Day: 14 September 2022

The ResponsibleSteel accreditation coalition has released a new set of environmental, social, and governance standards to help the industry meet its long-term sustainability goals, Kallanish learns from an organisation release.

The revised and more stringent standards will “provide leaders in the steel industry with an immediate opportunity to showcase how they are driving down emissions, whilst tackling other urgent issues such as the impact of mining, water use, labour rights, air pollution, and diversity,” ResponsibleSteel says.

The coalition has so far certified 41 steelmaking sites on four continents, representing about 48 million tonnes of production out of the total global production of about 1.8 billion tonnes. Another roughly 50mt of production is currently under audit and awaiting certification.

Flagship members include ArcelorMittal, Bluescope, POSCO, Tata Steel, thyssenkrupp, US Steel and voestalpine.

Global steel industry CO2 emissions must fall by at least 90% by 2050 to hold global warming at 1.5 C, ResponsibleSteel says, citing the International Energy Agency.

“Time is short, in other words, and for the industry to be on track this will require substantial emissions reductions within this decade,” it says.

ResponsibleSteel ceo Annie Heaton adds that the new standards come at an historic political and market juncture.

“ResponsibleSteel’s new international standard comes at a critical time, with the unfolding energy crisis alongside the climate crisis only magnifying the need for a global scale transition to a decarbonised economy,” she says. “The standard enables anyone that’s either buying or making steel to demonstrate they are not only driving down emissions, but also thinking responsibly about impacts on people and nature right across the value chain.”

Dan Hilliard USA

Germany’s steel and metalworking sectors are deeply alarmed over the seemingly endless increase in energy prices, which threatens to profoundly disrupt the value chain.

“We are in a substantial industrial crisis. Companies are cutting back on production. Every day we are losing added value that will not come back,” says Christian Vietmeyer, managing director of steel and metal fabricators federation WSM. He calls on the government to make quick amendments to the relief package it recently announced, and which was criticised by many sides as insufficient.

“We are facing the abyss,” he warns.

WSM thus echoes the call made by several automotive supplier sectors, which admonish that the traditional supply relationship between themselves and OEMs might no longer work (see Kallanish 12 September).

Current economic figures show how production at Germany’s steel and metalworking industries is losing more and more momentum. In July, it fell by another 2% year-on-year.

“The volume of orders is shrinking enormously, by 14.1% y-on-y in July, by 11.4% in the second quarter,” says Holger Ade, head of energy policy at WSM. Vietmeyer adds that “business expectations for the next six months are sinking to the level we experienced during the pandemic outbreak.”

Fabricators feel sharp headwinds from all sides, with supplier mills ceasing production, and electricity contracts expiring with no new offers from energy suppliers for 2023.

“Add to that the gas shortage – no one knows what the allocation will be in the worst case,” Vietmeyer says.

These factors are driving companies closer to the breaking point every day.

“We are already seeing the first insolvencies,” he says.

Christian Koehl Germany

The Spanish government gave guarantees to the domestic steel sector that its contingency plan for the energy crisis will provide a response according to the needs of large consumers of energy. This was understood after the meeting between steelmakers, autonomous communities, and workers unions representatives with the Minister of Industry, Commerce and Tourism, said Reyes Maroto on Monday.

Maroto admitted that energy prices affect the development of all industrial sectors, and especially the steel industry, Kallanish reports.

“The government is working on a contingency plan that should be announced before the end of September, and with which we intend to achieve a European response in accordance with the needs of large energy consumers, such as the steel industry,” Maroto comments. “Last Friday, there was a unanimous agreement in the European Energy Council to enable intervention mechanisms in the wholesale electricity market.”

During the meeting, the minister pointed out that the Spanish government has supported electricity and gas intensive industries with more than €850 million ($863.9m) in recent months to deal with the rise in energy prices as a result of the Russian invasion of Ukraine.

“The government is aware of the importance of the steel sector in the Spanish economy and its contribution. For this reason, we have approved measures to respond to the demand of the industry, such as lowering energy taxes and increasing direct aid, and raising the compensatory for CO2 emission costs to €244m, while working with Brussels to increase the maximum threshold of this aid for future calls,” Maroto confirms.

In May, Spain and Portugal reached an agreement with the European Commission to establish a temporary mechanism, the so-called Iberian mechanism, recognizing the countries as an energy island. The scheme has allowed the implementation of temporary and exceptional measures to reduce electricity prices for end consumers and business.

Since its application, the Iberian mechanism has saved €2 billion for Spaniards on electricity bills.

Todor Kirkov Bulgaria

India’s Tata Steel said Sept. 13 that management, engineering, and business practice consultancy Hatch will be part of the team to deliver hydrogen to make green steel at its IJmuiden Works located on the Dutch coast.

Hatch has been selected to develop basic engineering for the reducing electric furnace (REF) solution, which, when coupled with a direct iron reduction (DRI) plant, will enable the production of green steel using hydrogen.

The smelting complex will use Hatch technology which uses an electric arc furnace to continuously melt and decarburize DRI and other metallics to make steel.

The hydrogen route project is part of Tata Steel’s commitment to produce steel with zero carbon emissions by 2045.

To achieve that goal, Tata Steel will convert its steelmaking facilities from coal-based to hydrogen-based utilizing DRI technology, in which iron ore is directly reduced using natural gas with progressively increasing amounts of hydrogen, and subsequently melted and refined in large efficient rectangular electric smelting furnaces.

This DRI + electric furnace route allows the production of the same high-quality steel, according to Tata Steel.

“We want to be CO2 neutral before 2045 and … emit between 35% and 40% less CO2 before 2030. This will largely be done via the hydrogen route,” commented in a statement CEO of Tata Steel Nederland Hans van den Berg. “We are replacing the blast furnaces with modern technology that uses hydrogen or gas instead of coal.”

— Ekaterina Bouckley

Germany-based independent steel and metals distributor Klockner & Co has delivered its first green steel coil to Mercedes-Benz, it said Sept. 13.

The coil weighs around 20 mt and is “significantly carbon-reduced steel”, the company said.

Emissions from the extraction to the production process were less than 500 kg of carbon per ton of steel, more than 80% lower than the average of around 2.5 mt of carbon per ton of steel produced using a blast furnace, it said in a statement.

The coil was delivered under the company’s new Nexigen brand to the Mercedes-Benz Kuppenheim plant.

Carmakers are increasingly turning to deals with steelmakers that allow them to procure green steel in order to achieve net-zero emissions by 2040. In particular, Mercedes-Benz plans to continue to shift from conventional to green steel in raw material procurement as part of its Ambition 2039 plan.

Klöckner & Co’s Nexigen brand will serve as an umbrella for the entire portfolio of the company’s sustainable products and services. Under the Nexigen brand, the company aims to “provide transparent, carbon-reduced solutions in the three categories of materials, processing and logistics.”

“Our customers are increasingly asking for sustainable steel solutions, Guido Kerkhoff, CEO of Klöckner & Co SE said. “Nexigen means they can easily and reliably source green steel and metal products. With additional advisory services, we are also helping them to make their supply chains significantly more sustainable and make their progress in decarbonization transparent.”

Platts assessed hot-rolled coil in Northwest Europe on Sept. 12 at Eur760/mt ($769.88/mt) ex-works Ruhr, unchanged on the day, according to S&P Global Commodity Insights data.

— Annalisa Villa

The series of measures discussed at the EU’s Energy Council Sept. 9 lacked a sense of urgency and required elaboration, associations representing European ferrous and non-ferrous metals producers and miners, among other European groups, said in a joint statement Sept. 13, calling for immediate and precise relief measures.

The association had previously sent a letter from energy intensive industries, signed by Eurofer, Eurometaux, Earomines and Euroalliages, among others, to the EU presidency Sept. 6 calling for urgent and effective action at EU level on gas and electricity prices.

While the Energy Council acknowledged the pressure increasing electricity and gas prices had on inflation and the EU economy and the threat to the competitiveness of European companies, the associations said many of the measures discussed required further elaboration, as they were worded in broad and sometimes vague terms and were unclear in their application to industry.

“We call upon Europe’s leadership to provide industry with immediate and precise relief measures that can be implemented swiftly to ensure the continued viability of the operations in Europe,” the associations said.

In the previous letter, the energy intensive industries had referred to the destructive consequences of high energy prices. which had already caused the reduction or closure of production at a number of plants in different sectors.

The Dutch TTF gas spot price peaked at Eur334/MWh three weeks ago, which the associations pointed out was 15 times higher than its pre-crisis level, 10 times more than US prices and much higher than prices in Asia.

“With every day that goes by, the situation grows worse with potential irreversible consequences on investments in Europe,” they said Sept. 13.

A number of steelmakers have been impacted, with Slovakia’s US Steel Kosice idling one of its three blast furnaces for 60 days for maintenance, long steel maker Stahl Gerlafingen in Switzerland reducing operating hours during October to December and ArcelorMittal temporarily shutting three blast furnaces — in Bremen, Germany, Gijon, Spain and Dunkirk, France.

In the aluminum sector, several European producers have been impacted, with shutdowns taking place at Norsk Hydro’s Slovalco smelter in Slovakia, Alro’s alumina facility in Romania and Damco Aluminum Delfzijl Cooperatie’s Farmsum plant in the Netherlands.

There has also been a 33% curtailment at Alcoa’s Lista smelter in Norway, a 20% production cut at France’s Aluminium Dunkerque, a 59% production cut at Speira’s Rheinwerk smelter in Germany and reduced output at Alcoa’s San Ciprian alumina refinery in Spain.

Hydro also decided to keep smelting pots at its Husnes and Karmoey plants in Norway offline after normal maintenance due to lower aluminum demand.

— Jacqueline Holman

The European market for hot-rolled coil remained quiet on Tuesday September 13, with little to no trading activity amid chronic overstocking and weak end-user demand, sources told Fastmarkets.
Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe, at €765.00 ($774.20) per tonne on Tuesday, down by just €3.33 per tonne from €768.33 per tonne on Monday.

The latest calculation of the index was stable week on week, but down by €9.17 per tonne month on month.

Although integrated mills in the region maintained their official offers for HRC at €800-850 per tonne exw, deals were not sealed at those price levels, sources said.

Most buyers estimated tradeable prices for HRC in the region at €750-770 per tonne exw, with some transactions for minor volumes reported within that range in Germany.

Market participants cited a lack of end-user demand as a key problem for the market.

“The price [for HRC] does not matter right now. Even if mills cut it by another €50 per tonne, it wouldn’t result in a boom in buying,” a distributor in the region said. “There is no demand, and no demand recovery in sight, at least [not] this year.”

At the same time, producers have been struggling with extremely high energy prices and have therefore insisted that the price increase was necessary to cover surging costs.

Europe-wide steel output cuts might support a degree of price recovery in the longer run, sources suggested.

“Maybe closer to end of the fourth quarter, when buyers restock for the first quarter of 2023, we will see some recovery [in HRC prices],” a trader said.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy, meanwhile, was €757.50 per tonne on Tuesday, down by €5.00 per tonne from €762.50 per tonne on Monday.

The latest calculation of the Italian index was up by €5.00 per tonne week on week, but down by €12.50 per tonne month on month.

Activity in Italy’s HRC market was also quite weak, sources said.

Despite substantial production cuts announced by local mills, prices for HRC in the nation were relatively stable and the offer-bid gap remained wide.

HRC offers from local mills were reported closer to €800 per tonne exw, while buyers’ estimates of achievable prices were heard at €750-780 per tonne exw, depending on tonnage.

Published by: Julia Bolotova