Day: 27 October 2022

Domestic prices for cold-rolled and hot-dipped galvanized coil dropped in Europe in the week to Oct. 26 due to low demand caused by combination of high stocks in the supply chain and a cautious end-consumer demand outlook.

Platts assessed North European CRC down Eur5/mt day on day and by Eur20/mt week on week, at Eur780/mt ex-works Ruhr.

Oct. 26. The assessment folllowed tradable values heard in the market.

Platts assessed HDG stable in Northern Europe at Eur820/mt ex-works Ruhr, down Eur30/mt week on week.

Market participants estimated achievable prices at Eur800-840/mt ex-works Ruhr — one source reported bids at sub-Eur800/mt ex-works Northern Europe.

“Nobody is really buying CRC,” a mill source said. “For HDG I think realistically the buyers would not pay much above Eur800/mt ex-works Northern Europe. But also, nobody is looking for big volumes. If someone needed it, they would have total control over the price as mills struggle to fill order books.”

Weak demand has been the main driver behind the negative trend in the European market. Distributors were reported to have high stocks of downstream coil booked earlier this year at higher prices, avoiding any restocking in the near term. Market participants expect that demand would not start to recover until first quarter of 2023.

Blast furnaces and downstream line production cuts have not been sufficient to bring balance to the market and tackle oversupply.

In addition, buyers have indicated that mills were able to give additional discounts on the recent decline of energy prices.

Platts assessed South European CRC down Eur10/mt on week, at Eur800/mt ex-works Italy Oct. 26, again following tradable value indications.

The assessment for domestic HDG in South Europe moved down by Eur20/mt week on week, to Eur820/mt ex-works Italy. Tradable value was heard at Eur800-830/mt ex-works Italy.

European steelmakers started negotiations with automotive customers for long-term contracts this week. So far, no agreement has been reached. Mills aim for fairly stable prices while automotive manufacturers target decreases of around Eur250-300/mt compared with previous contracts, driven by the declining spot market. Mills were also reported as looking to shorter-term contracts over yearly or half-yearly agreements due to market volatility.

Platts is part of S&P Global Commodity Insights.

— Maria Tanatar, Benjamin Steven

European domestic steel sections prices continued to soften on week to Oct. 26, as sources reported slow demand in the market.

Platts European medium sections price (category 1, S235 JR) was at Eur1,125/mt delivered Oct. 26, down Eur20/mt on week, according to S&P Global Commodity Insights data.

One European mill source cited transactions booked around Eur1,100-Eur1,150/mt delivered. The source noted that buyers were in a wait and watch mode. “But I think [electricity costs] are becoming more or less stable. So, I don’t think that prices for long steel products will move much lower in the near-term. In fact, we might even see some corrections in the upward direction,” he said.

“We might also see some restocking activity from customers so overall positive sentiment for the market,” he added.

One Benelux-based distributor source cited a tradable value for category 1 medium sections at Eur1,100-1,150/mt delivered Benelux. The source noted that demand was better for their market as better weather conditions and lower energy prices were creating positive sentiment and some projects were continuing. However, the source expected energy costs to increase during winter season.

Elsewhere, Northwest European domestic rebar prices also softened on week to Oct. 26, amid a lack of activity. Platts assessment of TSI Northwest Europe Rebar was down Eur6/mt to Eur860/mt ex-works on Oct. 26, according to S&P Global Commodity Insights data.

One European mill source indicated a workable level for domestic rebars in the Northwest European market at Eur875/mt delivered or even lower.

One seller source also indicated workable level at around Eur875/mt delivered or lower. However, he noted that buyers were only asking for prices but no one was placing any orders.

One European mill source noted that Eur875-Eur880/mt delivered levels made sense for Germany from local producers, as the Italian mill was offering rebars to Germany at Eur850-Eur860/mt delivered. The source added that some mills in the market might stop production soon for a while as inventory levels in the market were strong and buyers were holding back. In addition, with the upcoming winter season demand might be affected. The source expected prices to recover by the end of the year.

— Rabia Arif, Staff

The European long products market is seeing some signs of stabilisation after a prolonged period of downward pressure, according to steelmaker sources.

The latest measures implemented by policymakers in Europe have pushed gas price down to more sustainable levels, after the spike seen since the second quarter. “Uncertainty in our sector was driven mainly by the fear of energy costs and inflation; now, if energy prices stabilise, we could see a revival of large construction and infrastructure projects previously put on hold,” one steelmaker source observes.

Another issue impacting longs market sentiment in Europe has been destocking. Observers believe the destocking is now coming to an end. In Germany, for example, stocks of beams have reduced significantly, from over three months’ worth of sales to some 2 months.

Despite hopes for a normalisation of the market, sources believe a price increase is yet to be implemented firmly. According to Kallanish indices, rebar prices in northern Europe are continuing to trend down, but remain above the levels registered when the Russian invasion of Ukraine started in late February.

The market is in a similar situation in Italy, where prices nevertheless moved down more during recent weeks, thus widening the gap with northern European values. Still, European steelmakers explain that they are not making any Ebitda on sales of commodity grades at the current price levels.

In the coming weeks, the market is also expected to feel more impact from reduced supply from local steelmakers. One source notes that, with intermittent stoppages, his company cut production at electric arc furnace operations by some 20-25% in recent months.

Import arrivals have also slowed down somewhat. According to official data related to EU safeguard measures, during the first month of fourth-quarter quotas being available, only some 66% of rebar quotas have been used and 26% of wire rod quotas. In Q3, during the first month, almost 80% of rebar quotas were used and some 46% of wire rod quotas.

Emanuele Norsa Italy

Steelmaking decarbonisation will lead to scrap trade restrictions, resulting in “scrap wars” that will significantly lift prices of the feedstock and impact Turkish mills’ competitiveness, KPGM says in its “Steel Industry Outlook – 2022” report.

The consultancy predicts the trend of steel production from scrap, in line with the global zero carbon target and the tendency of China, the USA, EU and Russia to keep their own scrap in their domestic markets may cause significant price increases in the coming years.

This situation may negatively affect Turkey’s competitiveness and cause problems in Turkish steel production, the report says. “We expect the importance of scrap to increase with the green economy, while scrap wars as a new version of trade wars will be on the agenda in the coming years.”

“The steel sector is one of the most prominent sectors in the fight against climate change due to its high carbon emissions during production,” KPMG Turkey metal and mining sector head Burak Yıldırım is quoted as saying by local media. “There are basically two types of technologies used in steel production. The first of these is ore-based production in basic oxygen furnaces. High carbon emissions occur in this production. The second type of production is scrap based production in electric arc furnaces. In this production, very low emissions occur when steel is produced from scrap.”

In this context, Yıldırım says the most viable way to reduce emissions in the short term seems to be to shift from ore-based production to scrap-based production, Kallanish notes.

“Turkey mainly has a technology that produces cleaner iron and steel, and our emission rates are lower. Although this situation seems to be a serious advantage for Turkey, Turkey is not an economy that can produce enough scrap like developed economies and imports almost 80% of the raw material used in production. In this sense, Turkey is an import-dependent country and the supply shortage in scrap may destroy our technological advantage. It has become a necessity for us to focus on how we can increase raw material sources and diversity. At the same time, new markets will need to be well defined,” Yıldırım concludes.

Burcak Alpman Turkey

Ford in Europe has announced further steps to secure supply of low-carbon steel for its future products and help reach its carbon neutrality target by 2035.

The carmaker has signed memorandum of understandings (MoUs) with its strategic suppliers, Salzgitter Flachstahl, Tata Steel Nederland and thyssenkrupp Steel Europe, to secure supply of low-carbon steel.

As a first application, Ford plans to use the low-CO2 steel for the production of its all-new, all-electric, medium-sized crossover vehicle, starting in 2023, the carmaker tells Kallanish. The cars will be assembled at the Cologne Electrification Centre from 2023.

Ford says it targets carbon neutrality across its European footprint of facilities, logistics and suppliers by 2035. To reach this, it is analysing the whole value chain. Major updates to the Cologne Electrification Centre, with new energy efficient solutions, will save more than 2,000 tonnes of CO2 and more than 2,600 MWh of electric energy per year, it claims.

Tata Steel Nederland, in a statement of its own, notes that Ford will be the first customer committed to offtake the green steel that Tata Steel plans to produce via the hydrogen route, which is labelled with the brand name Zeremis.

Christian Koehl Germany

Eurofer slashes demand outlook, 2023 deteriorates significantly

Eurofer has slashed its demand outlook for the European steel industry for both this year and next. The association now expects apparent steel demand to contract also in 2023.

According to its latest report issued this week, Eurofer expects apparent steel demand to move down 3.5% year-on-year in 2022 and 1.9% y-o-y in 2023. In August, when the previous report was published, the outlook predicted a drop of 1.7% y-o-y this year, followed by a strong recovery of 5.6% in 2023.

“The positive trend seen in apparent steel consumption throughout 2021 came to an end in the second quarter of 2022, due to the impact of ongoing disruptions linked to the war in Ukraine, poor demand outlook and severe rises in energy prices and production costs. All these downside factors are expected to weigh even more in the second half of 2022 up to the second quarter of 2023 included, as a result of the prolonged effects of the war in Ukraine,” Eurofer explains in a note sent to Kallanish.

“Apparent steel consumption is set to decrease also in 2023, albeit at a lower rate, as demand from steel-using sectors is expected to remain severely subdued, at least until the second quarter of 2023. These developments are conditional on the evolution of energy prices and the Russia-Ukraine war – which are unforeseeable at the time of writing – and its impact on global supply chains,” the association adds.

The negative correction in 2022 demand would be the third registered during the last four years, taking apparent consumption in Europe back to 145 million tonnes, the level registered in 2019.

As demand remains under pressure in Europe, available data indicate that import activity has been higher than in 2021 during the first eight months of 2022. Nevertheless, the trend is slowing down significantly as the year progresses.

In Q2, total steel imports into the EU rose 1.6% y-o-y, after a jump of some 28.5% y-o-y in Q1. During the first eight months of the year the European steel trade deficit was of 2.1 million tonnes/month on average; in 2021, the full-year trade deficit reached 1.5m t/m on average.

Emanuele Norsa Italy

German scrap prices increased in some parts of the country this month, according to local scrap market participants. Most sources continue to expect the market to be very sluggish in November, with sales low and customers adopting a wait-and-see attitude. The main reason for this remains high energy costs and low purchases by steel mills.

Prices in some parts of Germany have increased only for old scrap by €5-10/tonne ($4.9-9.7/t), a buyer tells Kallanish.

Nationwide average prices for old thick scrap sort 3 are at €360/t. The price for new scrap sort 2/8, meanwhile, fell to €350-360/t. E40 shredded scrap has reached €370/t.

In Austria, scrap prices also changed in October depending on the sort. Old thick scrap sort 3 increased to €360/t but new scrap sort 2/8 fell to €355/t.

“There were some exports to Turkey and Italy, but the volumes were again very low,” another merchant notes. “In Germany, prices increased slightly only for old scrap, which is more in demand. Downward pressure weighed primarily on new scrap, which is hardly in demand from flat steel producers due to the lack of new orders from the automotive industry.”

This month, German steel recyclers federation BDSV said skyrocketing electricity and gas prices in Europe pose major challenges for steel recycling and jeopardise the ambitious goals of climate neutrality and circular economy in Germany and at EU level (see Kallanish passim).

BDSV also urged more scrap transport by rail due to the ongoing logistics problems on road and waterway routes in Germany.

Most participants in the German scrap market expect prices to continue to be sluggish in November due to the same reasons like this month – high energy prices and low demand. This is causing great uncertainty among steel manufacturers.

Svetoslav Abrossimov Bulgaria

Demand in the Northern European steel rebar market remained depressed in the week to Wednesday October 26 amid weak end-user consumption and a continued wait-and-see attitude among buyers.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €850-920 ($852-922) per tonne on Wednesday, down by €30-65 per tonne from €915-950 per tonne on October 19.

Mills offered significant discounts to stimulate market activity. But low demand and an uncertain outlook resulted in little trading activity.

“Demand is very poor. This is causing downward pressure on prices. There is a small window where price could drop further, however it cannot go down too much and remain profitable for producers to keep producing,” a buyer source said.

While there is still a considerable number of construction projects in development in the public and infrastructure sectors, many projects have been postponed due to a lack of labor force and high costs for building materials.

Demand has dramatically fallen in the private housing sector as many projects have been cancelled, sources said.

Despite falling prices, market activity has not picked up. With so few transactions taking place, it has become difficult to gauge a market price, Fastmarkets heard.

“Producers are talking prices down but no one is buying. You can say the price is €600 per tonne but no one is buying so it’s not really the price,” a second buyer source said.

“If prices keep dropping there will be more activity. Prices are still comparatively high and so mills may have to drop prices further,” the second source added.

Despite energy costs stabilizing over the last fortnight, energy prices are expected to surge toward the end of the fourth quarter as demand for energy rises.

If demand does not pick up but energy costs surge again, mills may cut output further, Fastmarkets heard.

The market is not expected to recover for the remainder of the year, sources said.

International scrap prices impact the price of all long steel products. Scrap prices have stabilized through mid-October.

Fastmarkets’ daily calculation of the index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was €351.83 per tonne on Wednesday, down from €365 per tonne a week earlier.

Published by: India-Inés Levy

Eurofer, the European association of the steel industry, has forecast steel demand in the EU to drop by 3.5% to 145 million mt in 2022, owing to a deeper-than-expected recession caused by the continuing worsening of the EU economy following Russia’s invasion of Ukraine and the energy crisis.

Earlier this year, the association had forecast steel demand to drop by 1.7% in 2022.

In an Oct. 26 report, Eurofer cited that negative demand was expected to continue for at least the first half of 2023, posting a drop of 1.9% year on year to 142.4 million mt of steel products.

Although consumption rebounded after 2021 with an increase of 16.3% post-pandemic, the positive trend in steel demand came to an end in the second quarter of 2022 owing to a drop of 4.8% to 38.6 million mt.

According to the association, 2022 and 2023 would mark the third and fourth respective years of recession for steel consumption in five years.

“All downside factors have remained in place and even exacerbated, especially skyrocketing energy prices, which lead to unbearable production costs,” Eurofer Director General Axel Eggert said in the report.

“This has entailed a further cut in apparent steel consumption and a significant downward revision of steel-using sectors’ output in the EU for the remainder of this year and supposedly for the first half of next year,” he said, adding that Eurofer was still worried about the “persistent high level of distortive steel imports into the EU.”

Although imports into the EU continued to grow, albeit at a slower pace, in the second quarter at 1.6%, they were significantly down from 28.5% in the first quarter.

EU steel-using sectors

Steel-using sectors had proved to be more resilient in Q2 than initially thought, owing to the carry-over effect of 2021’s post-coronavirus rebound of 8.4%, Eurofer said in the report.

However, the Russia-Ukraine war and consequential energy price increases are likely to impact the end of 2022 and at least Q1 2023, the report added, with steel-using sectors’ output in 2023 expected to fall by 0.9%, compared with the previous forecast of a 2.2% increase.

Among the main steel-using industries, positive developments were recorded in the construction, mechanical engineering, and transport sectors, and particularly in the automotive sector, in which growth of 1.9% was expected for 2022.

The association revised its forecast for the construction sector upward, with a growth of 5.6% expected in 2022, compared with 5.3% previously, due to bullish developments in H1.

However, this trend was expected to ease over the forthcoming quarters due to the impact of rising construction material prices, easing growth in construction and low supply.

Eurofer said growth in construction output was set to lose speed in the coming quarters of Q4 2022 and Q1 2023, with full-year 2023 construction activity to fall by1%.

Rebar prices, the main steel product used in the construction sector, have seen a large drop in prices since March 2022, it said.

According to Platts, part of S&P Global Commodity Insights, the weekly Northwest Europe rebar ex-works price moved from Eur809/mt at the beginning of January to Eur1,264/mt at the end of March, before falling to Eur865/mt on Oct. 19.

After a severe slump of 18% in 2020 due to the coronavirus pandemic, automotive output rebounded by 3.3% in 2021. However, Eurofer expected the production to drop again, albeit at a moderate pace, in 2022, revising its forecast to a 1.7% drop from 0.5% previously.

The automotive sector was forecast to see moderate growth of 1.1% in 2023, according to Eurofer, although this was based on “that war-related disruptions and uncertainty will ease substantially as a result of an improved economic and industrial outlook,” it said.

Platts assessed hot-rolled coil, the main steel products used in the automotive industry, in Northwest Europe stable day on day at Eur650/mt ($648.38/mt) ex-works Ruhr Oct. 25, although it has dropped Eur272/mt since the beginning of the year.

— Annalisa Villa

The merger of NLMK DanSteel and NLMK Belgium Holdings has been formally concluded following the EU approval Oct. 11, the steel plate producer said Oct. 25.

With its integration with NLMK DanSteel, NBH said it is expanding its European plate business and aims to become a premium steel supplier of plate products for the wind energy industry in the continent.

“The integration of DanSteel reinforces our presence in the wind industry sector — a particularly important and growing segment of renewable energy, and enables NBH to additionally contribute to global efforts for the transition to a less carbon-intensive society,” NBH CEO Ben de Vos said.

“We are very excited to have DanSteel in the perimeter of Belgium-based NBH. This will complement the capabilities of the Plate Division in serving the European industry with one of the most comprehensive product portfolios,” CEO of DanSteel Igor Sarkits said.

Platts assessed heavy plate in Northern Europe down Eur10/mt at Eur1,040/mt ex-works Ruhr.

NBH is a joint venture primarily between SOGEPA at 49% and NLMK with another 49%. It is comprised of various steel production facilities, service centers and distribution centers.

The Strip Products Division includes NLMK La Louvière (Belgium), NLMK Strasbourg (France) and NLMK Manage Steel Center (Belgium). The consolidated Plate Products Division includes NLMK Clabecq (Belgium), NLMK DanSteel (Denmark) and NLMK Verona (Italy).

The consolidation of DanSteel extends the JV’s Plate Division footprint to three production facilities in Europe.

DanSteel has a strategic portside location in Denmark and is a key supplier of XXL dimensioned, wide and thick heavy plates.

— Annalisa Villa