Day: 28 June 2023

ArcelorMittal’s plant in Fos-sur-Mer, southern France will be idled due to excessive emission levels. The stoppage has been ordered by the labour inspection authority and no date for a restart has yet been decided, Kallanish learns from the company.

“Faced with a disproportionate decision, we are working to avoid a plant shutdown, while reinforcing our commitment to health and safety in the workplace, and ensuring the delivery of products to our customers. On Friday, we were notified by the labour inspectorate of a decision to temporarily shut down part of the Fos site: the steel shop department. The shutdown of this department gradually implies the shutdown of all other units on the site,” a company spokesperson says.

The company is implementing an action plan to reduce employee exposure and is in talks with the labour inspectorate and unions. The management believes the decision to suspend the steel mill’s operations “and consequently those of the entire site is totally unfounded and disproportionate. In conjunction with the relevant administrative authorities, we are taking all legal steps to suspend this decision as quickly as possible,” the firm comments.

The shutdown has started and will take several weeks. Should ArcelorMittal’s appeal fail, the supply chain and sales teams are already taking advantage of the period of preparation for the shutdown to plan appropriate solutions for each of the customers concerned.

Natalia Capra France

Central European construction steel market participants note prices of rebar and wire rod have reached rock bottom. Some small increases could be announced, but the market remains challenging.

“This is generating some timid requests for re-stocking and if mesh prices do not fall any further – which appears impossible given the low values reached – then the wire rod market could also gradually resume some volumes of purchases in the coming weeks,” a mill source tells Kallanish.

The price decline stopping is also due to the application of new safeguard restrictions on wire rod imports from third countries, particularly Malaysia and Egypt. “The most probable scenario is therefore that of a July where we could witness some awakening of apparent demand for long products and some restocking, but producers will only be able to obtain relatively moderate increases, between €10-20/tonne [$11-22] at most, with a €10/t hike seeming more reasonable at the moment,” the source continues.

Another mill source says the market is gearing up for a €30/t hike for commodity-grade long products. Steelmakers are reducing or stopping rebar and mesh-quality rod production because current market values are not profitable enough, he adds.

Some steelmakers are announcing upward adjustments for rebar prices but wire rod is still seeing “deathly silence and prices firming at the bottom of the barrel … However, it is difficult to say with how much conviction producers are implementing rebar price increases given the very high inventories for all steelmakers and the current supply and demand imbalance”, he adds.

Buyers, especially those in Slovakia, Hungary, Germany, Poland and Czech Republic, are still seriously concerned about the level of real downstream demand, especially from the construction activity. The combination of higher credit costs and the skyrocketing cost of construction is now freezing the residential building sector.

This is particularly so in Germany; the number of new building permits in Bavaria has declined by over 50% compared to the same period in 2022. The situation appears to be only slightly better in northern Germany. Public works, for which start-up and construction times remain long, are only partially compensating for the drop in activity in the private sector. A large part of steelmakers in Germany are thus working at reduced utilisation to meet lower consumption.

“Italy, with its various incentives and some induced optimism, is perhaps performing better than all the other European countries at this stage … but a radical rise in energy costs will happen. This adds to uncertainties over tax credit which have allowed steelmakers to sustain acceptable energy costs in Italy. Mills expect July to see prices in the Italian market at least €30-40/t higher than June,” the source adds.

Scrap prices have bottomed in Italy and sources see extended August stoppages at all longs producers in the country. “We hope this will have a temporary supply and demand re-balancing effect. It’s difficult to say if the second part of the year will bring concrete signals of higher real consumption … The combination of the high cost of money and high construction cost could in fact require a long time for Europe to reposition itself to an acceptable level for the downstream market,” he continues.

“Moreover, the preliminary announcements for the next step of interest rate hikes by the European Central Bank are only having the effect to increase panic and uncertainty,” he adds. The market may have to wait until spring 2024 to see a real stable trend reversal that does not only reflect a momentary restocking, he concludes.

Natalia Capra France , Emanuele Norsa Italy

Central and Eastern Europe (CEE) is becoming a steel processing hub for Western European countries and a centre for steel exports to Ukraine, Metals Consulting International chief executive Alexander Siryk said at EUROMETAL’s Central Europe regional meeting in Krakow last week. Asian-origin steel is meanwhile gaining CEE market share, especially in the flat and stainless steel segments.

The volume of CEE steel production almost equals the volume of exports, Siryk pointed out at the event attended by Kallanish. On flat products, 865,000 tonnes/month are being exported from CEE in 2023 versus 1.13 million t/m in 2022, with Austria accounting for 40%, Slovakia 24% and Poland 12% this year. Ukraine has accounted for 3% of 2023 flats exports versus 1% in previous years, Siryk showed. Overall exports have however slowed in 2023 due to stagnating European demand.

Around 1m t/m is of steel is meanwhile traded between CEE countries, of which 60% are flats, with Czech Republic and Poland the largest destinations.

CEE imports of steel for processing have grown some 30% since 2010, peaking at 2.1m t/m of imports from non-CEE origins in 2021, with the figure at 1.7m t/m in 2023. Other EU countries account for around 70% of supply, with flats representing over half of supply.

As for imports from Asia, this origin has upped its import share to 10% for flats and 12% for stainless steel in 2023 versus 6% each in 2010. Poland imported 40% of the 875,000 t/m of flats intake in 2023.

CEE crude steel production has been inching down since 2010 amid serious industry restructuring and optimisation, Siryk observed. Liberty has become a major player in the region after acquiring plants from ArcelorMittal, followed by further takeovers. The insolvency of Dunaferr meanwhile poses a question over its future ownership, with Liberty currently managing the steelworks.

The green transition will revolutionise the region’s steel industry, which is 79% based on the blast furnace route, forcing local supply chains to adapt, Siryk concluded.

Adam Smith Poland