Day: 28 November 2022

Bowim’s sales fell in the nine months through September as the market deterioration from the second quarter hit business. Higher prices boosted revenue but increased costs dented profitability, Kallanish learns from the Polish distributor.

Consolidated steel sales dropped 5% on-year in January-September to 385,238 tonnes. Although sheet sales fell only 1% to 148,390t, pipe and tube deliveries dropped 6% to 69,894t and rebar sales plunged 23% to 50,942t. Sections sales however rose 9% to 50,185t.

Rising inflation, higher interest rates and the repercussions of the Ukraine war started to impact the steel market in the second and third quarters, resulting in a downward demand and price correction. This was behind Bowim’s reduced volumes.

Despite the lower volumes, nine-month revenue rose 33% to PLN 2.2 billion ($487.8 million) thanks to higher sales prices. However, net profit dropped 24% to PLN 110.4m due to higher operating costs.

Imports accounted for 28% of Bowim’s purchases in the nine months versus 25% a year earlier.

Adam Smith Poland

Southeast Europe (SEE) crude steel production decreased in October compared with the same month last year, according to the latest worldsteel data monitored by Kallanish. Regional output amounted to 385,700 tonnes, down by 7.8% year-on-year.

However, output was more than in September, when SEE production was 368,602t (see Kallanish passim).

In January-October, regional production was flat on-year at 4.02 million tonnes.

Serbia was again the largest steel producer among the seven countries of SEE, which also include Bulgaria, Croatia, Slovenia, Bosnia, North Macedonia and Moldova.

Serbia’s production of crude steel totalled 1.44mt in January-October, up by 13.4%.

Second-largest producer in the region Bosnia and Herzegovina saw crude steel output almost flat on-year at 750,000t.

Third-largest steel producer Slovenia saw ten-month production drop by 6.8% at 524,560t.

Fourth-largest Bulgaria’s production was flat on-year at 488,100t.

Fifth-largest steel producer Moldova saw its crude steel output down by 0.9% on-year at 468,400t.

North Macedonia produced 207,374t, less by 18.7% on January-October 2021, and Croatia produced 138,988t, down by 1.7%.

Special steelmaker Slovenian Steel Group (SIJ) said earlier it anticipated a 40% reduction in production volumes in the fourth quarter due to extremely high energy costs and customers being unlikely to accept still higher steel prices (see Kallanish passim).

HBIS Group Serbia Iron & Steel’s production in January-September was stable and the firm has increased exports to the EU, despite the energy crisis and global logistical problems. In July, the plant nevertheless idled blast furnace No.1 at its Smederevo works due to low global demand for steel products (see Kallanish passim).

Svetoslav Abrossimov Bulgaria

After falling in November, Italian plate prices are now flattening on-week but demand is persistently slow, Kallanish learns from market participants.

Due to the current economic uncertainty, customers are adopting a wait-and-see attitude and even large buyers are purchasing lower volumes compared to usual. Sellers believe plate is suffering from the negative influence of all other steel products and argue that the current gap between S275 grade and hot rolled coil prices is too large.

Italian sellers are quoting December lead times. Contract prices are at some €820-830/tonne ($852-862) ex-works for the basic S275 grade and about €850/t ex-works for the higher 355 grade, which remains in short supply.

Despite the weak year-end sales performance, sellers will report solid results for 2022, considerably higher than those achieved in 2021, which was a record year. The market is currently absorbing lower volumes of coil derivatives. Plate sales in 2023 will however be supported by investments in infrastructure financed by the European recovery fund, as well as by the flourishing renewable wind power sector.

Meanwhile, merchant slab prices continue to soften. Russian slab prices corrected down by another $10-20/t to $420-450/t fob, depending on grade, from western Russian ports. Offers to Turkey lost around $20/t in two weeks to $420-430/t fob, with freight fluctuating between $35-50/t depending on volume and port (see Kallanish 23 November newsletter).

Natalia Capra France

After a prolonged period of steady inflow, coil offers from overseas to Europe have gone up and lost their attractiveness for EU buyers.

“Just today I received a call with offers from Asia because some ship is not full yet. It seems they [Asian suppliers] are not selling their stuff that well any longer,” a buyer from a German fabricator tells Kallanish. For his purposes, he needs plain S235 hot rolled coil, while the domestic integrated mills prefer to do higher grades. “So, we are pretty dependent on Asian offers as well, and like to buy through both channels, but currently there is no advantage in price,” he says.

This was still different a few weeks ago but, now, import offers have adjusted and come close to the €600/tonne ($623) that marks the low end of the HRC offer range from domestic EU mills. “I’m getting it from Italian or German mills for €660 delivered,” an Austrian manager says. “That means $590 cfr can’t lure me if I have to wait three months, so we are not buying from import now.” Offers of cold rolled coil from abroad meanwhile stand at €700-720/t, according to a Swiss trader.

A Dutch manager emphasises the massive surge in imports this year. These came from traditional export countries Brazil, Vietnam, Korea, Taiwan and India, but also “Japan proved to be a huge outlier”, he observes. “In 2020, it exported about 83,000 tonnes of coils to Europe. In the first eight months of 2022 alone, the export volume is a whopping 730,000t plus.” Excess production is typical in economies with a dependence on the automotive industry, in which activity has slowed, he adds.

Because prices moved irrationally for most of this year, the long lead times could be seen as an argument in favour of imports, given the safety some months down the line of a certain tonnage at a certain price. This is no longer the case, and the latest appreciation in import prices should foreshadow a reversal in the European pricing downtrend.

Christian Koehl Germany

The Federal Ministry of Germany for Economic Affairs and Climate Action, or BMWK, has granted Eur880,000 ($914,000) to steelmaker Georgsmarienhütte’s decarbonization project, which would cut carbon emissions and natural gas imports.

This was the first time BMWK was funding a project aimed at decarbonizing steel processing, the ministry said in a Nov. 25 statement.

Using this fund, Georgsmarienhütte—a German supplier of bars made of high-grade structural and stainless steel—will build a quenching and tempering plant for the thermal treatment of steel bars and put it into operation in mid-2023.

In the traditional energy-intensive tempering process, the reheating furnaces are fired with natural gas and generate greenhouse gas emissions, but in this project, they will be powered instead by green electricity. The project will therefore replace a major source of CO2 emissions at the Georgsmarienhütte site in Lower Saxony, and at the same time contribute to reducing Germany’s dependence on natural gas imports.

At this mill alone, around 2,800 mt/year of CO2 emissions can be avoided, according to BMWK’s statement.

This funding approval is the first in a series of similar projects in the primary and secondary steel industry as well as the chemical, glass, cement, paper, and nonferrous metal industries, which the ministry is currently considering supporting as part of decarbonizing European industry and hydrogen-related IPCEI initiatives.

In Germany, the steel industry accounts for 30% of the country’s industrial emissions, or 181 million mt of CO2 equivalent in 2021, and therefore offers a large lever for decarbonization, according to BMWK.

Platts, part of S&P Global Commodity Insights, assessed the Northwest European price for rebar at Eur785/mt ex-works, down 1.9% on the week. The weekly assessment was broadly stable, having come off only Eur5 from Eur790/mt at the start of the year.

— Ekaterina Bouckley

The European hot-rolled coil market was quiet Nov. 25 as buyers surveyed cheaper offers, watching for the price floor.

Platts assessed hot-rolled coil in Northwest Europe stable Nov. 25 at Eur605/mt ex-works Ruhr.

A service center source heard offers at Eur620/mt EXW, with the transactional level considered closer to Eur600/mt EXW. Cheaper offers were also heard on a delivered basis ex-Italy at Eur600/mt.

A distributor also heard offers at Eur610-620/mt delivered Ruhr ex-Northern Europe.

Buyers were said to be watching for the bottom of the market, unsure whether the floor had yet been reached.

While there was some pickup in transactional activity in the week ended Nov. 19, some attributed this more to having waited to the last minute to fill gaps for January 2023 than any substantive restocking, with no identified recovery in distributors’ sales prices or volumes to end-consumers.

“We’ve started to call each other to make sure the phones are still working,” said one German distributor. “It is absolutely dead.”

The Italian market seemed to be performing better, with some smaller tonnage deals heard at Eur610/mt EXW Italy.

Market participants were skeptical whether the recently attempted price increase from one Italian mill to Eur650/mt EXW Italy would hold, with a mill source doubtful unless other producers supported the increase.

Higher prices were heard for the first quarter even beyond the Eur650/mt mark, with one producer apparently targeting Eur700/mt EXW moving into next year.

After volumes in the tens of thousands of metric tons moved at sub-Eur600/mt EXW in the week ended Nov. 19, expectations were that orderbooks were largely filled for December-January but that lower prices could still be available to fill remaining gaps.

Platts assessed HRC in Italy stable on the day at Eur600/mt EXW.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven

The European plate market fell on the week Nov. 25, with reported offers ranging wide between project and commodity-grade material.

Plate prices were assessed down Eur30/mt across Europe, at Eur900/mt ex-works Ruhr, and Eur790/mt ex-works Italy.

In Northern Europe, a wide range of offers were reported between integrated and re-rolling producers.

Offers from re-rollers were heard at Eur850/mt and below, delivered Northern Europe ex-Central Europe and ex-Benelux. One German mill was heard to be offering at under Eur950/mt ex-works Ruhr to some customers, while another German producer remained focused on project business, only offering spot plate at above Eur1,000/mt ex-works.

“Project business is doing well, especially plate for pipes,” a distributor source said. “Geopolitically, there is strong demand for additional pipeline connections given the move away from Russian energy suppliers.”

Despite the bullish project market, stockholders were looking toward the lowest offers, with a mill source saying that “stockholders in Germany are not paying above Eur850/mt on plate purchasing.”

Indeed, a German source reported a deal on the day at Eur800/mt delivered Germany ex-Italy, normalized to Eur780/mt ex-works Italy. Delivery time was reported at under two weeks — illustrating the lack of current demand and willingness of steelmakers to cut discounts to secure volumes.

Offers in the South European plate market were generally heard at around the Eur800/mt mark, ex-works, with larger buyers able to achieve prices of Eur780/mt ex-works Italy.

The decline in plate prices was primarily attributed to poor demand, but the downtrend was also accommodated by lower energy prices.

“Transformation costs have come down around Eur100/mt in the last month due to lower energy prices, which basically correlates to the discounts we are seeing now,” a service center source said.

Platts assessed heavy plate prices in Italy at Eur900/mt on Oct. 28, Eur110/mt above the Nov. 25 assessment.

However, lower production costs won’t necessarily sustain lower prices, as one distributor said.

“Reduction in energy costs may have allowed the market to adjust downward, but this will also reignite the economy somewhat which could create demand and reverse price direction,” the source said.

Slab prices move lower

Besides the input cost of energy, slab prices also moved down week on week, assessed at $545/mt CIF South Europe on the day.

Offers for slab were heard in a range of $550-$600/mt CIF Italy ex-Asia, with one larger re-roller heard settling deals at $545/mt CFR Italy, ex-Taiwan, and at $500/mt CFR, ex-Indonesia, for substantial bulk tonnages.

Trading sentiment for slab was negative, given offers heard at Eur450/mt FOB Russia. While Russian material was overall considered unattractive and usually unviable in the European market due to sanctioning, distributors said there was potential to have the origin disguised for a slight premium through routes such as Turkey.

The material was also heard as routed to Asia, substituting their own domestic products for export back into Europe.

A European distributor said: “The Asian market can buy high-quality Russian slab and export their own poorer-quality material at much higher prices, while we get a dramatic increase on both price and lead times.”

However, another distributor said that new technologies were increasingly being adopted to identify trace elements in the slab to identify origin, which would potentially increase effectiveness of existing sanctions. “If they aren’t testing, then it’s all a farce,” he said.

Platts is part of S&P Global Commodity Insights.

— Benjamin Steven

Polish rebar producers were seeking higher prices amid rising energy costs in the week to Friday November 25, but buyers held back from making any purchases, sources told Fastmarkets.

A steel mill in Poland was heard to have pushed its rebar price up to 3,700 zloty ($819) per tonne delivered (about 3,650 zloty per tonne EXW) this past week, up from 3,450-3,500 zloty per tonne delivered in the first half of November.

The increase was due to rising energy prices, market sources said.

The average wholesale electricity price in Poland was 646.3 zloty per MWh in October, but prices have risen throughout November, exceeding 750 zloty per MWh, according to market sources.

But rebar buyers were skeptical about any price rise, considering the slow demand from end-use markets and the approaching holiday season.

During the week, transactions for domestic rebar in Poland were reported at 3,250-3,300 zloty per tonne EXW.

Another mill in the country reported offers at 3,300-3,400 zloty per tonne delivered, which net back to about 3,250-2,350 zloty per tonne EXW.

Local mills were also heard to still have December volumes to sell.

As a result, Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, exw Poland was 3,250-3,350 zloty per tonne on Friday, down by 50-100 zloty per tonne from 3,300-3,450 zloty per tonne a week earlier.

Trading has picked up a bit since last week, with distributors starting to inquire for first-quarter delivery rebar.

In general, market sources believe that rebar prices in Poland have touched a floor and even expected a slight rebound before the year-end.

Published by: Julia Bolotova

European hot-rolled coil producers are selling December volumes at reduced levels, but are targeting price increases for the first quarter of 2023, sources told Fastmarkets on Friday November 25.Fastmarkets calculated its daily steel HRC index, domestic, ex-works Northern Europe at €624.69 ($650.65) per tonne on Friday, up by €8.02 from €616.67 per tonne on Thursday.

The latest calculation of the index is down €1.14 per tonne week on week and by €45.31 per tonne month on month.

Transactions for December volumes were heard at €610-620 per tonne EXW in Germany and in the Benelux region.

But several mill sources told Fastmarkets that the current minimum price idea for January is closer to €650 per tonne EXW.

“If we keep selling at prices below €650 [per tonne EXW], we will have to shut down capacity altogether,” a mill source said.

At the same time, producers expect demand from the automotive sector to start recovering next year.

Several sources said that agreements had been reached with end consumers with prices down by about €150 per tonne compared with November 2021. 

“In fact, deals with automotive [market participants] are being signed at about €150-per-tonne lower than last year,” a trading source in Germany said. “But spot prices [for HRC] have dropped by much more than [€150 per tonne year on year], so mills are refusing to give [any more] discounts to the spot market.” 

Market participants said they expect production cuts to have a positive effect on HRC prices in the first quarter of 2023.

Fastmarkets’ calculation of its daily steel HRC index, domestic, exw Italy, meanwhile, was €591.25 per tonne on Friday, up by €4.58 per tonne from €586.67 per tonne on Thursday.

The latest calculation of the Italian index is down by €8.75 per tonne week on week and by €103.75 per tonne month on month.

Buyer estimates of achievable prices were about €580-600 per tonne EXW.

But mill sources said that prices below €600 per tonne EXW were only available from one producer for December volumes and the target price for the first quarter of 2023 will be around €600-650 per tonne EXW, depending on the mill.

Overseas coil markets were generally quiet in the week to Friday, but several trading sources in Europe reported that a deal for Vietnamese HRC with late first-quarter delivery had been done at $550 per tonne CFR to Italy – although the deal could not be widely confirmed by the time of publication.

Published by: Julia Bolotova