Day: 24 November 2022

European prices for cold-rolled and hot-dip galvanized coils dropped further in the week to Wednesday November 23, with buyers in southern Europe opting for competitive imports instead, Fastmarkets heard.

CRC
Insufficient demand from the automotive sector as well as still-high stock levels at both steel service centers and stockholders continued to limit buying interest for cold-rolled coil in Europe.

In addition, a source said that buyers believe CRC prices in Europe have yet to find a bottom and have therefore postponed purchases.

CRC offers from mills in Southern Europe were at €750-770 ($771-791) per tonne delivered during the assessment week. This nets back to €720-730 per tonne EXW, the source said.

Fastmarkets’ weekly price assessment for steel cold-rolled coil, domestic, exw Southern Europe was €720-730 per tonne on Wednesday, down by €30-40 per tonne from €750-770 per tonne a week before.

Apart from weak demand and overstocking, CRC prices in Southern Europe have also come under pressure from competitive overseas offers, sources said.

Offers for CRC with January-February shipment from Vietnamese and South Korean suppliers were reported at €650-670 per tonne CFR Southern Europe, with bookings reported within that range, sources said.

Southeast Asian mills, however, have reportedly withdrawn from the market since late last week and are considering price increases.

Fastmarkets’ assessment of the price for steel cold-rolled coil, import, cfr main port Southern Europe was €650-670 per tonne on November 23, widening downward by €5 per tonne from €655-670 per tonne the week before.

HDG
HDG offers from mills in Southern Europe were heard at 730-750 per tonne EXW during the week.

Market sources said that generally, some buyers feel the need to restock, but they would like to wait for the price to hit its lowest point before restocking for the first quarter of 2023.

Fastmarkets’ weekly price assessment for steel HDG, domestic, exw Southern Europe was €730-750 per tonne on November 23, down by €20 per tonne from €750-770 per tonne the previous week.

Offer for 0.5 mm HDG with zinc coating 100 g/m2 from Vietnam were heard at €775 per tonne CFR Southern Europe. Several sources reported a booking at that level during the assessment week.

Published by: Julia Bolotova

The Spanish government has awarded €17.1 million ($17.7m) to ArcelorMittal within the compensation mechanism for indirect costs attributable to greenhouse gas emissions reflected in the price of electricity, Kallanish learns from the country’s Ministry of Industry, Commerce and Tourism.

“The competitiveness of the large industry is one of the priorities on the government’s agenda, in addition to guaranteeing a competitive energy price,” says Minister Reyes Maroto. “This grant shows the government’s commitment to reinforcing the industrial capacities and employment of a key sector in Spain, at a time when it is necessary to increase the weight of the industry to accelerate the economic and social recovery.”

Total support for energy-intensive industry amounts to €244m, of which the steel sector has a 37.5% share and the aluminium industry 15%.

The aid is part of the Spanish energy support package for large industries, including compensation for electricity bill charges, intended to finance renewables and high-efficiency co-generation and direct aid to gas-intensive companies. The mechanism also aims to reduce 80% of the cost corresponding to access tolls for electricity transmission and distribution networks.

Todor Kirkov Bulgaria

Logistics now constitute up to 40% of the final cost of Severstal products due to the cessation of export supplies to Europe and reorientation to new markets, the company confirms to Kallanish.

“Today, we have a very competitive product, but in the absence of export sales to Europe and forced sales to Southeast Asia and neighbouring countries, logistical costs range from 20% to 40% of the cost of the final product,” Severstal chief executive Alexander Shevelev said at the RBC.TECH plenary session. “Currently, Severstal supplies 80% of its products to the Russian market and 20% goes for export.”

Russian steelmaking capacity is 70 million tonnes/year but the domestic market consumes only 40m t/y, he added.

According to Shevelev, the main task is to find sales markets for products that cannot be sold domestically. “We need to effectively export about 30mt of products, otherwise we will have to significantly stop production and dismiss personnel, and this is an increase in costs with all the ensuing social consequences,” he explained.

Other significant obstacles for Russian steelmakers are limitations to modernising technology due to Western sanctions against Russia, limited seaborne exports and the strong rouble, Shevelev observes.

Severstal previously said that the main blow to its sales structure for high value-added products occurred due to the loss of Europe as a key sales market – over 30% of sales went there in 2021 (see Kallanish passim).

Severstal supplied galvanized steel and thick sheet to the European market and now predicts it will probably need from 3-5 years to restore the share of deliveries of products for export.

It noted nevertheless that Russian steel consumption in 2022 is expected to decline by only 2-4%. Severstal considers the construction of housing and industrial facilities based on a steel frame to be the most promising direction in Russia.

Svetoslav Abrossimov Bulgaria

The plants of Acciaierie d’Italia (ADI), formerly known as Ilva, have been engulfed in another workers’ strike this week.

On 21 November, workers in Taranto went on strike for 24 hours and are planning more action to protest against the perceived lack of government support for the steelmaking joint venture. They are calling for swift state intervention to nationalise the steelmaker, union sources confirm to Kallanish.

“In March, the company said it would ramp up output to 5.7 million tonnes; we are now at slightly over 3mt,” the UILM union say in a note denouncing the “dramatic situation”. The steelmaking plant in Taranto is only working with two blast furnaces while almost all finishing lines remain idle. Workers are asking the government to respect its initial commitment and inject cash into the company to make ArcelorMittal a minority shareholder, sources say.

Amid a liquidity crisis, ADI’s management recently decided to suspend its use of contractors. This, on top of almost 3,000 workers being temporarily laid off, is putting in doubt production continuity. The steelmaker is said not to be paying many of its debts.

The Italian government will inject some €1 billion ($1.03 billion) into the troubled steelmaker, economic development minister Giancarlo Giorgetti announced in August. The funds will be released thanks to a decree called “Aiuti Bis” prepared by the economic development ministry (Mise) to save the company (see Kallanish passim).

Troubled by financial hardship, the funds are becoming necessary for ADI’s survival, multiple sources confirm.

Invitalia signed an agreement in May with joint venture partner ArcelorMittal to delay the completion of its acquisition of a majority stake in ADI. According to the 2020 agreement between the two parties, Invitalia invested the first tranche of €400 million last year in AM InvestCo, the ArcelorMittal subsidiary that agreed to purchase the former Ilva plant. This provided Invitalia with joint control over AM InvestCo.

The second tranche of up to €680m was due to be paid on the closing of AM InvestCo’s purchase of Ilva, the deadline for which was end-May 2022. This would have raised Invitalia’s shareholding in AM InvestCo to 60%, giving it control over ADI. The payment of the second tranche has however been postponed to 31 May 2024 (see Kallanish passim).

In 2021, ADI posted turnover of €3.3 billion, up from €1.6 billion in 2020. Last year, the company produced 4.1 million tonnes of crude steel, an increase from 3.4mt in 2020.

Natalia Capra France

Salzgitter has secured post-2025 supply of 50 MW/year of wind-generated electricity for 15 years to power its carbon-neutral steel production due to begin on scale from the mid-2020s, the German steel group said Nov. 23.

Steel coil, strip and sheet rolling mill Salzgitter Flachstahl signed a corresponding power purchase agreement with German energy company EnBW.

The 900 MW He Dreiht offshore wind farm in the North Sea that is due to come online at the end of 2025 will supply Salzgitter’s production of green hydrogen, which will be used to make carbon-free steel.

In October 2022, the European Commission approved a Eur1 billion fund to help Salzgitter Flachstahl decarbonize its steel production, including through the construction of a 100 MW electrolyzer, which will produce 9,000 mt/year of green hydrogen. The electricity Salzgitter has committed to purchase from EnBW is meant for that plant.

The agreement further safeguards the steel company’s transformation program, called SALCOS, or Salzgitter Low CO2 Steelmaking. The project’s first implementation stage represents an investment of Eur700 million ($725.31 million), the largest since the steel producer’s listing in 1998.

Producing green hydrogen using sustainably generated energy is a core element of SALCOS. Salzgitter, which embarked on research into the use of hydrogen in steelmaking in 2016, plans to switch its steel production to hydrogen-based processes from end-2025 and become carbon neutral by 2033.

The amount of power Salzgitter has secured — 50 MW/year or 438 GWh/year — could suffice to feed the production of only 6.5% of the 1.9 million mt/year of carbon-neutral steel that the group has targeted, as production of a metric ton of steel may need about 90 kg of hydrogen and generating a kilogram of hydrogen needs roughly 39 kWh power.

To make all 1.9 million mt with zero carbon emissions, the company will need roughly 6,670 GWh, or 6.67 TWh, of renewable energy, the equivalent of 1.3% of German annual power demand at this point, S&P Global Commodity Insights estimates.

Salzgitter has become the third big off-taker for He Dreiht wind farm, which is being built without state funding, according to EnBW board member Georg Stamatelopoulos. “PPAs are a key element of the energy transition as they secure the necessary investment while also enabling energy-intensive companies to achieve ambitious climate targets,” he said.

The other significant PPAs that EnBW has secured for He Dreiht comprise the ones with Frankfurt Airport operator Fraport and major German chemicals company Evonik.

However, the final investment decision concerning the construction of this farm is yet to be made, something EnBW plans to do in 2023.

Salzgitter has been a partner for the renewable energy sector for several decades now having become a full-line steel supplier to the industry. Its Ilsenburger Grobblech mill has been manufacturing heavy plates for onshore wind farm projects since 1996 and increasingly for the offshore market since 2010.

Steel pipes are another product the group makes specifically for wind turbines, including precision pipes for nacelles and large-diameter pipes for farm substructures.

Platts, part of S&P Global, assessed domestic hot-rolled coil prices in Northern Europe at Eur610/mt ($632/mt) ex-works Ruhr Nov. 22. The assessment was down Eur5 on the day and by a third since the start of 2022.

— Ekaterina Bouckley, Andreas Franke

Global crude steel output was unchanged year on year in October 2022 at 147.3 million tonnes the World Steel Association (Worldsteel) said Tuesday November 22.Output in October decreased by 2.84% to 147.3 million tonnes from 151.6 million tonnes in September, according to the association’s corrected monthly statistics.

In October, steel production in Asia and Oceania, the Middle East and Africa increased. Output in Europe, the Americas, Russia with Commonwealth of Independent states and Ukraine decreased from the same month last year.

A double-digit increase in output from China and moderate increases in India and Iran were offset in October by similar double-digit output decreases from Turkey, Germany, South Korea, Russia and Japan. Production in the US and Brazil declined slightly.

In the first 10 months of the year, world crude steel output decreased by 3.9% from a year earlier to 1.55 billion tonnes, with all regions except the Middle East contributing to the cumulative contraction.

At the same time, out of the 10 largest steel-producing countries, only India and Iran achieved a year-on-year increase in January-October output. All the other countries registered decreases in output, with Turkey recording the largest drop.

Outlook
Interest-rate rises to combat global inflation, Russia’s invasion of Ukraine, China’s economic downturn and resurging cases of Covid-19 have all hit yearly steel production results.

According to Worldsteel’s short-term outlook, steel demand will contract by 2.3% in 2022 to 1.7967 billion tonnes after it increased by 2.8% in 2021. In 2023, it expects steel demand to recover by 1.0% to 1.8147 billion tonnes.

China
Steel output in China decreased in early November due to multiple outbreaks of Covid-19 and subsequent lockdown restrictions.

Market participants expect rebar demand to stay weak for the rest of 2022 because investment in the real estate sector continues to fall. In October, Chinese margins for producers were reportedly at or below breakeven.

India
Steel production in India, the world’s second-largest steelmaker, has increased in the first 10 months of 2022, rising by 6.1%.

The removal of India’s export duties on steel and steelmaking raw materials, effective November 19, should boost exports but weak demand from major foreign outlets may limit steel output growth opportunities.

Japan
Reduced output of crude steel so far this year in Japan mainly reflects weak demand from downstream industries such as automotive, construction and shipbuilding.

Japan’s government has asked companies and households to conserve electricity from December 1 until March 31 next year amid fears of a power shortage given that Japan is heavily reliant on energy imports. The likely outcome is that weak demand will persist and that steel production in December will fall.

United States
Worldsteel expects crude steel production in the US to fall, with mills operating at an average capacity utilization rate of 73-73.5% in November.

At the same time, some US steelmakers are bullish for 2023.

South Korea
Domestic steelmakers Posco and Hyundai Steel are likely to recover completely from typhoon-related production cuts in the first quarter of 2023.

Still, prolonged labor strikes may weigh further on November steel output.

Germany
Crude steel output in Germany continued to decline year on year in October 2022, marking the eighth consecutive month of decline.

Output was lower due to several recent steel production cuts announced by German mills to balance the oversupplied steel market, especially in the flat steel market.

Sluggish end-user consumption and a pessimistic outlook subdued market activity but producers expect price increases ahead of holiday closures.

Turkey
In October, steel output from Turkey fell by 17.7% year on year, marking the largest monthly decline out of the 10 top steelmaking countries.

Reduced capacity utilization in Turkey was due to continued rises in energy costs as well as overall weak demand for finished steel, which is not set to improve in the coming months.

Due to a lack of finished steel sales, some mills were reportedly keeping their production lines idle, either running maintenance or planning to do so soon. Other mills either reduced operating hours or worker shifts.

Brazil
The end of the year is usually the seasonal weak season for demand in Brazil, with the country’s productivity this month possibly affected by the Qatar 2022 World Cup, which started on November 20.

Iran
Iran usually suffers from a shortage of natural gas during winter, which affects steel output. This seasonal shortage has not started yet but is likely to come in December of this year or January next year.

Ukraine
Out of all steel-producing countries, Ukraine’s output and exports of raw materials and steel products registered the largest decreases, due mostly to its war with Russia.

In January-October, steel output in Ukraine was 5.84 million tonnes, while pig iron output was 5.81 million tonnes, a 67% year-on-year reduction.

The continued production of metals in Ukraine has been thrown into question following Russia’s largest missile attack to date on the country’s energy infrastructure in November.

Published by: Elina Virchenko

Subdued demand and a depressed outlook continued to inhibit activity in the Southern European rebar market in the week to November 23, with little expectation of any change before 2023, sources told Fastmarkets.Italy
Slow consumption and persistent overstocking by buyers has resulted in weak market conditions in the Italian rebar market, sources told Fastmarkets this week.

Fastmarkets price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €810 – 860 ($838-890) per tonne on Wednesday up by €25-35 per tonne from €775-835 per tonne on November 16.

The price floor has been reached, sources said, and with energy costs rising toward the end of the fourth quarter, mills cannot drop prices any further without reaching their cost lines.

The added that discerning tradable price levels has become difficult due to the fact so few trades are occurring and demand is very depressed.

“The demand is very, very low,” a buyer source in Italy told Fastmarkets.

Another trader source said: “Buying is [limited] and customers don’t believe in new [price] increases. The economic indicators are not so good and so the sentiment for the future is not optimistic. We expect low demand for December and for the first quarter of 2023.”

Mills could cut production earlier than usual over the winter holiday period to manage the supply-demand balance, Fastmarkets understands.

“Producers are already starting to announce longer production stoppages for the Christmas period,” a buyer source said.

But customers are not buying regardless of price levels due to weak end-user consumption and it remains to be seen when, and to what extent, demand levels will recover, sources told Fastmarkets.

Spain
Slow demand and a pessimistic attitude among buyers resulted in few trades taking place in the Spanish rebar market, sources told Fastmarkets this week.

And the lack of consumption led most market participants to the view that a price floor has been reached.

“Prices are likely to be very close to the bottom because the energy market is so volatile,” a trader source in the region said. “New energy price hikes are likely and that is making mills cautious.”

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain was €730–760 per tonne on Wednesday down by €45-75 per tonne from €775-835 per tonne last week.

International scrap prices affect the price of all long steel products and have remained relatively stable through October and early November.

Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $344.65 per tonne on November 23, up from $338.71 per tonne last week.

Published by: India-Inés Levy

European domestic steel sections prices continued to weaken in the week ended Nov. 23 amid persistent weak demand.

Platts assessed European medium sections (category 1, S235 JR) down Eur50 at Eur1,025/mt delivered on Nov. 23. The assessment has fallen Eur225 since mid-September.

“We consider the workable level to be more like Eur1,040-Eur1,050/mt delivered, but some of our competitors are more in the Eur1,020-Eur1,030/mt delivered level with some sporadic deals,” a Europe-based mill source said. “Demand is very low and customers are not in a hurry due to the year end but stock levels are also very low so we expect some restocking in the new year.”

The same source said the recent price correction had been larger than the recent fall in energy costs, and therefore the source expected prices would not go down further.

“[The] expectation is that energy prices will be up in the winter,” the same mill source added.

A second Europe-based mill source cited a seller target for medium sections (category 1, S235 JR) at Eur1,080/mt delivered, but accepted that demand was very low.

One distributor source in the Benelux region cited a tradable value for category 1 medium sections at Eur1,000/mt delivered and slightly lower, despite offers around Eur1,040/mt delivered and higher.

Meanwhile, Northwest European domestic rebar prices also fell amid poor demand. Platts assessed TSI Northwest Europe rebar down Eur15 on the week to Eur785/mt ex-works Nov. 23.

“We’re expecting a further downtrend as we’re not buying and neither are our competitors and our own order intake from end users is very weak,” the distributor source said.

Market sources largely suggested Eur800-Eur820/mt delivered was workable for rebar in Northern Europe, but one Italy-based mill source indicated that rebar prices around Eur785/mt delivered Germany were also possible from one German domestic producer, but this level was not repeated by other market participants.

“In Germany, there is not a lot of demand and the market is frozen,” the Italy-based mill source said.

Platts is part of S&P Global Commodity Insights.

— Viral Shah

Although participants reported bullish expectations for the automotive sector in 2023, the European downstream coil market continued on a bearish trend on the week, with competitive domestic offers reported Nov. 23.

Cold-rolled coil remained a problematic product for domestic mills, with prices driven lower on poor demand. Domestic offerings were heard below import prices. Platts assessed North European CRC down Eur20 on the week at Eur710/mt ex-works Ruhr.

The South European market showed a similar decline, with Platts assessing the price in that region at Eur700/mt ex-works Italy, down Eur20 on the week.

Galvanized coil in Northern Europe fell Eur30 on the week to Eur740/mt ex-works Ruhr, while South European prices fell Eur25 to Eur725/mt ex-works Italy.

While traders reported difficulty in securing volumes due to the effective parity between domestic and import offerings, sentiments were not overly bearish due to buyers’ expectations for a domestic price increase.

Market participants witnessed some restocking in the Italian market week beginning Nov. 21, with the expectation that domestic prices would rise in the near-term. Traders held this as a bullish indication for near-term demand, as buyers considered locking in cheaper forward material against a potential uptrend.

Sentiments in the North European market were more tied to prospects of the automotive sector, which was in negotiation with European mills for long-term contract settlements.

As the sector has not been taking volumes at traditional levels, producers more exposed to automotive trade were offering particularly aggressively on downstream products.

However, while automotive demand was not quite at desired levels for mills, a mill source was more optimistic for performance in 2023.

“Semiconductors aren’t as big an issue anymore, and OEMs have a relatively strong pipeline and supply chain,” the source said. “The weekly consumption or orderbook is at a pretty good level – it suggests that underlying demand is there so in many ways we’re confident looking forward to next year.”

The same source said that current volumes were relatively stable and strong through November-December for automotive and other customers.

“2023 won’t set any records, but expectations are positive,” the source added.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven

The IJmuiden steelworks of Tata Steel Nederland ranks 3rd in the 2022 CO₂ intensity benchmark published by the World Steel Association, the international trade body for the iron and steel industry. The site has been among the best 10% since 2013 and this is the 3rd consecutive year that it has scored a top-5 position. The ranking is a clear recognition of the importance Tata Steel attaches to process optimisation.

Tata Steel has been working for years to reduce its CO₂ emissions. The CO₂ intensity of the steel produced in IJmuiden is around 7% below the European average and almost 19% below the global average. 

“I am proud that we are once more recognised as one of the most CO₂-efficient steelworks in the world and I would like to share this recognition with all our people, contractors, suppliers and customers,” says Hans van den Berg, Chairman of the Board of Management of Tata Steel Nederland. “While steel is an essential part of our daily lives, we are not blind to the impact of our activities. We invest significantly to further reduce the impact of our IJmuiden operations on our neighbours and the environment. Our recently launched climate strategy represents a new level of ambition, which revolves around green, clean and circular steel production.”

Tata Steel Nederland aims to be completely CO₂-neutral by 2045. CO₂ reduction measures are being implemented across Europe. The site in Naantali, Finland, for example, is the first within the company to have CO₂-neutral operations (for scope 1 and 2), while the new plant in Geldermalsen, the Netherlands, already runs entirely on electricity.

The company also plans to switch to green hydrogen-based steelmaking at its IJmuiden steelworks. It targets to commission its first direct reduction plants and electric furnaces by 2030, becoming a producer of large quantities of high-quality green steel and reducing its CO₂ emissions by 35-40%.

Since the announcement, a great deal of progress has been made on the design phase. In August, McDermott, Danieli and Hatch were awarded the contract for the basic engineering and technical project management. Tata Steel Nederland recently also signed a memorandum of understanding with Ford in Europe to supply the car maker with Zeremis^® green steel once the IJmuiden steelworks switches to green hydrogen-based steelmaking.

Source: Tata Steel Press Release