Day: 24 June 2022

CIS crude steel production decreased in May, according to the latest worldsteel data monitored by Kallanish.

Regional output amounted to an estimated 7.4 million tonnes, down by 19% year-on-year. During the first five months of 2022, crude steel production was 38.4mt, down 13.1% on January-May 2021.

Russian production in May is estimated to have been at 6.4mt, down by 1.4%. Cumulative steel output was 23.1mt, a decrease of 2.3% over the same period last year.

The second-largest producer in the region, Ukraine, saw May crude steel output drop to only 308,000 tonnes, down by 83%. The country’s year-to-date output totalled 4.2mt, down 52.8%.

This is the result of Ukrainian steelmaking coming to an almost complete standstill due to the Russian invasion of Ukraine on 24 February. In April, most Ukrainian steelmakers resumed production, but at low capacity utilisation and amid huge logistical problems, including for exports (see Kallanish passim).

The third-largest steel producer in the CIS over January-May was Kazakhstan with an estimated output of 1.83mt, up 0.5% compared with the same period last year.

Belarus, the fourth-largest producer, saw crude steel output in the five months reach 755,000t, down by 19.6% on-year.

Russia remained in fifth place in the ranking of top ten global steel producers in May, worldsteel data shows. However, Ukraine dropped to 18th place.

In March, the European Council agreed to adopt the EU’s fourth round of sanctions against Russia (see Kallanish passim), thereby banning imports from Russia of those steel products currently under safeguard measures. The ban is expected to impact some €3.3 billion ($3.52 billion) of steel exports from Russia.

The safeguard quotas assigned to Russia and Belarus have been redistributed among other nations. There is hope among EU steel buyers that, with Ukrainian steel capacity gradually coming back on line, imports from this country could pick up again. In May, the EU removed tariffs on Ukrainian steel for one year.

Svetoslav Abrossimov Bulgaria

The UK government has decided to extend safeguard quotas for a further two years to end-June 2024 on the five categories of steel products on which they are set to lapse next week, Kallanish notes.

The decision has been lauded by UK Steel, whose director general, Gareth Stace, says the move “will guard against anticipated surges in imports from trade diverted away from the US and EU markets that will remain shielded for years to come. Such surges would have risked jobs, investment, and our ability to transition to net-zero”.

‘We are aware this extension was not straightforward. Establishing a trade remedies framework for the first time in fifty years was always going to be challenging and the nature of these measures virtually guarantees some opposition from one quarter or another,” he continues. “However, this is not sufficient reason to shy away from using the trade tools now at our disposal.” The move ensures “steelmakers are not left to the mercy of a global steel market that suffers from overcapacity and state-induced distortions.”

“It is vital we now work with partners like the EU, and the US to address the underlying issues that are destabilising global steel markets. Safeguards are not a long-term solution, and the goal here is a global market for steel where we all play by the same rules,” Stace concludes.

In June 2021 the UK Trade Remedies Authority recommended to extend safeguard measures on ten products for a further three years, with nine slated to be revoked. The government then used emergency legislation to extend measures for one year on five of the categories that were proposed to be revoked. These were categories 6, 7, 12, 16 and 17 – tin mill products; quarto plate; merchant bar and light sections; wire rod; and angles, shapes and sections.

The government has now decided that if the measure were discontinued, there would be serious injury or the threat of serious injury to UK producers. Moreover, UK producers are adjusting to the surge in steel imports, as required under the WTO Safeguards Agreement, it says. However, due to supply problems with category 12, the government has increased the tariff rate quota on category 12a by 126,136 tonnes to ensure it better reflects trade flows.

Adam Smith Poland

Italian steelmaker Acciaierie d’Italia, the joint venture between ArcelorMittal and state-owned Invitalia, has idled two galvanizing lines due to deteriorating demand for coil in Italy and Europe, sources tell Kallanish.

The company declined to comment. However, deadlock and falling prices are persisting in the Italian coil market. This is forecast to continue through the summer, sources speculate.

Acciaierie d’Italia may not be an isolated case. Other Italian and European producers are mulling longer-than-usual, six-week maintenance production stoppages over August and are already beginning to reduce output by idling re-rolling lines. In France, ArcelorMittal is understood to be preparing to idle one blast furnace – HF2 – at its Dunkirk mill, effectively reducing output for the coming months (see Kallanish 20 June).

At present, Acciaierie d’Italia’s Taranto steel plant is working using BFs 1, 2 and 4, Kallanish understands. The steelmaker said in May it will increase its steel output by 40% this year compared to 2021. In 2022 it intends to produce 5.7 million tonnes of steel. Sources however believe this is now in doubt because of the unexpected deadlock in the global flat steel market.

The producer posted approximately 4.4mt of output in 2020 and had a production target of 5mt last year. Output for 2021 is yet to be announced.

Natalia Capra France