Day: 12 October 2022

European hot-rolled coil prices were slightly weaker on Tuesday October 11, amid persistently sluggish demand – even though some producers were ready to provide discounts to fill their order books, sources told Fastmarkets. Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe at €718.75 ($698.15) per tonne on Tuesday, down by €8.75 per tonne from €727.50 per tonne on Monday.

The latest calculation of the index was down by €28.75 per tonne week on week and by €55.00 per tonne month on month.

Buyers indicated that an achievable price would be about €700-730 per tonne exw, with one transaction in Germany reported at €715 per tonne exw.

An offer for fourth-quarter delivery HRC from one major European steel mill was reported at €765 per tonne delivered, which nets back to about €725-735 per tonne exw. That was down by €45 per tonne from the previous offers heard at €810 per tonne delivered in mid-September, sources said.

A transaction for Italy-origin HRC to the region was reported at €750 per tonne delivered earlier this week, but for a limited tonnage.

In general, sources said that only small volumes of HRC have been traded recently, with distributors and steel service centers (SSCs) in Europe focused on reducing stocks.

“We are competing with [other SSCs] to sell costly inventories to end users, but demand is very weak. Our [HRC] sales in September were 25-30% [lower] year on year,” a source at an SSC in the region told Fastmarkets.

Fastmarkets’ calculation of its daily steel HRC index domestic, exw Italy was €715.00 per tonne on Tuesday, down by €7.50 per tonne from €722.50 per tonne on Monday.

The latest calculation of the Italian index was down by €33.75 per tonne week on week and by €52.50 per tonne month on month.

Sellers and buyers said a tradable level for HRC in Italy was about €700-730 per tonne exw.

Despite competitive overseas HRC offers being available, import booking were scarce due to high levels of market volatility and safeguard-related risks.

HRC from Japan and Taiwan was on offer at €670-680 per tonne cfr Italy, sources said.

And HRC was on offer from an Indonesian mill at €650 per tonne cfr Italy, with bids coming in at €625-630 per tonne cfr Italy.

Published by: Julia Bolotova

In 2021, Acciaierie d’Italia (ADI) posted a turnover of €3.3 billion ($3.2 billion), up from €1.6 billion in 2020. In its 2021 sustainability report obtained by Kallanish, the steelmaker reports operating costs of €3 billion, including €1.5 billion for raw materials and various goods.

Last year, the company produced 4.1 million tonnes of crude steel, an increase from 3.4mt in 2020. This, coupled with raw material price increases, drove the cost increase. The company has 3,200 suppliers, of which 87% are in Italy and the rest abroad. ADI sells over 75% of its volumes in Italy, 20% in other EU countries and the remaining 4% in the rest of the world. The main outlet is Germany, followed by Spain, Turkey and France.

Last year, 87 of ADI’s products were shipped by vessels, almost 12% by truck and only over 1% were delivered by railway.

ADI shipped 3.9mt of finished products and semis, mostly seaborne, the cheapest transport mode. The steelmaker received 29,246 tonnes of slab for re-rolling.

Last year, the company focused on improving its products for the automotive and packaging industries. It says it continues to heavily invest in the energy transition, decarbonisation, energy efficiency, and the circular economy. It is also developing new products such as high-resistant plate for the shipbuilding sector, together with pipe for gas transport.

The investments underway and planned for the Taranto steelworks amount to €1.7 billion.

ArcelorMittal owns 62% of ADI, while the remaining 38% is held by state-owned investment vehicle Invitalia. According to the 2020 agreement between the two partners, Invitalia’s shareholding in the steelmaker will be raised to 60% next year (see Kallanish passim).

Natalia Capra France

Italian sections producer Duferco Travi e Profilati is investing in an upgrade of its Pallanzeno mill in northern Italy. The steelmaker has placed an order with technology company Steele for a new cut-to-length line for sections, Kallanish notes.

The company’s objective is to enlarge its product range and improve quality. Construction is to start early next year, with commissioning scheduled already in spring 2023, Duferco says in a note. The turn-key solution will process high-resistance sections using an innovative cutting system.

The steelmaker has started construction of the new Smart Beam Manufacturing (SMB) rolling mill at its San Zeno Naviglio site near Brescia. The mill supplied by SMS will become operational in 2023. With a yearly output of 1.5 million tonnes of long products, it will increase Duferco’s current capacity by 650,000t. Powered by renewable energy and using green hydrogen, the new mill will have a low carbon footprint. The overall investment is €180 million (see Kallanish 8 February).

Natalia Capra France

The French rebar market continues to stagnate, with demand weak from both end users and distributors, and the construction sector slowing, sources tell Kallanish.

Domestic steelmakers continue to implement stoppages a few days per week and are reported to have relatively high stocks. The production cuts, however, are not easing market overcapacity, as consumption is low and sales are mostly back-to-back, both in the north and south of the country. Production plans are also changing constantly, according to daily prices of gas and electricity.

Distributors say that uncertainty continues to impact the private residential construction sector. Some new projects are being put off because of the high prices of raw materials. A general wait-and-see attitude is being reported on the side of rebar buyers.

French domestic rebar contracts are mostly stable on September at an average of €880-910/tonne ($853-882) ex-works, including size extras. The low and high points of the range depend on client and tonnage, sources suggest. Some slightly lower-priced material sales are being reported, particularly in southern France, coming from Spanish and Italian producers.

Meanwhile, buying activity on the German rebar market is also subdued after many distributors filled their inventories until the end of October. Following the buying spree at summer base prices of €750-800/t, mills started quoting prices at firmly above €800/t. This time, however, observers believe prices ultimately paid could likely undercut the previous lower end of the range (see Kallanish passim).

Natalia Capra France

Large Turkish automotive steel components maker Beycelik Gestamp’s Romanian facility has been recognized as one of Ford’s top automotive components suppliers by receiving the automaker’s Q1 quality certification, the company said Oct. 11.

The Q1 Certification is awarded to Ford suppliers that demonstrate excellence beyond the ISO/TS certification requirements in five critical areas: capable systems, continuous improvement, ongoing performance, superior manufacturing process and customer satisfaction.

The plant in Romania supplies automotive sheet components to major domestic and global automakers. In Turkey, Beycelik also has a sheet forming and welding plant in Bursa and a plant in Kocaeli.

Beycelik, which is aiming to raise its mill capacities with investments in Turkey and Romania in 2023, will also start to supply parts to UK electric vehicle maker Arrival in 2023.

The company will also supply body and chassis components to other EV makers, Dacia and Togg, it said.

Platts, part of S&P Global, assessed Turkish HRC at $685/mt ex-works Oct. 7, down from an intra-year high of over $1,200/mt reached in mid-March.

— Cenk Can

H2 Green Steel is partnering with Midrex Technologies to use its direct reduction ironmaking technology and also received an investment from Midrex’s parent company Japanese steelmaker Kobe Steel, the companies said in a statement Oct. 11.

H2 Green Steel is developing a green hydrogen powered plant in Boden, northern Sweden that will produce 2.1 million mt/year of hot direct reduced iron and hot briquetted iron to feed an initial production of 2.5 million mt/year of low carbon steel, potentially increasing to 5 million mt/year by 2030.

H2 Green Steel’s process will remove up to 95% of carbon emissions compared to traditional steelmaking with a blast furnace and using iron ore.

“This unique project is a ‘lighthouse’ to our industry and sets the standard for green steel,” Midrex Technologies CEO Stephen Montague said in the statement. “There is simply nothing like it — 100% hydrogen from day one to produce over 2 million mt of DRI with up to 95% reduction in CO2,” he said.

The main emission cuts come when iron ore is reduced to sponge iron using the Midrex technology, with the two companies having been collaborating for almost two years to achieve a low carbon solution for iron reduction.

On top of this, Kobe Steel has made an undisclosed investment in H2 Green Steel’s series B financing round and the two parties have begun discussions for the possible purchase of low carbon HBI in the future.

“We are really excited to cooperate with H2 Green Steel as the strategic partners from both aspects of plant supply and equity investment, in order to jointly tackle the challenge toward the global carbon neutrality,” Kobe Steel Executive Vice President Kazuto Morisaki said.

H2 Green Steel CEO Henrik Henriksson said: “As a major Japanese steel maker, Kobe Steel’s investment in our venture clearly demonstrates the interest from incumbent steel companies in new ventures that will move the entire steel industry forward. It also adds further geographical diversification to our progressive group of investors who provide us solid support.”

Platts assessed the 62% Fe iron ore index at $98.75/dry mt CFR North China Oct. 10, down 17.4% since the start of 2022, S&P Global data showed.

The cost of producing renewable hydrogen via alkaline electrolysis in Europe was assessed at Eur20.08/kg ($19.48/kg) Oct. 10 (Netherlands, including capex), based on month-ahead power prices, down from a peak of Eur34/kg in late August. PEM electrolysis production was assessed at Eur23.74/kg.

Platts, is part of S&P Global Commodity Insights.

— Annalisa Villa

Suppliers of premium heavy melting scrap kept their offers for Turkey unchanged at above $370/mt CFR on Oct. 11 in an attempt to consolidate earlier gains.

The prices of HMS 1/2 (80:20) had already reached $371-$373/mt CFR Turkey in the week to Oct. 7, but the number of actual deals was still low. With more requirements from Turkish buyers for November shipments, scrap recyclers decided to wait and see whether similar price levels can be repeated in the next trades.

The offers for the US HMS 1/2 (80:20) were not confirmed but indications were still above $370/mt CFR, with a Turkish agent seeing the workable level at up to $375/mt CFR.

A US recycler put a workable level at $373/mt CFR Turkey for HMS 1/2 (80:20). An agent active in the US scrap trade believed that the market had to stay around $373/mt CFR as US suppliers found better pricing in India and Bangladesh.

According to a European trader, some Turkish buyers were trying to push the price back to $370/mt CFR or lower for premium quality HMS. At the same time, US/Baltic scrap sellers sought to sell in the $375-$380/mt CFR range. Regarding the EU scrap, most suppliers were well booked and indicated $365-$366/mt CFR, the trader added.

The European trader observed generally flat scrap pricing on Oct.11, which may continue until the following week. Sellers were trying to assess the situation with the collection cost, which for the time being remained stable, not giving dealers room to drop their prices.

The heavy melting scrap dock prices in Belgium were heard at around Eur330/mt delivered to the dock, a recycler said. One supplier was also heard to be paying as high as Eur340-350/mt delivered to the dock. A Benelux recycler put a new offer for prompt shipment at a minimum $370/mt CFR Turkey.

Turkish scrap buyers were hesitant and preferred to wait and evaluate the finished steel sales opportunities, with more demand expected in the Americas and East Mediterranean markets.

Platts assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $372/mt CFR Oct. 11 unchanged from Oct 10, according to data from S&P Global Commodity Insights.

On Oct. 11, Platts assessed the LME scrap future contract for October stable from Oct. 10 at $368.50/mt. However, the November contract fell $9/mt to $356/mt on Oct. 11, strengthening the backwardated structure over the October to November portion of the near-term forward curve. This indicated that futures traders were expecting scrap prices in the physical market to soften significantly in the immediate near term.

— Wojtek Laskowski, Rabia Arif, Viral Shah

Prices continued to fall in the Southern European market for steel rebar in the week to Wednesday October 12 on weak end-user consumption.
Although mills were offering discounts, customers remained in wait-and-see mode.

Italy
Persistently weak consumption by the construction industry, combined with uncertainty regarding the future price direction, resulted in a static market for rebar in Italy, Fastmarkets heard.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, exw Italy, was €895-955 ($869-927) per tonne on Wednesday, down by €5-20 per tonne from €900-975 per tonne last week.

While some sources predicted that prices would remain flat through October, others forecast further declines.

“The price of rebar is constantly decreasing,” one buyer source said. “Demand remains low and customers wait for further decreases before putting in significant orders. I do not forecast that demand will improve this month but it is impossible to predict what will happen in the future.”

“It is almost impossible to make a prediction,” another buyer source in the region said. “The market is very quiet in Italy, and there is a lot of skepticism regarding price direction.”

The Italian government has pledged support to help mills survive high energy costs but until the country’s newly elected administration is settled, it was unlikely that any changes would be implemented, Fastmarkets heard.

“The Italian government has issued a decree [that it will] contribute… financial aid to Italian companies to support them with their energy costs,” one producer source in Italy said. “Italian companies will receive 15-40% of the [cost of] energy in the form of a tax credit.”

Sources remained optimistic about the government’s support for the steel sector, but this was not yet a reality.

Spain
Prices have dropped further in the Spanish rebar market amid weak trading activity, Fastmarkets heard.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Spain, was €800-850 per tonne on Wednesday, down by €20-50 per tonne from €850-870 per tonne last week.

“Demand is weak and there is low demand from the construction industry, which further drags on prices,” one producer source said. “There is a lack of projects, due to high interest rates.”

International scrap prices affect the prices of all long steel products, and scrap prices have stabilized so far in October.

Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $362.41 per tonne on October 12, compared with $365.38 per tonne a week earlier.

Published by: India-Inés Levy

European cold-rolled and hot-dip galvanized coil prices slid lower during the week to Wednesday October 12 amid insufficient demand, sources told Fastmarkets.
Some European mills were ready to provide discounts on flat steel products to fill gaps in order books, but this did not help to spur trading activity.

Notably, one major European steelmaker was offering CRC at €865 ($840) per tonne delivered and HDG at €885 per tonne delivered across Europe late in the week to October 7. That would net back to €825-835 per tonne exw for CRC and to €845-855 per tonne for HDG. This is down from previous offers in the mid-September at €910 per tonne delivered for CRC and at €930 per tonne delivered for HDG.

But buyers’ indications of achievable prices were lower still – at €810 per tonne for CRC and at €830 per tonne for HDG.

According to market sources, both CRC and HDG production is very energy intensive however, so in general, producers could not be flexible with offers.

As a result, some producers preferred to withdraw CRC and HDG offers from the market altogether.

“We tried to offer CRC at €850 per tonne exw, but there was no buying interest at all,” a mill source in Northern Europe told Fastmarkets.

Fastmarkets’ weekly price assessment for steel CRC, domestic, exw Northern Europe was €810-830 per tonne on Wednesday, narrowing downward from €810-850 per tonne seven days earlier.

Fastmarkets’ corresponding weekly price assessment for steel HDG, domestic, exw Northern Europe was €840-860 per tonne on Wednesday, down by €10-30 per tonne from €850-890 per tonne seven days earlier.

Published by: Julia Bolotova

Hot-rolled coil (HRC) prices across Europe sank on Wednesday October 12 when lower offers emerged, and buying activity remained weak amid destocking activity and sluggish demand from end users, sources told Fastmarkets on October 12.
The European HRC market has remained depressed in October, with little trading taking place in oversupplied conditions and amid slow demand from key end sectors.

Some producers in Northern Europe have reduced their offers for large buyers to fill gaps in order books, according to several market sources. Notably, offers from Germany and the Benelux area to Italy were reported at €700-710 per tonne cpt, which nets back to €650-660 per tonne exw, sources said.

At the same time, some other mills in the region were maintaining offers at around €720-740 per tonne exw.

“The range [of HRC offers] in the market is enormously wide – it is hard to tell what the benchmark price [for HRC] is,” a mill source in Germany told Fastmarkets.

“All offers [for HRC] below €700 [per tonne exw] must be for really substantial quantities – they only appeared in the market this week,” a trading source in Germany said.

Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe at €701.25 ($680.94) per tonne on Wednesday, down by €17.50 per tonne from €718.75 per tonne on Tuesday.

The latest calculation of the index was down by €38.75 per tonne week on week and by €67.08 per tonne month on month.

The index was based on buyers’ indications of an achievable price of €700-740 per tonne exw and offers reported at €650-660 per tonne exw and at €725 per tonne exw.

Sources are not ruling out further price drops during October-November unless more production cuts are announced.

Notably, one tubemaker suggested that during restocking in November deal prices for HRC could slide to €600 per tonne exw. But a producer claimed that, “with such a low price, at most, two to three steel mills will remain operational by the beginning of 2023.”

Fastmarkets’ calculation of its daily steel HRC index domestic, exw Italy was €707.50 per tonne on Wednesday, down by €7.50 per tonne from €715.00 per tonne on Tuesday.

The latest calculation of the Italian index was down by €36.96 per tonne week on week and by €55.00 per tonne month on month.

Offers from local steelmakers were reported at €720 per tonne exw. Bids for large quantities from tubemakers, stockholders and steel service centers were lower, at €680-700 per tonne exw, sources said.

Small tonnages of HRC were still traded at €720 per tonne exw, while transactions for hot-rolled sheets were reported at €760-780 per tonne exw.

Imports
Overseas HRC offers consolidated below €700 per tonne cfr, but European buyers were cautious about overseas bookings given long lead times and the downtrend in the domestic market.

“I’m not interested in import [HRC] bookings – their prices are too close to the domestic, lead times are quite long, and the European prices [for HRC] are dropping. So importing is too risky,” a tubemaker from Italy told Fastmarkets.

“I’m not booking anything with long lead times now. The market is too unpredictable,” a source at a service center in in Italy said.

HRC from Japan and Taiwan with early-first-quarter 2023 delivery was on offer at €670-680 per tonne cfr Italy, sources said. And HRC was on offer from an Indonesian mill at €650 per tonne cfr Italy, with bids at €625-630 per tonne cfr Italy.

Sources also reported a booking of 30,000 tonnes of HRC with end-of-fourth-quarter delivery from Egypt at €680 per tonne cfr done last week.

Published by: Julia Bolotova