Day: 10 March 2023

Long products demand has improved, following the winter holiday season, everywhere but in Europe, says the International Rebar Exporters and Producers Association (Irepas).

In the EU, mills are running at low capacity and prices are lower than in many other markets. Despite the good weather in February, inquiries from construction sites were much lower than expected. Most cut and benders had their yards fairly well stocked and so had no need to replenish. Raw material prices have meanwhile strengthened considerably despite very low demand for finished products, and mills’ margins were squeezed into the red, Irepas says in its latest note seen by Kallanish.

Mills had to increase prices in recent weeks or start shutting down their EAFs. It remains to be seen however whether the price hikes are accepted. “Lower energy prices help little because electricity prices in the region remain unpredictable,” Irepas observes.

Turkish rebar mills remain largely uncompetitive. They can only ship west in the search for a positive margin. Lower energy prices are helping to reduce inflation and the cost of manufacturing, which creates a positive mood. However, there is still a big gap with offers coming from North Africa, the Gulf Cooperation Council and Southeast Asia.

Post-earthquake reconstruction is not expected to change the volume of Turkish market demand, but rather the focus of demand. “The government will be focusing all their efforts on reconstructing new housing for those who need shelter and so all other works will be on hold for a while,” Irepas observes.

Scrap demand outpaced supply in February as inventories needed to be restocked quickly, with energy prices easing and production levels normalising. The implementation of Turkish flat product import duties to stimulate local production and therefore scrap demand has nevertheless been postponed following the earthquake.

US mills have pricing power and very healthy profit margins. General demand in the US is flat, though a slowdown in construction is expected in the coming months for both residential and commercial construction, amid high interest rates, Irepas says.

“China still constitutes a big hope to start the wheel running even though it has started much slower than expected after the Chinese New Year holidays, despite the previous forecasts for a rapid rebound,” the association concludes.

Adam Smith Poland

The Italian long steel market deadlock has continued this week. Values are reported to be falling for merchant bar and rebar, after sales in the first two months of the year were slow for most longs, sources tell Kallanish.

However, scrap prices are increasing in Italy and Europe by some €20-25/tonne ($21.1-26.4), while 1 April will see the expiry of the energy cost relief tax discount implemented by the Italian government. Some producers are therefore suspending sales and intend to ask for significant price increases.

The past weeks were quiet for merchant bar sales in a stagnant market. The distribution sector continues to buy back-to-back or use its stock to satisfy the weak consumption. Merchant bar contract values remain flat on last week at €480/t base ex-works on average. Including size extras, contracts are at €900/t ex-works, sources suggest.

Buyers and sellers say January and February were good months for sections sales, despite there being cheaper Spanish offers available. Domestic values for the first category are also flattening at €950-960/t ex-works, depending on tonnage and client. Buyers expect beam prices to hike on higher production costs in the coming days.

ArcelorMittal told its European customers this week of its intention to raise long product offers, in order to recover some margin loss due to higher input costs. According to market sources, the company is increasing offers for commodity-grade products by some €30/t. Longer-term contracts for the second quarter for higher-grade products are being raised by a minimum of €50/t (see Kallanish 7 March).

Natalia Capra France

Italian re-rollers are pushing up tube prices, in line with increasing values of hot rolled coil in Europe. Welded tube values continue to lag behind the acceleration of HRC price hikes, sources in the market tell Kallanish.

In Italy, sources are reporting a lack of import offers for HRC and long lead times from European producers. One steelmaker in Italy is quoting June and July delivery, while others are closing May order books.

Tube discounts are continuing to decrease but at a slow pace. In Italy, they are now beginning to reach 25 points with some clients still paying 26-28 points. Each point of discount is equal to €12-13/tonne ($12.6-13.7), depending on product. Tube makers intend to consolidate the level of 25 and continue to recover two or three points per week. By the end of March, they are targeting 20 points of discount in Europe.

A source reports some more interest from buyers and better demand for welded tube, but also some shortages because of supply chain issues and long HRC lead times. The distribution sector is also expected to come back to purchasing after the slow tube buying of the past weeks, which should cause some apparent demand to resurface. With the current price of HRC at €800-820/t base ex-works, basic welded tube grade 40x40x3 should cost over €1,000/t ex-works.

A large service centre reports some improved sales volumes from the automotive industry, while the appliance sector’s downturn continues. Tube discounts in Italy reached 36 points in December, Kallanish notes.

Natalia Capra France

Steel distribution group Klöckner & Co will be reorganising its sites in France this year, chief executive Guido Kerkhoff said at the group’s annual press conference in Düsseldorf on Thursday.

He emphasised that Klöckner will not reduce its range of activities in the country, but mainly rearrange locations to operate more effectively, which means closure of a number of sites. “We have a rather big footprint in France; our set-up there is very fractured, so we want to concentrate activities at the larger sites, while maintaining all processing services,” he said.

The company has 24 sites in France, of which 11 are projected to be closed. It has commenced negotiations with trade unions, and as of yet will not anticipate the possible outcome, chief financial officer Oliver Falk told Kallanish on the sidelines of the event.

He noted that smaller warehouses with annual sales of 10,000 tonnes or less tend to be hardly profitable due to their long turnover periods. “Material bought at high prices is just sitting for too long at smaller sites, which means tied-up capital,” he explained. Klöckner therefore wants to retain just the bigger houses with quicker turnover rates in the French regions where the company operates.

The “growth-oriented hub-structure initiative in France”, as it is called by the company, will mean a negative financial effect on earnings, which however it sees largely offset by medium-term gains from asset disposals, it says.

Christian Koehl Germany

A pick-up in demand and price levels is expected in the Spanish rebar market, while Italian long steel producers also pushing for increases despite weak demand in Italy, sources told Fastmarkets this week.
Spain
Spanish steel mills are seeking higher rebar prices after demand improved in the week to Wednesday March 8, sources told Fastmarkets.

But while sentiment in the Spanish rebar market has shown signs of improving, Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain, was €740-770 per tonne on Wednesday unchanged week-on-week.

“Mills are trying to increase prices as a result of increasing input costs,” one producer source said.

“Demand is, however, improving and buyers are looking for tonnages as they are afraid of future [price] hikes,” he added.

International prices for steel scrap – the key raw material for all long steel products – have been rising since December 2022.

Fastmarkets’ daily calculation of the index for steel scrap HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey was $456.26 per tonne on March 8, up from $445.00 per tonne a week earlier.

Italy
In Italy, meanwhile, market activity remained inhibited by slow demand. Even so, producers are confident that their latest price increases will be accepted by the market.

Fastmarkets price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €725-760 ($764-801) per tonne on Wednesday, stable week-on-week.

Sentiment was mixed among market participants in the Italian rebar market.

While most producer sources do expect prices to rise over the coming week, buyers continued to cite weak demand and remained skeptical about whether the market fundamentals could support any increases.

“Since the beginning of March, we have seen an upward trend [and] this upward trend has consolidated [this week],” a producer source told Fastmarkets.

But while also forecasting a future uptrend, other market participants said prices would remain unchanged for now.

“Prices have remained stable, with deals being done at the same level as last week,” a trader source said.

“We already have new orders for the coming week that are arriving at €20 per tonne higher, but these deals are for very small tonnages,” he added.

And other sources were more skeptical about price rises.

“Rebar producers are trying to raise their prices and have announced new offers, but demand is still low and selling is [taking place] at lower levels, [both in terms of] quantities and [compared with] offer prices,” another trader source said.

“At the moment, customers are not digesting these increased prices, so they don’t buy so much,” he added.

Published by: India-Inés Levy

German steel and metals distributor Klockner & Co.’s shipments were 4.1% lower in 2022 at 4.68 million mt, it said in its 2022 financial results released March 9.

Sales for the year, however, rose 26% to Eur9.4 billion ($9.9 billion), driven by higher average price levels.

The company expanded its range of sustainable products and services in 2022 and brought together its CO2-reduced products and services under its Nexigen brand, which enables customers to reliably procure CO2-reduced steel and metal products, it said.

Klockner delivered the first quantities of CO2-reduced steel to long-term customers, such as Mercedes-Benz and Siemens, in 2022 and also launched a partnership with stainless steel producer Outokumpu, allowing it to supply CO2-reduced stainless steel.

Financially, Klockner reported an EBITDA before material special effects of Eur417 million, down 50.8% year on year, which it said was a strong result given the challenging economic environment.

“We made significant progress toward our goal of becoming the leading one-stop shop for steel, other materials, equipment and processing services in Europe and the Americas,” Klockner CEO Guido Kerkhoff said.

In late 2022, its US subsidiary Klockner Metals Corporation acquired National Material of Mexico, strengthening its steel and metals distribution position and its steel service business in North America.

The acquisition is still subject to the necessary antitrust approvals, with Klockner expected to close it before summer 2023.

Klockner also strengthened its partnership with US steelmaker Nucor and is investing in a heavy plate processing plant at Nucor’s new steel mill site in Brandenburg, Kentucky to develop sustainable, innovative and complex solutions for the entire supply chain and extending its portfolio of higher value-added services, it said.

To expand its products and services in Europe, Klockner also acquired Hernandez Stainless and RSC Rostfrei Coil Center, allowing it to enter into stainless steel processing.

Steel market to normalize in 2023

Looking forward, Klockner said it expected the global steel market to increasingly normalize in 2023 despite the economic environment remaining challenging.

“A stronger demand trend in the Company’s key European and US markets is thus expected to bring a considerable increase in shipments compared to fiscal year 2022,” it said.

However, it said that, despite higher steel prices at the beginning of 2023, it expected a lower price level overall year on year and correspondingly lower sales.

Q1 2023 EBITDA before material special effects is expected to be higher at Eur40 million-90 million, due to an improving macroeconomic environment, a positive price trend and rigorous net working capital management.

Platts, part of S&P Global Commodity Insights, assessed domestic HRC prices in Northern Europe at Eur680/mt ex-works Ruhr at the end of December, down 26% over the course of 2022. The price has risen since to be assessed at Eur835/mt on March 8.

— Jacqueline Holman

Blastr Green Steel plans to invest in an iron ore pellet plant in Gildeskål municipality in Northern Norway to supply its Finnish green steel mill, it said March 9.

The investment in Gildeskål is estimated at more than Eur1 billion ($1.1 billion), which makes it one of the largest industrial projects in the Nordic region.

However, a final investment decision is expected in 2025, subject to relevant permits and agreements. If it gets a final go-ahead, the facility will be tentatively planned to start production in 2028.

It will convert iron ore pellet feed into direct reduction (DR) pellets, which will be used as a raw material for the company’s recently announced low carbon steel mill in Inkoo, Finland.

The Gildeskål location chosen for the DR furnace is considered beneficial as it provides an ice-free harbor with easy access to seaborne iron ore from the Norwegian Sea. The company will source hydropower for it, and is currently in discussions with potential suppliers with a view of securing a long-term contract.

Pellets from the Gildeskål site will be a key part of Blastr’s steel value chain, where the aim is to reduce CO2 emissions from steel production by 95% mainly by departing from the use of coke.

“Our planned pellet plant in Gildeskål will supply Blastr’s [steel] production in Finland as well as a significant and growing world market for direct reduction pellets,” Blastr Green Steel CEO Hans Fredrik Wittusen said in a statement adding the project is going to be an important contributor to decarbonizing global steel production.

— Ekaterina Bouckley

Large Turkish long steelmaker Ekinciler Demir Celik has restarted production after it halted due the Feb. 6 earthquakes, Executive Board Member Huseyin Soykan said March 9.

“After eliminating the destructive effects of the earthquakes, Ekinciler Demir Celik has begun to work with full capacity again,” a company statement said.

Ekinciler has a 1.25 million mt liquid steel capacity and produces billet and 8-50 mm rebars.

Most steelmakers operating in the earthquake-affected south-eastern region of Turkey have restarted production recently.

Isdemir, Turkey’s largest basic oxygen furnace-based steelmaker, is also expected to return to production in the coming days, which would solve some domestic availability issues.

The region produces around a third of Turkey’s annual steel output.

Turkey’s housing development administration plans to build 350,000 houses in 11 cities within a year, which will require 5 million mt of steel products, including 3 million mt of rebar, 750,000 mt of wire rod and 1.25 million mt of sheet metal.

This could be met by steelmakers prioritizing the domestic market, Turkish Steel Producers’ Association said previously.

Producers have agreed that no increase will be made in rebar prices, except for fluctuations in raw material prices, as previously reported.

Demand for rebar for reconstruction projects, however, has seen imported billet and scrap prices rise in recent weeks.

Platts, part of S&P Global Commodity Insights, assessed Turkish imports of premium heavy melting scrap 1/2 (80:20) at $457.50/mt CFR March 8, $32.50/mt higher than on Feb. 1, while the CIS export billet assessment was $615/mt FOB Black Sea, up from $560/mt CFR on Feb. 1.

— Cenk Can