Day: 28 July 2023

Most mills in Southern Europe will stop production in early August until late August-early September, sources said.

Fastmarkets price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €660-675 ($730-747) per tonne on Wednesday, down by €10 per tonne by €670-685 per tonne on July 19.

Market participants in Italy said they expect demand and trading to remain slow until the end of the summer holidays.

As a result, prices are also expected to remain flat.

“Demand remains flat in the market as everyone is evidently preparing for summer holidays,” a producer source said.

“Mills have tried to raise prices, but weak demand and an uncertain market has made it impossible,” a trader source said.

“Now there’s still a week and a half of work and after this the summer closures will put the price in stand-by,” he added.

At the same time, prices in the Spanish rebar market were stable.

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain was €640-650 per tonne on Wednesday, unchanged since July 12.

Mills in the Spanish market were seeking extended production cuts to rebalance the market, given current slow demand, sources told Fastmarkets.

Southern European wire rod
Fastmarkets’ price assessment for steel wire rod (mesh quality), domestic, delivered Southern Europe was €580-600 per tonne on Wednesday, down by €10 per tonne from €590-610 per tonne on July 19.

Demand has remained flat this week, Fastmarkets heard.

Published by: India-Inés Levy

Trading activity is expected to remain slow till mid-August, when mills reopen.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, delivered Northern Europe was €575-605 ($636-670) per tonne on Wednesday, stable week-on-week.

Trading activity remained minimal in the northern European rebar market in the week to Wednesday, with most producers having closed for the summer holidays.

“There is ongoing low demand,” a trader source from Germany said. “Everyone is in holiday mode.”

Meanwhile, the corresponding Fastmarkets’ weekly price assessment for steel wire rod (mesh quality) domestic, delivered Northern Europe was €570-610 per tonne on Wednesday, unchanged week-on-week.

Demand and prices remained unchanged in the northern European wire rod market.

Published by: India-Inés Levy

If this lower figure proved to be correct, it would be the fourth annual contraction in the steel market in the past five years, but a stronger recovery was expected in 2024, the association said.

Eurofer expected apparent steel consumption in the EU to drop by about 3% year-on-year in 2023, to 135 million tonnes, it said in its third-quarter 2023 outlook report. This would be down from the previous outlook for a 1% year-on-year consumption drop to 138 million tonnes, published in May this year.

In 2024, apparent steel demand in the bloc was expected to recover by 6.2%, rising to 144 million tonnes. This was a revision from Eurofer’s previous forecast for a 5.4% recovery.

But the association noted that the overall evolution of steel demand in the EU remained subject to much uncertainty. “Quarterly positive developments in apparent steel consumption are only expected to begin from the third quarter of 2023,” it said.

Steel-using sector outlook
Automotive
Eurofer said that automotive sector output recovered by 3.5% in 2022, but that this was mostly a rebound from the low comparison base of 2021 due to a components shortage that year.

The sector was expected to record further growth in 2023, by 6.4%. This was revised from a previous recovery rate of 1.2%, according to the association.

The automotive industry in Europe was one of the few well-performing steel-consuming sectors in 2023, with data from the European Automotive Manufacturers Association showing that new car registrations in the EU continued to grow strongly in June 2023.

Notably, in June 2023, the EU car market grew by 17.8% to 1 million registered units. This growth, however, can be attributed to the region’s rebound from a low comparison base last year, primarily driven by vehicle component shortages, the European Automotive Manufacturers Association (ACEA) said earlier this month.

Overall output levels in the sector will remain rather low in historical terms, and the automotive industry will continue to be mostly exposed to external factors. Therefore, Eurofer forecasts another drop in output for the automotive industry in 2024, by 4% year-on-year. This was also down from a previously expected decline of 1.8% year-on-year.

Market sources noted that demand for steel coil from the automotive industry has been rather stable at low levels during the course of 2023.The pick-up in steel demand from the automotive industry in March-April 2023 was rather a short-term rebound, mainly driven by the acute shortage of material due to production disruptions at key suppliers.

Construction
Meanwhile, Eurofer expected the construction industry to decline moderately by 0.5% in 2023, after recording 4.8% growth in 2022. The sector was expected to recover modestly (+0.7%) in 2024 (previously expected at +1.3%).

This sluggish trend in construction industry performance was expected to worsen in the next three quarters due to the effects of rising prices for construction materials, a shortage of construction workers, and in particular the consequences for housing demand of continued monetary policy tightening.

“Looking at the construction sub-sectors, the expected rise in interest rates – as a consequence of policy rate rises by the [European Central Bank] and other central banks – is set to affect residential construction demand,” Eurofer said. “Civil engineering is expected to continue to provide the strongest contribution to the construction sector’s performance, but to a lesser extent.”

Weak construction demand has weighed heavily on the European long steel market in recent months, with most producers taking summer maintenance breaks that are longer than usual due to a lack of inquiries, market participants told Fastmarkets.

“The construction industry is facing pressure from rising interest rates. There is a lack of new projects,” a trading source in Europe said.

In the Northern European market, the price for steel reinforcing bar (rebar), domestic, delivered Northern Europe, fell to a low of €575 per tonne ex-works in late July 2023, from highs around €1,030 per tonne ex-works in September 2022.

Published by: Julia Bolotova

“[The market] is awfully quiet at this moment,” a trader in Northern Europe told Fastmarkets.

Fastmarkets’ weekly price assessment for steel sections (medium) domestic, delivered Northern Europe was €790-820 ($874- 907) per tonne on Wednesday, unchanged from a week earlier.

While slower trading activity is usually to be expected in the holiday months, which vary from country to country in Europe, market participants told Fastmarkets that this summer has been more muted than in previous years, with low construction activity reducing consumption of all materials.

Most of Europe’s steel industry is already shut for the summer, but Italy’s rolling and steel mills are expected be closed for the holidays in August, with low demand across Europe and hot temperatures in Southern Europe in particular hampering trade and construction activity, sources said.

Traders said they do not expect any significant price movements or an uptick in purchasing activity until September.

Sections prices in Poland were stable at around €745 per tonne CPT on a theoretical-weight basis, sources told Fastmarkets.

And a source in southeast Europe said that prices in Romania were around €730-740 CPT on the same basis — although they added that, in Turkey’s price-maker market for south-eastern Europe, prices were about $750-800 per tonne fob levels.

“I don’t see any strong demand,” the source said. “Not many sales.”

Hot-rolled coil feedstock prices fell in in the week to Wednesday, with the market muted because of the weak summer holiday demand and economic uncertainty.

Fastmarkets’ daily calculation of its steel hot-rolled coil index domestic, exw Northern Europe was €656.25 per tonne on Wednesday, down by €10 per tonne from €666.25 per tonne a week earlier.

Fastmarkets’ weekly price assessment for steel sections (medium) domestic, delivered Southern Europe was €790-820 per tonne on Wednesday, stable week on week.

Published by: Holly Chant

Sources suggested that HRC prices across Europe would flatten in the upcoming weeks amid the traditional summer lull, but prices could recover from September.

“Currently, it is still a buyers’ market because of limited end-used demand. But the availability [of HRC] will be reduced in the coming weeks because the Europe-wide summer stoppages, while we expect some restocking after the vacation season. Hopefully this will support HRC prices,” a distributor told Fastmarkets.

Another factor that was supposed to support a rebound in European HRC prices was the expectation for lower imports toward the end of 2023 due to the rapid depletion of some safeguard quotas.

“Third-quarter quota volumes are almost [completely used up] so those tonnages would have to wait to be cleared through customs after October 1. [Consequently,] the fourth-quarter ‘other countries’ quota is likely to dry up quickly as well,” a distributor in Italy said.

There are currently still very few suppliers active in Northern Europe, with offers for September-October delivery coil ranging between €660 and €700 per tonne EXW, while buyers’ estimates of tradeable values were no higher than €650-660 per tonne EXW.

Fastmarkets’ daily steel hot-rolled coil index domestic, exw Northern Europe was calculated at €655.63 ($726) per tonne on July 27, down by €0.62 per tonne from €656.25 per tonne on July 26.

The latest calculation of the Northern European index was down by €3.54 per tonne week on week and by €16.37 per tonne month on month.

Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €643.33 per tonne on July 27, down by €0.42 per tonne from €643.75 per tonne on July 26.

The Italian index was however up by €4.58 per tonne week on week but down by €2.66 per tonne month on month.

In Italy, the market was also very quiet ahead of summer stoppages.

Buyers reported tradeable values for September-October delivery HRC at no higher than €640-650 per tonne EXW on July 27.

At the same time, some sources reported price ideas for tonnages over 1,000 tonnes at €600-610 per tonne EXW, however, local mills were reluctant to accept such low bids.

In general, market sources did not expect HRC prices in the nation to dip more after the summer holidays.

“In the next three weeks the market will be deadly quiet, so no price movement can be expected. While for September I guess we can expect some rebound in [HRC] prices, driven by light restocking,” a trading source in Italy said.

Import HRC offers were largely flat day-on-day, with no fresh booking reported on July 27.

HRC for shipment in September-October from Asia was said to be available at €580-610 per tonne CFR to Italy.

A Japanese mill was offering HRC with end-September shipment at $680 per tonne CFR to Antwerp.

Published by: Julia Bolotova

Decarbonisation in the global steel industry will gain momentum out to 2030, aided by hydrogen-based production methods and increased use of renewable energy. However, the immaturity of hydrogen-based technology means that progress towards net zero in steel will continue to lag other sectors, says research group BMI.

Steel firms will implement a three-pronged approach to reduce emissions from steel production. Incorporating hydrogen into the steelmaking process is the most promising new technology being adopted by mining firms, as it makes net-zero steel feasible, BMI says.

The second popular approach will be the increased use of electric arc furnaces, particularly with scrap. The third will be the installation of carbon capture, utilisation and storage (CCUS) technology in traditional blast furnaces.

However, limited availability of green hydrogen will be the biggest constraint on the adoption of hydrogen-based steel production, BMI continues. According to the International Energy Agency, low-emission production accounted for less than 1% of total hydrogen production in 2022. The vast majority of hydrogen production currently relies on fossil fuels.

“The relatively high cost of producing green hydrogen relative to grey hydrogen will slow the construction of steelmaking facilities relying on green hydrogen as feedstock,” the research group says in a report seen by Kallanish.

Adoption of EAFs has meanwhile been held back by the need for higher-quality iron ores, reliable electricity supply and the large amounts of scrap required as feedstock. Traditionally, the development of substantial EAF capacity in China has been constrained by the limited availability of scrap, but this is changing as a significant scrap market is developing in the country, BMI observes.

CCUS meanwhile has a weak track record in economically reducing carbon emissions in steel production, it continues. There are no fully operational large-scale CCUS facilities in blast furnace steelmaking operations, but there are a few pilot projects either in progress or in the planning stages.

“Ultimately, the huge pipeline of blast furnaces existing and set to come online in East, South and South East Asia over the next decade means carbon capture will inevitably play a significant role in reducing emissions from the steel sector over the next decade,” BMI opines.

European and Chinese firms will lead the development of green steel, while blast furnaces will still dominate in 2030, but their share will decline, BMI concludes.

Adam Smith Poland

Ukraine increased flat-rolled exports in June compared with the previous month, according to national customs data.

Total volume delivered amounted to 122,930 tonnes, up by 5% on-month and 2.8 times more than in June 2022, Kallanish notes. In monetary terms, flat product exports increased 5.9% on-month and 2.2 times on-year to $94.23 million.

In January-June, Ukraine exported 422,500t, down by 68% on-year. The value of the flat product exports amounted to $308m, lower by 72.4%.

In the first six months of the year, Ukraine exported uncoated hot rolled coil in the amount of 312,300t for $219m. In June alone, it shipped 89,100t, down by 5.3% on-month, at a value at $65.4m, a decrease of 6.4%. It shipped 89,600t of cold rolled coil last month, up by 24% on-month. Income was at $62m, up 18.5%.

The largest consumers of Ukrainian HRC in January-June were Poland with a 33.4% share, Bulgaria with 14% and Portugal with 10.4%. Those three countries together also consumed about 60% of CRC. The main buyers of Ukrainian coated rolled products were Poland (65.4%) and Romania (27.4%).

June long-rolled metal exports increased by 5.6% on-month and 28.1% on-year to 61,060t. Revenue from exports was lower by 1.5% on-month and 29% on-year to $40.5m. In January-June, Ukraine exported 253,400t, down by 40% on-year. Revenue amounted to $208.2m, down 48.7%.

Six-month exports of hot-rolled bars and bars in coil were up 15% on-month to 119,200t for $78.2m. In June alone, 24,600t were shipped, an increase of 7.6% on-month, but lower by 7.7% on-year. Revenue was $15m, down 2% on-month and 40.3% on-year.

The largest consumers of Ukrainian hot-rolled bars in January-June were Poland with a 40% share and Germany with 21.2%.

Earlier, ArcelorMittal Kryvyi Rih (AMKR) said it soon will resume operation of individual rolling mills, after it has a normal water supply following the destruction at Kakhovka Hydroelectric Power Plant (HEPP) and dam (see Kallanish passim).

AMKR was forced to suspend crude and rolled steel production in June.

Metinvest, Interpipe and Centravis said previously they are operating normally despite the destruction of the dam (see Kallanish passim).

In 2022, Zaporizhstal launched the production of eight new types of CRC and HRC, which were previously produced at Metinvest’s Mariupol enterprises.

Ukraine’s crude steel output in June amounted to 463,000t, up by 48.6% on-year.

Svetoslav Abrossimov Bulgaria

The EU’s steel trade deficit – for finished plus semi-finished steel – narrowed somewhat during the first four months of this year, mainly due to the fall in imports being steeper than the decline in exports, Kallanish understands from the latest data issued by Eurofer.

During the first four months of the year, Europe’s trade deficit reached 1.3 million tonnes/month on average. In full-year 2022, the trade deficit stood at 1.6m t/month and in 2021 at 1.5m t/month.

Asian countries such as South Korea, China, Vietnam, Japan, Taiwan and India were the ones with which Europe recorded the highest trade deficit.

A trade surplus, on the other hand, was recorded with the US, Switzerland, the UK and Turkey.

Last year, EU steel imports reached a new peak at 30mt, but this year the trend is rapidly turning, with year-to-date imports dropping almost 20% y-o-y. Exports, on the other hand, have been declining since 2012 and the trend is continuing this year.

Emanuele Norsa Italy

Crude steel production by German mills in the first six months this year totalled 18.257 million tonnes, down 5.3% on the first half of 2022, according to steel federation Wirtschaftsvereinigung (WV) Stahl.

The federation points out that output via the electric-arc-furnace route, especially, has diminished, with a drop of as much as 13% – to 5.412mt. The gap widened towards the end of the reporting period. In June, the drop for total crude steel was 8.4% year-on-year to 2.925mt; for EAF-based steel the drop was as much as 20%, with 839,000 tonnes produced.

The figures show that the overall steel consuming economy has slowed down, with production cutbacks being implemented towards summer. The federation explicitly mentions the construction industry as a problematic consumer sector. Given that construction steel is mainly made at EAF mills, that route is logically suffering most.

From unsubstantiated sources, Kallanish hears that production at German rebar mills has halved year-on-year. In fact, one big mill, Badische Stahlwerke, has kept one of its two production lines idled this year so far. Output might be higher at EAF mills that produce speciality bar qualities for sophisticated applications. This could be revealed in steelmakers’ upcoming half-year reports, for example of Swiss Steel with its four plants in Germany.

Apart from obviously sluggish demand, WV Stahl especially blames high electricity costs in Germany as a hurdle to recovery, which it says shows in the steep drop of EAF production. It notes that energy costs are three times that of two years ago and calls for political action to help the steel industry make its way through the technological transformation.

Christian Koehl Germany