Day: 8 September 2023

Fastmarkets’ weekly price assessment for steel sections (medium) domestic, delivered Northern Europe was €770-800 ($859- 892) per tonne on Wednesday, down by €20 per tonne from €790-820 per tonne.

Similarly, Fastmarkets’ weekly price assessment for steel sections (medium) domestic, delivered Southern Europe was €770-800 per tonne on Wednesday, down by €20 per tonne from €790-820 per tonne on August 30.

Despite mills targeting price rises, demand and sentiment remain weak, sources said.

But raw materials costs are expected to rise and that could stimulate trading activity, sources said.

“We expect prices to go up in the coming days, based on higher input costs. Prices are unworkably low at the moment,” a buyer source said.

But other buyers were skeptical that any upward price movements would be achievable given the weak end-user demand.

Fastmarkets’ calculation of its daily index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey, was $369.01 per tonne on Wednesday, stable week-on-week.

Published by: India-Inés Levy

The recent attempts by European steel mills to push for higher prices were broadly unsuccessful because there was no support from end-user demand.

In general, tradeable prices for HRC in northern Europe, reported by buyer sources, remained within the range of €630-650 ($676-697) per tonne ex-works, in line with what was seen in the market before the summer stoppages.

This was some way below official offers that were pushing toward €700 per tonne ex-works.

Mills in the region were offering October-November delivery coil, sources said. But buyers were postponing purchases, booking only “what’s strictly necessary” and were assessing the market situation.

Sources said that the wait-and-see stance taken by the market could be partially explained by expectations of large tonnages of cheaper imports, waiting at European ports to be customs-cleared, ready to flood the European market from October 1, when the new EU import safeguard quota period begins.

“According to our estimate, more than half-a-million tonnes [of HRC] is sitting in ports and awaiting the new allocation,” a trading source in Germany told Fastmarkets. “Those volumes were bought at very cheap prices, way below €600 per tonne CFR, so when this material enters the market, domestic prices [for HRC] will be under heavy pressure.”

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe, at €648.75 per tonne on September 7, up by €0.15 per tonne from €648.60 per tonne on September 6.

The index was down by €1.25 per tonne week on week but up by €2.92 per tonne month on month.

And Fastmarkets’ calculation of its corresponding daily steel hot-rolled coil index, domestic, exw Italy, was €634.17 per tonne on September 7, down by €0.83 per tonne from €635.00 per tonne on September 6.

The Italian index was also down by €0.83 per tonne week on week and by €2.08 per tonne month on month.

Buyers’ estimates of achievable prices were reported at €640-650 per tonne delivered, which would net back to about €625-635 per tonne ex-works.

Mills were pushing offers closer to €700 per tonne delivered (€685 per tonne ex-works), but such prices were not achieved in deals.

Trading in Italy’s market was also quite dull, and buyers believed that there was no room for a substantial price increase in September.

“There were hopes for restocking, but buyers are postponing purchases to late September-early October. Everyone wants to see the situation with imports – it will be a deal-breaker for the market,” a trader in Italy said.

New import offers from an Indian supplier for December-arrival HRC were heard around €600 per tonne CFR to Italy.

Taiwan-origin material with October-November shipment was on offer to the country at a similar price of €600-610 per tonne CFR.

South Korea-origin HRC for October-November shipment was offered at €620-625 per tonne CFR to Italy.

And finally, several sources said that Ukraine-origin HRC was on offer to Italy at €600 per tonne CFR, for late October-early November shipment.

Published by: Julia Bolotova

But while some were bearish and forecast a short-term decline in prices, others said demand, and therefore prices, would rise steadily through September as restocking activity picks up.

Fastmarkets price assessment for steel reinforcing bar (rebar) domestic, exw Italy was €645 – 655 ($692-703) per tonne on Wednesday, narrowing downwards by €15 per tonne from €645-670 last week.

If demand does not rise, steel mills could intensify output cuts, Fastmarkets understands.

“During the coming week, and the next one, rebar prices may continue to decrease because the market is flat, and exports are very low,” a buyer source said.

And a producer source told Fastmarkets little would be happening in the short term:

“The market is still asleep from the summer holidays,” the source said.

While market conditions may not support immediate price rises, producers remain reluctant to reduce prices further.

“[Prices] cannot move down further,” a second producer source said. “Prices are already heavily below production costs [and] any further decreases would unavoidably push mills to stop production [to avoid further] losses because they are already too big.”

Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered, Spain was €640-650 per tonne stable week on week.

In the Southern European wire rod market, meanwhile, prices were also unchanged amid subdued trading activity, sources said.

And Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Southern Europe, stayed at €580-600 per tonne on Wednesday.

Published by: India-Inés Levy

CBAM is a tariff on carbon-intensive products such as steel and extends carbon pricing to imports coming into the European Union.

Japan and South Korea are the prime movers in the decarbonization space in Asia, with numerous steelmakers already offering green steel products to buyers in the region through a mix of green steelmaking techniques and carbon-level calculations – including Fastmarkets’ Asia green steel premium, which is being launched on Friday September 8.

Fastmarkets’ weekly green steel, flat-rolled, regional differential to cfr Vietnam HRC index, Japan/South Korea/Taiwan, will apply to steel produced with maximum Scope 1,2 & 3 emissions of 1.3 tonne of CO2 per tonne of steel.

In Japan, Nippon Steel is using the mass-balancing method to measure its carbon dioxide emissions footprint per tonne of steel produced, while simultaneously using a new electric-arc furnace (EAF) at its Setouchi Works to cut emissions in its “Carbolex” steel.

Nippon Steel is also looking into using hydrogen to produce low-carbon steelmaking raw materials, including direct-reduced iron (DRI), which will have a growing role to play in the production of green steel.

JFE Steel has started marketing its “JGreeX” green steel, which is produced with “highly-advanced steelmaking processes [that] produce significantly less carbon dioxide.” JFE Steel plans to achieve carbon neutrality by 2050, with planned developments including carbon recycling blast furnaces, carbon recycling DRI, hydrogen-based processes and large EAFs. The company is already running trials using ferro-coke as a new raw material.

In South Korea, Hyundai Steel is ramping up the marketing of its low-carbon “HyECOsteel” and is aiming to produce high-quality automotive steel by using ferrous scrap, blast furnace-based molten iron and hydrogen-based DRI. It has successfully produced low-carbon, high-strength steel plate using its “Hy-Cube” EAF technology, in collaboration with downstream automotive partner Hyundai Motors and its subsidiary Kia.

Compatriot steelmaker Posco is banking on its “Greenate” brand of steel products to fulfill downstream buyers’ ESG needs. It plans to use its “HyREX” hydrogen reduction steelmaking technique, which uses iron ore fines and 100% hydrogen in a reduction furnace to produce DRI, which is then fed into an EAF to produce hot metal.

In local media reports, Posco has said that it had already sold low-carbon steel to LG Electronics, has signed an offtake green steel deal with car producer Volvo and named Samsung Electronics as another potential customer.

Elsewhere in Asia, Baosteel is looking to start up a hydrogen/natural-gas based DRI plant at its Zhanjiang facility in southern China, while Hebei Iron & Steel in northern China is to supply automaker BMW with steel made from hydrogen-based DRI. In Thailand, Meranti Steel is looking to produce high-grade HRC with hydrogen-based DRI, and in Singapore, major steel market participants expect to see price differentials for low-carbon rebar.

While Fastmarkets’ new Asian green steel premium aims to make clearer the nascent price differentials for low-carbon steel, this process does not start or end with steelmakers and many others in the steel and ferro-alloys supply chain are also looking at green premiums.

Iron ore producers, for instance, are watching green steel premiums keenly to calculate the capital expenditure needed for new beneficiation plants and are looking at investing in areas such as the Middle East, where abundant natural gas makes it an ideal location for natural gas or hydrogen-based metallics production.

While such metallics output will undoubtedly first be funneled toward the European market, it is also likely that it will find its way to various other destinations – wherever steelmakers find they require low-carbon steelmaking raw materials. And these raw materials will naturally incur their own green premiums if rising demand creates an obvious price differential to non-green steelmaking raw materials.

Even coking coal miners can benefit from green steel premiums if their metallurgical coal is high-strength, low-ash and low-sulfur, Fastmarkets understands. And miners that own Tier-1 premium hard coking coal assets will continue to reap the benefits of decarbonization as steelmakers continue to try to reduce emissions by using higher-strength coke.

Low-carbon steel premiums are a brand new tool in the transition to greener steel, but they will undoubtedly start to take firmer shape in the years to come when raw materials and steel products start to adhere to Scope 1-3 standards and steelmakers fight to stay relevant and retain market share.

Published by: Paul Lim