Moody’s meanwhile forecasts 3.1% GDP growth in 2022, with the US and eurozone seeing 2.8% and 2.5% respectively, while Russian GDP is set to fall 7%. Besides Russia, it does not foresee a recession in any other country.

“Several crosscurrents have hit the global economy all at once, and will slow growth more significantly than we envisaged only a few months ago,” Moody’s says. The key factors are the Ukraine war, new lockdowns in China and monetary policy tightening to fend off accelerating inflation. “The rise in prices, especially of essentials, is quickly eroding household spending,” Moody’s points out.

Meanwhile, economies are returning to a post-pandemic normal, which involves reversals of some economic patterns to pre-Covid trends. Households are once again spending a greater proportion of their incomes on high-contact service activities and buying fewer goods.

For Europe, “cuts to the supply of natural gas would force a rationing of energy across sectors, cutting back factory, transportation and other energy-intensive activity, and would plunge the region’s economy into a recession,” Moody’ warns. “A recession in Europe would reverberate throughout the world.”

Adam Smith Germany

Stalprofil’s revenue surged 43% on-year in the first quarter to PLN 603.1 million ($140m), while net profit soared 127% to PLN 41.38m, Kallanish notes.

Restricted steel supply in Europe and therefore higher prices as a result of the outbreak of war in Ukraine, coupled with significant inventories amassed by Stalprofil before the price surge, allowed the firm to expand Q1 margins. Sales volume was up 26% on-year, the Polish distributor says without providing tonnages.

Polish apparent steel consumption rose 5% on-year in Q1 to 3.8 million tonnes, the firm says citing Polish Steel Association (HIPH) figures. The increase in prices and demand is happening as steel production declines globally, with EU27 crude steel output down 3.8% in Q1 to 36.8mt.

Stalprofil’s steel product sales rose 12% on-year in 2021 to 207,721 tonnes, with steel structures sales up 9% to 2,216t.

Adam Smith Germany

The European Parliament and the European Council have voted in favour of the proposal to suspend for one year all trade barriers against Ukraine-origin steel imports, to support the country during the ongoing war with Russia.

The proposal was presented at the end of April by the European Commission (see Kallanish passim). Following the favourable vote, the suspension is now expected to become effective in a matter of days.

As part of the suspension, the Ukrainian steel sector will benefit from being excluded from the existing safeguard measures system. In addition, other trade restrictions would be suspended, such as the anti-dumping duties in place on hot rolled coil from Metinvest, and certain steel tube.

Emanuele Norsa Italy

South European domestic hot-rolled coil offers moved down May 26, with the Northern market also seeing decreases on bearish sentiment, although indications were limited due to public holidays in the region.

More activity was seen in the Southern market, with mills reportedly decreasing offer levels in response to bearish sentiments.

Hot-rolled coil in South Europe was assessed down Eur20/mt on day at Eur970/mt ex-works Italy, according to S&P Global Commodity Insights data.

Offers were reported at Eur980/mt ex-works from a North Italian integrated producer; Eur960/mt ex-works from a South Italian producer; and Eur940/mt delivered to Italy ex-Romania.

Demand remained reduced in the South European market, although buyers were expected to return to purchasing in the near term to reserve September material.

However, a mill source was pessimistic about the revival of overall demand, thinking buyers would avoid substantive restocking in June on market uncertainties.

“The fact is, people need to buy now for September, but I don’t see the waiting game as ending fully,” the source said. “Everyone is still playing on whether to order with EU or foreign mills — there are less import offers available now India has new duties, but EU mills are still nervous and offering for July delivery at discounted rates. I think we’ll see limited trade in June, but most won’t restock fully, with poor demand extending into H2.”

A service center source confirmed the sentiment, seeing low import prices as no longer available given India’s new export duties of 15% on HRC exports.

“Local mills have decreased offers again, so it seems the trend hasn’t changed, but the decline has slowed somewhat.”

Demand was similarly muted in the Northern market, accentuated by public holidays on the day.

A service center source provided tradable value at Eur1010-1040/mt ex-works, agreed by a distributor source. A mill source saw tradable value slightly higher at around Eur1050/mt ex-works. A trader considered lower prices of Eur1000/mt ex-works as achievable.

S&P Global Commodity Insights assessed Platts HRC in Northern Europe down Eur10/mt May 26, at Eur1040/mt ex-works Ruhr.

— Benjamin Steven, Maria Tanatar