Day: 17 August 2022

Germany’s SMS Group is to upgrade Spanish long steel supplier Megasa’s merchant bar mill at the Megasider Zaragoza plant, Kallanish learns from the plant maker.

Megasa has agreed a contract with SMS to replace its existing rolling mill with equipment based on environmentally-friendly heating technology. The new facility will be designed to produce a wide range of merchant bar.

“We are proud that Megasider is relying on the future-oriented technology of SMS and will obtain a plant that sets standards in the environmentally friendly production of steel bars,” says Luigi Barbante, vice president of the SMS Bar & Wire Rod Mills unit.

The investment includes a walking beam furnace with capacity of 120 tonnes/hour. In addition, the company will supply the so-called SMS Prometheus Level 2 control, which ensures uniform temperature distribution and low oxidation and carbon enrichment of the steel.

It will also provide the SMS DigiMod combustion management system and ZeroFlame HY2 burners. These are capable of operating with both natural gas and a blend of natural gas and hydrogen in any ratio, making this furnace hydrogen-ready, SMS observes. Both burners and combustion management system will lower nitrogen oxide emissions to 45 parts per million, reduce scale formation to 0.4%, and cut fuel consumption to 27 Nm3/tonne, according to the supplier.

Megasider Zaragoza produces merchant bar, with a wide range of dimensions and grades of rebar and steel sections.

Todor Kirkov Bulgaria

Shipments from EU distributors during the first six months of the year continued their negative trend, according to the latest data issued by Eurometal, seen by Kallanish.

Flat products service centres saw six-month shipments move down 1.1% year-on-year. In January-May the y-o-y change had still been slightly positive (+0.1%).

Stocks at flats service centres reached 79 days’ worth of shipments by the end of June, compared to 53 days in June 2021.

Shipments for multi-products and proximity distributors fell 12.8% y-o-y during the first six months of the year. The negative trend accelerated in June as during the January-May period the fall registered was 11% y-o-y.

Emanuele Norsa Italy

Swiss Steel will implement a new divisional structure for its group operation starting in September, Kallanish hears from the maker of special bar quality (SBQ) products.

Under the new structure, sales will be segmented by product category in the three divisions, Stainless Steel, Engineering Steel and Tool Steel. “This new organisation, which will go into operation in September 2022, allows a more holistic market approach and more effective and tailored customer service,” says chief executive Frank Koch.

He gives this “customer-centric organisation along product categories” as a main priority in the group’s outlook for the second half of the year (see separate story).

Another such priority is the group’s commitment to the Science Based Target initiative (SBTi) that encompasses a reduction of carbon emissions by around 42% over the next ten years. Swiss Steel is thus following other European steel companies, which have announced their participation in SBTi.

In June, Swiss Steel was announced as one partner in an alliance of five to reduce their CO2 emissions as part of a pilot project along the entire value chain for an automotive component. The others are bright steel manufacturer Andernach & Bleck, steel distributor Heine + Beisswenger, electromagnet manufacturer Magnet-Schultz and technology group ZF Friedrichshafen.

Christian Koehl Germany

European distributors of flat steel products reported marginally lower year-on-year shipments for January-June 2022, the regional steel industry association EUROMETAL said on Tuesday August 15.
In the first six months of 2022, flat steel shipments in the EU fell by 1.1% year on year.

Eurometal’s stock index for flat steel service centers in the EU was 107 in June 2022, compared with 71 in June 2021. The index uses the 2018 average as its 100-point basis.

Stock levels at EU steel service centers averaged 79 days’ worth of supply in June 2022, compared with 53 days in the corresponding month of 2021.

In June 2022, European coil prices continued to drop amid persistently slow buying activity and chronic overstocking at distributors and steel service centers.

Despite a short-term stabilization of HRC prices in July, the downtrend has resumed with European producers taking an aggressive approach and cutting their offer prices to fill weak order books.

Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe, at €770.00 ($785.69) per tonne on Monday, down by just €4.17 per tonne from €774.17 per tonne on Friday.

The latest calculation of the index was down by €53.75 per tonne week on week and by €81.67 per tonne month on month.

Multi-product distributor shipments in the EU and UK fell 12.8% year on year in January-June 2022, according to Eurometal data. During the review period all steel product shipment volumes fell.

In June 2022 alone, however, multi-product distributor stocks increased by 4.4% compared with June 2021, with only profile and merchant bar stocks dropping.

Published by: Julia Bolotova

Swiss manufacturer of tool steel and non-corrosive long rolled steel Swiss Steel reported a 12% year on year decrease in sales volumes over April-June, but revenues grew sharply thanks to achieved prices being 50% more than in the same quarter last year.

Swiss Steel sold 11.8% less steel — 457,000 mt — in the second quarter of 2022 compared with 518,000 mt in the same quarter of the previous year. This is attributable to an almost 8% decrease in the sales volume for quality and engineering steel and a 33% fall in stainless steel sales, although tool steel shipments gained 3%.

Meanwhile, the lower sales volume was compensated by considerably higher sales prices reflective of higher prices for raw materials and energy.

In April-June, the company’s average sales price at Eur2,442 ($2,475)/mt was 50% higher than in the same quarter last year, when it stood at Eur1,621/mt. Aside from increasing its base price, the steelmaker implemented an energy surcharge to pass on inflated energy costs to consumers.

As a result, Q2 revenue increased by 33% to Eur1.1 billion ($1.13 billion) versus Eur839 million in the prior-year quarter. It climbed in all of its markets, with the strongest gains in the US due to higher activity in the oil and gas industry.

Adjusted EBITDA for the second quarter was 47% higher, at Eur96 million.

In January-June, Swiss Steel sold 937,000 mt of steel, with the volume being 8.9% lower year on year, and at 48% higher average price of Eur2,290/mt. Its H1 revenue and adjusted EBITDA grew by 35% and 55.6%, respectively.

Geopolitical instability, inflation and potential economic slowdown confront companies with considerable challenges and are going to cause immaterial disruptions in the remainder of 2022.

“As we look to the second half of 2022, volatilities and uncertainties have increased,” said its CEO Frank Koch. “The unstable geopolitical situation persists, energy prices continue to skyrocket, and energy availability has become increasingly uncertain.”

As a consequence and faced with reduced growth forecasts in its end-industry markets, Swiss Steel expects lower market demand and a resulting decline in margins, amplifying the usual seasonal slow-down in activity in the second half-year.

The company is being reshaped toward consolidating operations into an integrated Swiss Steel Group under one brand.

It has reorganized its sales around the three divisions — Stainless Steel, Engineering Steel and Tool Steel with the new organization going into operation in September 2022.

Electric arc furnace-based Swiss Steel also aims to consolidate its position as a producer of CO2-reduced steel: the company has joined the Science Based Target initiative that promotes a reduction of carbon emissions by 42% over the next 10 years.

— Ekaterina Bouckley

Steel sales at EU steel service and distribution businesses slowed in the first half of the year while stocks rose, particularly for strip mills’ products, European steel distributors’ lobby group Eurometal said Aug. 16.

In January-June 2022 sales volumes of steel coil and sheet products by EU steel service and distribution centers slipped by 1.1% on the year, after they inched up 0.1% in January-May.

Inventories within the distribution sector, meanwhile, rose to be the equivalent of two-and-a-half months of material,

Expressed in days of shipments, stocks of strip mills’ products within the EU steel distribution sector were at 79 days in June 2022 compared with 53 days in the same month last year.

Domestic prices for hot-rolled coil in both the north and south of Europe were unchanged on the day Aug. 15. Platts, part of S&P Global Commodity Insights, assessed Northwest European HRC at Eur750/mt ($761/mt) ex-works Ruhr and South European at Eur720/mt ex-works Italy. Compared with 2021 year-end levels, North and South European prices came off by 18.6% and by 13.8% respectively, according to Platts data.

Shipments grouped as Multi-Product and Proximity Steel Stockholding Distribution by EU and UK steel distributors fell 12.8% on the year in H1, with all products declining within the category.

In June stocks rose 4.4% on the year, with all products except profiles and merchant bars recording an increase.

Compared with May 2022, June stocks fell 2.3%, despite a rise for rebars, plates and tubular products.

Eurometal’s market monitoring system tracks EU steel distribution shipments and stocks for two business segments — Flat and Multi-Product and Proximity Steel Stockholding Distribution.

— Ekaterina Bouckley

Turkey’s coated steel coil exports, most of them hot-dip galvanized coil, were 10% lower year on year at 868,800 mt in the first half of 2022, as demand from the EU fell substantially, according to Turkish Statistical Institute data.

HDG exports to Spain fell 53% year on year to 123,500 mt in H1 and exports to Greece fell 18% to 53,300 mt, although Romania imported 73,000 mt, up 38%.

Turkey’s other EU export destinations were Italy at 50,200 mt, down 50% year on year, Portugal at 40,000 mt, down 37%, and Bulgaria at 34,500 mt, up 5%.

Amid low EU demand, coated coil exports to the US rose to 99,000 mt, up from 33,000 mt a year ago.

Other export destinations were Canada at 47,500 mt and Egypt at 31,300 mt.

The total revenue generated from the overall exports rose 23% on the year to $1.15 billion in H1, amid higher global steel prices, according to the data.

Due to the collapse of the CIS raw materials supply chain, Turkish mills’ HDG prices exceeded $1,400/mt in mid-March, but have declined since April on low demand and lower HRC prices, with Turkish domestic HDG was assessed at $790/mt EXW Aug. 12, according to S&P Global data.

Looking ahead, with the European Commission imposing antidumping duties on HDG steel coils and sheets imports from Russia and Turkey for five years from Aug. 12, exports to the EU could fall further in the coming months, industry sources said.

The antidumping duties are 10.5% for MMK Metalurji, 2.4% for Tatmetal, and 11.0% for all other companies, including Tezcan.

— Cenk Can

UK-based steelmaker British Steel has raised its prices for structural sections by GBP100/mt ($120.35/mt) for all new orders with immediate effect, it said in an Aug. 15 letter to customers seen by S&P Global Commodity Insights.

The company attributed the increase to a surge in energy prices and the significant impact on steelmaking costs.

Electricity costs make up a large portion of steelmaking costs, accounting for up to 20% of the costs of converting basic raw materials into steel.

UK day-ahead baseload electricity was assessed by Platts at GBP381.85/MWh Aug. 15, up 260% year on year. The baseload Calendar 2023 contract was assessed at GBP449.65/MWh, a new record and up 350% year on year.

The UK usually produces around 7 million mt/year of crude steel, about 70% of the country’s annual requirement, although this dropped to 6.05 million mt in 2021.

The UK government said Aug. 12 that it was consulting on the option to increase support for high electricity-using businesses like the steel industry. It is aiming to boost the level of exemption for certain environmental and policy costs from 85% to up to 100%.

— Jacqueline Holman, Benjamin Steven

European hot-rolled coil prices remained stable Aug. 16 on minimal trade, although sentiments on price direction were uncertain.

Platts assessed hot-rolled coil in Northwest Europe stable at Eur750/mt ex-works Ruhr Aug. 16.

Market participants saw tradable value was circulating around the Eur750/mt level. Only one service center source suggesting material could be available cheaper, citing a workable range at Eur740-750/mt ex-works Ruhr.

By way of contrast, a second service center source had not seen said lower levels in the market, instead reporting the lowest offers were received at Eur770/mt ex-works Ruhr.

This suggested a degree of uncertainty as to current price levels in Northern Europe, which was confirmed by a trader source in the day.

“Prices are questionable at the moment,” the trader said. “There have been some deals, but you can hardly judge the market on August trading. No one buys serious volumes and there is a clear lack of outlook at present.”

Previously, mills were heard withholding offers for late-fourth quarter, which was speculated as price protection, but the trader suggested that mills would now settle orders for November-December delivery at current spot prices, dampening bullish expectations for the near-term despite rising production costs.

“Mills are still trying to sell more volumes into the market, keeping the prices down, but demand isn’t really recovering in kind,” a third service center source Aug. 16.

A second trader agreed the sentiment, stating that prices could even fall below the current Eur750/mt stabilization point without much surprise from the market.

Buyers continued to avoid the import market, given ongoing uncertainties on price direction, especially since import and domestic prices were in close proximity when factoring in transportation and other related domestic costs.

In the Southern market, the Platts HRC assessment remained stable at Eur720/mt ex-works Italy on muted trading and demand.

A third trader reported prices of Eur700-740/mt as achievable depending on the buyer, while a fourth confirmed the Eur720/mt level was tradable, both basis ex-works Italy.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven, Maria Tanatar