Day: 31 October 2022

Tension caused by diverting views on coil prices between mills and buyers is persisting in the northwest European coil market. It is spawning some unusual north-south relationships and creating the idea of making slab an item of trade within the EU.

Mills are standing firm on clinging onto the threshold of €700/tonne ($696) for hot rolled coil offers, because it approximately defines the limit of breaking even on high production costs. “It is like on the stock market where brokers try to keep up a certain figure x,” the manager of a processor company finds.

And, “as soon as one gives in, the others will need to follow,” a service centre chief executive says, describing the atmosphere of tension. Speaking to Kallanish at the Euroblech trade fair in Hanover last week, he offered a theory for the particularly low-priced deals between Italian customers and northwest EU mills. The prevailing record-high energy prices might be particularly harmful to the cost structure of the typical Italian re-roller, meaning customers there get more competitive coil offers from north of the Alps.

Meanwhile, from the northern perspective, “mills can sell HRC to Italy for €700/t delivered, thus staying true to their nominal limit”, the manager says. This would net back to an ex-works price of some €650/t. That figure, however, is at best unofficial for domestic northern customers. Such offers are then labelled as “excess material” which does not differ from standard prime material. “It shows that mills are trying to use stories to justify the offer,” one observer quips.

Officially, one northern mill concedes €680/t, but will not admit values could go lower. “Below that, it would make more sense if we sold slab, rather than rolling it,” a mill source says. This could create an alternative market, now that slab imports from the traditionally preferred and competitive Russian/Ukrainian sources have become restricted.

Christian Koehl Germany

Players on the northwest European coil market have no hurry proceeding with talks for long-term contracts for 2023, given the prevailing insecurity and unusual lull in business for this time of the year.

Numerous political and economic factors are depressing business and spot market activity, and make it even more difficult to establish a formula for long-term pricing. The reference to prior contracts is virtually grotesque in view of the record leaps spot prices have seen in 2022 so far.

Still, one mill indicates it will try to continue the prices agreed in mid-year. “For existing H2 2022 contracts for automotive, we will aim for a rollover as a bare minimum as again we need to recover inflationary cost,” one manager tells Kallanish. Spot prices for hot rolled coil sunk below the mark of €900/tonne ($895) in July, but held above €800 still for some weeks. This level would have to compete in negotiations with current spot prices claimed by mills to be still at €700, but seen dipping to €650 by buyers.

A comparison will be even more difficult with this time last year, when the Ukraine war was largely unanticipated. According to the mill manager, the prices struck for 2022 HRC contracts had their low end at €1,000. That sounds credible, as spot prices at end-2021 had just undercut that mark. Moreover, contract prices are typically higher than the spot market to ensure long-term supply security.

While current spot prices are €300-350 lower year-on-year, the gap for contracts might be less pronounced. “I believe we will sign at €200-250 below last year,” the manager of a processor company opines.

On contract lengths, the mill manager says that “we are contemplating shorter-term agreements but also happy to discuss annual contracts with OEMs, where we will aim for an increase to recover some of the additional cost we incurred.”

Christian Koehl Germany

Kaltenbach.Solutions’ digital solutions for the steel processing industry and for machine manufacturers
are now also available in English and Spanish. By the end of the year, the languages Dutch and French
will be added. This is in response to increased demand from companies around the world that use both
Kaltenbach.Solutions hardware and software to make a wide range of work processes around machines
and plants transparent. With the help of digitization, sustainable goals such as increased performance
in processing and energy savings can be achieved in the next step.

Kaltenbach.Solutions is working intensively on internationalizing its products for machine
manufacturers and steel processors. As of this week, the digital platform Steelsuite is available in
German, English and Spanish. A Dutch and a French version are already being planned and Eastern
European languages will follow.

In response to the interest shown by international companies in the best practices of
Kaltenbach.Solutions, two inspection tours were organized at in October for steel traders from the
Netherlands and Spain. First, Valentin Kaltenbach traveled with a group of Dutch steel traders to F.
Hackländer GmbH in northern Hesse who has belonged to Carl Spaeter since 1908. Kaufungen near
Kassel is one of 19 locations where digital management of all operating equipment was introduced at
in 2021. Plant manager Thomas Schröder showed how the digital solution from Kaltenbach.Solutions
is used in day-to-day operations.

The following day, a delegation of managing directors from Spanish steel traders visited the Carl
Spaeter Group site in Hamburg. On site, authorized signatory Reyk Hagelberg, department manager
Stefan Thiel and warehouse manager Holger Behnke gave an insight into their digitalization project.
By measuring data-based information on the machines in the pre-processing department and the
subsequent display of current processes in clear graphics, transparency is also created here as the
basis for a sustainable increase in performance.

About us
KALTENBACH.SOLUTIONS GmbH strives for long-term cooperation with both the processing
industry and machine manufacturers and has set itself the goal of becoming a preferred partner.
As a full-service provider with decades of experience in the steel industry, it develops innovative
web- and AI-based industry solutions to improve performance in operations. Thanks to its deep
expertise, KALTENBACH.SOLUTIONS has succeeded in linking the world of machinery and
equipment with the digital world. This unique link guarantees measurable success for customers
worldwide and creates sustainable added value.

Press contact
Nicola Chlench
T +800 454 0 2345
marketing@kaltenbach-solutions.com
www.kaltenbach-solutions.com

En el siguiente enlace pueden acceder a la edición de Octubre de nuestra revista: INFOACERO

Destacamos a continuación algunos de sus contenidos:

• Opinión – Dña. Meritxell Serrano  – Junta Directiva  UAHE. 
• Evolución del Índice de Precios de Productos Siderúrgicos – UAHE
• Sector Metal: Informe de Coyuntura- Confemetal
• Información Asociativa:  Jornada UAHE, Madrid, 24 de Noviembre, Formación- Curso Técnicas de Venta (Aula Virtual).
• Siderurgia: Previsión sectores consumidores de acero- Eurofer-Informe 4º trimestre

Metinvest’s enterprises in Zaporizhzhia, Kamianske, Pokrovsk and Kryvyi Rih continue to produce and ship products to Ukrainian and foreign customers at different capacity utilisation levels, Kallanish notes.

The Pokrovske Coal unit, Unisteel, the Ingulets, Northern and Central GOKs, Kametsteel and Zaporizhstal all continue to work at different utilisation levels, based on safety, logistical and economic factors, Metinvest says.

However, output at Avdiivka has been halted because of the hostilities. Due to the occupation of Mariupol by Russia, the group cannot continue production at its entities there – Azovstal, Ilyich Steelworks, Mariupol Machining and Repair Plant, and the Mariupol branch of Metinvest-Promservice.

“Control over them [Mariupol units] and production can be restored only if the occupation ends and the city is returned to the Ukrainian government,” Metinvest says. “In addition, a detailed review of the technical condition of the Group’s assets in Mariupol and appropriate repair work will be necessary. Labour relations with employees of these enterprises are regulated and they have been offered employment options at other Group enterprises, particularly in Zaporizhzhia, Kryvyi Rih, Kamianske and Pokrovsk.”

According to the enterprise, the fight against theft by Russia, which is trying to ship 234,000 tonnes of Metinvest’s steel from Mariupol, is ongoing. “The Group has been making every effort to end the piracy and bring those responsible and their accomplices to justice,” it adds.

At the same time, the warehouses and distribution centres of Metinvest in Ukraine and other European countries still have steel products made by the group’s enterprises in Mariupol before the invasion began on 24 February. These products, with appropriate labelling and documentation, are available for sale, Metinvest points out.

Earlier, Metinvest chief executive Yuri Ryzhenkov said the firm is operating at 30-50% of its pre-war capacity (see Kallanish passim). The company also filed claims at the European Court of Human Rights (ECHR) against Russia for damages caused by Russia to its property and possessions in Ukraine.

Svetoslav Abrossimov Bulgaria

Poland’s competition authority, UOKiK, has raised objections to ArcelorMittal Poland (AMP)’s planned joint venture with rail welder and steel trader Moris.

After carrying out a detailed study of and collecting data from participants in the rail market, UOKiK found that the JV could lead to a significant reduction in competition in the domestic market for welded rail sales to end users. The new entity would also be the only supplier of welded rail in Poland, which could lead to increased prices for the product.

“The participants of the concentration are each other’s only significant competitors from the perspective of the end buyer of the rails. Our analysis shows the establishment of a joint venture may eliminate competitive pressure and, with high probability, result in an increase in prices for end users. The concentration may also limit the possibility of new suppliers entering the market,” UOKiK president Tomasz Chrostny says in a note seen by Kallanish.

The objections are not binding on UOKiK’s final decision. AMP and Moris have 14 days from 26 October to respond.

Adam Smith Poland