EU steel market tries to estimate 1 Oct import arrivals
EU market participants are trying to estimate import arrivals for the upcoming ‘other countries’ import quota, resetting on 1 October, but this is proving a difficult task, with estimates ranging from 600,000t to 1.2mn t.
Sources are also speculating on 1 January arrivals, as some buyers have and are still concluding purchases for December arrival to guarantee clearance on the first day of next year. But a number of Asian suppliers, which import under the ‘other countries’ allocation, are already offering for delivery beyond the expected beginning-of-January exhaustion date.
The quota uncertainty appears to be lending some support to index-linked trade, as some buyers look to secure tonnages for next year, with arrivals before subsequent new quotas reset, without risking agreeing on the price today.
Looking at export customs data for Japan, Taiwan, Vietnam and Egypt — some of the largest suppliers to the EU under the ‘other countries’ quota — October arrivals could be more than 1mn t, although it is unlikely that all of this material will arrive and be put forward to customs by 1 October.
Japan exported about 185,000t of hot-rolled coil (HRC) to the EU in June and 83,000t in July, the latest month for which data are available. The average volume for this year so far is 118,000 t/month. In comparison, Taiwan has exported an average of 123,000 t/month of HRC to the EU this year so far, with the last data available in June at 157,000t. Vietnam, which supplied June figures last and showed no exports to the EU for that month, has exported an average of 70,000 t/month this year. Egypt has exported an average rate of 75,000 t/month to the EU.
Assuming an average transit time of two months from the Asian suppliers, taking the average 2023 monthly figure for the unavailable export data for the four countries mentioned above, and assuming there was a steady flow of goods, arrivals should be 1.0mn-1.1mn t in October from those four suppliers alone. The previous quota, for July-September, exhausted on 25 July, and there could be some material at port that could not clear in the July-September quota. The October-December quota is 933,743t, the same level as the previous quarter.
Some EU buyers have said they intend to wait until the first week of October to make significant purchasing decisions in order to evaluate what supply in the bloc will be like. It is likely that decisions on potential output reductions at EU mills will be influenced by the quotas’ utilisation, in light of the weakened market demand and rising production costs.
Circularity-focused business models needed for industrial energy transition
While many of the technologies needed to transition heavy industry toward net zero emissions exist today, developing business models that consider circularity and expanding clean energy sources are still hurdles to overcome, according to presenters at Reuters’ Industry Transition conference, held Sept. 12-13 in Pittsburgh.
“The structure of industry has to change to a certain extent as a result of a lot of this circularity,” said John Bissell, CEO of Origin Materials, which turns carbon found in biomass into useful materials. “Often the discussion is around price and cost, which is totally appropriate, but the value that you’re getting may not be perfectly tied to price in the way that it used to be.”
As industries transition toward more sustainable production, the vale chain needs to be built out from the start, Bissell said, otherwise it makes it more challenging economically.
Rich Fruehauf, chief strategy and sustainability officer at US Steel, said when looking at sustainability goals for 30 years down the line, there is not only the assumption that the technology will be available, but also the business models.
“When you think about for example, hydrogen, electrolyzer technology exists today,” he said. “We know how to make hydrogen, it’s the business model of making it cost effectively.”
Cleaning up steel production
For steel, which accounts for roughly 8% of global greenhouse gas emissions, the industry can get to a place close to near-zero emissions steelmaking between electric arc furnaces, non-GHG emitting power sources and direct-reduced iron made using green hydrogen,” Fruehauf said.
“The challenge here for us…will there be enough hydrogen at scale? Will it be cost-effective compared with natural gas?” he said, adding the industry also needs more low-carbon emitting electricity sources.
Michael Ducker, senior vice president and head of hydrogen infrastructure at Mitsubishi Power Americas, said some industries use hydrogen today or are looking at using hydrogen in the future, but they are using traditional forms of producing hydrogen which have a high carbon intensity.
However, layering in the Inflation Reduction Act tax credits, you start to see opportunities for parity or even cheaper green hydrogen compared to traditional production methods, but it requires commitments from end users to drive greater expansion of availability.
“When we’re developing projects, we’re looking at how we make sure that the cost and the carbon intensity is as low as possible,” he said. “When we bring that together, those are the first movers. But still, I think we’re seeing an evolving market where it’s not really taking off together with the demand side.”
H2 Green Steel, which is constructing a 5 million mt/year steel plant in Sweden which will use renewable hydrogen to replace coal in the steel production process, has applied a “founder model,” bringing in investment from customers across the value chain to fund construction, said chief technology officer Maria Persson Gulda.
To date, H2 has sold more than 1 million mt of steel to customers across Europe throughout various industries that will be 95% abated compared with green steel products available today in the market in Europe, Gulda said. The company also is charging a premium of 20%-30% compared with “brown steels.”
“That price tag will only increase due to CO2 carbon prices but also due to circularity because the more circular you are, the more the customers would like to have your product,” she said.
Author: Justine Coyne
HRC buyers in Europe postpone restocking, await greater clarity on Q4 import volumes
Trading in the European HRC market has been very limited in the recent weeks, with most buyers seen to be postponing any restocking until early October while they await more clarity regarding import volumes.
“Everybody is waiting for the start of the fourth quarter to see what will happen when custom clearance [of imported HRC] will start for the new quota period. It’s a bit of a gamble, but on the other side it’s a buyers’ market today,” a trader in the Benelux area said.
“Most buyers postpone making purchases, there is very limited restocking across some grades and dimensions but that’s all,” a trader in Germany said.
Estimations of tradeable values for HRC in Northern Europe were reported at €630-650 ($676-698) per tonne ex-works on Wednesday.
Most mills in the region still could offer October/November-delivery coil, which indicated weak order books.
One producer in Germany was said to be offering December-delivery coil already. But this information was not widely confirmed by buyers.
In general, offers for October/November-delivery coil in the region were reported within the range of €640-685 per tonne ex-works. The upper end, however, was deemed to be totally unworkable by buyers.
As a result, Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe, at €642.08 per tonne on Wednesday, down by €2.92 per tonne from €645 per tonne on Tuesday.
The index was down by €6.52 per tonne week on week, and down by €2.50 per tonne month on month.
Meanwhile, Fastmarkets’ calculation of its corresponding daily steel HRC index domestic, exw Italy, was €627.33 per tonne on Wednesday, down by €5.17 per tonne from €632.50 per tonne on Tuesday.
The Italian index was down by €7.67 per tonne week on week, and down by €6.35 per tonne month on month.
Market conditions in Italy were similar to those in Northern Europe.
Italian buyers preferred to hold back from trading, struggling to consolidate higher prices downstream.
“HR sheet is being sold in the secondary market barely at €700 per tonne delivered in Italy, so there is no way Italian mills can get €700 per tonne delivered for HRC,” a third trader said, referring to target level voiced by some mills in early September.
A mill source estimated achievable values for HRC in Italy at €630-640 per tonne ex-works.
Buyers’ price idea was around €615-620 per tonne ex-works but trading in Italy was generally very quiet, sources told Fastmarkets.
Mill sources pointed out, however, that such levels were very close to the cost line already.
Sources did not rule out a repeat of the situation in the European HRC market last year when local mills started to gradual take capacity offline to avoid further price declines.
“Reducing [HRC] output might help, but it will have a delayed effect in the market; if mills start idling furnaces in October, the market will see the effect in the first quarter of 2024,” a mill source in Italy said.
Imports HRC offers to Europe were stable on Wednesday from a day earlier but interest for imported coil was also quite low.
Asian suppliers were offering January-delivery HRC at €590-615 per tonne CFR to Italy, with the lowest offers coming from Taiwan.
Italian buyers estimated workable prices for overseas coil to be around €56-565 per tonne CFR, but no such offers were available at present.
Published by: Julia Bolotova
European steel CRC, HDG producers squeezed between low demand, high costs
Slow demand and competitive import offers were the principal factors dragging on European domestic CRC and HDG prices, they said.
European mills were reported to be trying to get “some €20-30 [$21-32] per tonne” more for both products, but buyers were not accepting higher prices.
In Southern Europe, local producers were offering around €750-760 ($805-817) per tonne ex-works for CRC and €770-780 per tonne ex-works for HDG.
Mills in the region could mostly offer coil for November delivery, although some mills still had October delivery available, according to market sources.
Buyers, however, estimated tradable prices to be lower, at €730-740 per tonne ex-works for CRC and €750-760 per tonne ex-works for HDG.
“Demand is quite weak [for CRC and HDG] – trading is almost nil,” a trading source said. “Automotive demand is likely to dip further in the fourth quarter, and prices for HRC [the feedstock for CRC production] will remain under pressure, so I think we will soon see lower prices for CRC and HDG as well.”
European mills pointed out, however, that they could not reduce their prices by much, because the current values were already close to the cost line for them.
“Energy costs have risen again across Europe, and annealing [the heat treatment procedure for CRC production] is very energy-intensive,” a mill source in Southern Europe said.
For example, in Italy, electricity prices were €118.24 per MWh on September 1, but by September 13 they had climbed to €128.17 per MWh, according to Italy’s exchange for electricity and natural gas spot trading, Gestore Mercati Energetici (GME).
Fastmarkets’ weekly price assessment for steel CRC, domestic, exw Southern Europe, was €730-750 per tonne on Wednesday, widening downward by €10 per tonne from €740-750 per tonne the week before.
The corresponding weekly price assessment for steel HDG, domestic, exw Southern Europe, was €750-760 per tonne on Wednesday, down by €10 per tonne week on week from €760-770 per tonne.
Meanwhile, competitive offers from overseas suppliers were also dragging European prices downward. A transaction for South Korea-origin CRC with end-October shipment was reported at €660 per tonne CFR to Southern Europe during the assessment week.
A supplier from Japan was offering CRC for November shipment at $725 per tonne CFR to Italy.
And a Vietnamese supplier was said to be trying to achieve $830-840 per tonne CFR for 0.5mm HDG with Z100-120 coating, for November shipment.
Published by: Julia Bolotova
Presentations shown at Worldsteel Open Forum 2023
This week the Worldsteel Open Forum 2023 was held in Antwerp, Belgium.
The Open Forum aims to be a conversation about climate, involving the entire steel value chain and all its stakeholders to share ideas on how to accelerate the decarbonization of other steel industries:
# Climate Policy Implementation
# Financing the Transition
# Raw Material Requirements
# Energy Availability
# Steel Using Sectors
# Chain of Custody
The presentations delivered at this event can be downloaded using this link: Presentations.