European HRC players worried about the future influx of imports
In Western Europe, the upper price range for hot-rolled sheet, according to the price indicator Kallanish, remains unchanged since the beginning of August – €680/t EXW, the average price at the end of last week (September 1-8) was €660/t.
European market
On the Italian market, HRC quotations on September 1-8 decreased by 1.5% compared to the previous week – to €620-650/t EXW, according to the forecast, they will remain unchanged until the end of the current week. In general, the price of HRC in Italy has been in the upper range of €650-660 since mid-July.
European HRC buyers continue to refrain from buying these products, despite lower offers from some factories, notes Fastmarkets. Distributors are focused on reducing inventory amid negative market trends. Sources in the market say that the issue is not the price, but the lack of demand for these steel products.
Italian HRC producers have taken a wait-and-see attitude in view of the weak market. One of the local integrated mills still has the ability to offer hot-rolled coil for delivery in early October, indicating short order books.
The market believes that September will be a month with very few transactions, and the influx of imports in October will affect European prices.
It is expected that the quotas for the fourth quarter will be filled already in the first days of October, as significant volumes were waiting for customs clearance in European ports. So buyers are looking to sell current stocks before cheaper products will be cleared by customs. There is a possibility that steel mills in Europe will try to extend maintenance to prevent prices from falling.
«We adhere to the position that the demand from the end consumers in the flat rolled segment in the EU is stable. This is confirmed by data on production in the main sectors of consumption. But market players do remain pessimistic and cautious, wary of an influx of imports in October. But the price of imports from Asian countries is increasing amid more expensive raw materials. It is difficult to make assumptions about non-customs-cleared rolled steel in ports, as its volumes are unclear. This may turn out to be a kind of market horror», noted the chief analyst of GMK Center Andriy Tarasenko.
US prices
The US steel market has recently been pressured by a possible strike by the workers of the Big Three car producers (Ford, General Motors and Stellantis) – the companies have not yet agreed with the union (United Auto Workers) on the levels of wage increases and social guarantees. According to Argus Media, HRC prices in the US continued to fall earlier this week amid uncertainty about demand and where it will go.
According to the price agency, there were deep discounts on potential tonnages of 2 to 20,000 tons.The lowest recorded price for larger volumesin question was $610 per short ton, but there was no confirmation of any deals. The lead time for hot-rolled coil orders from American producers was 4-5 weeks.
However, as Kallanish writes, some sources in the market believe that a potential strike by auto workers will have minimal impact on domestic steel production in the US. At the end of last week, the price of steel coils in North America fell by 12.1% compared to the previous week – to $700-720/t EXW.
Demand in India
Indian mills have good demand for hot-rolled coil in the domestic market and better prices, which are forecast to grow further. Therefore, the country’s steel mills set export quotations equal to domestic ones, which foreign buyers consider unacceptable amid the availability of cheaper options. According to SteelMint, at the beginning of the current week, Indian HRC offers to the EU remained stable compared to the previous week at $690-695/t CFR Antwerp.
The situation in China
In China, during the past week, the price of hot-rolled steel continued to fall amid low demand, which is not typical for September. In addition, after several weeks of growth, HRC production also fell. Factories also accelerated deliveries to retailers to relieve pressure on inventories. The decline in domestic prices and the devaluation of the yuan began to affect the export prices of Chinese steel products. On September 8, HRC quotations in China were $555-565/t FOB, which is $5/t less than the previous week.
According to SMM, HRC purchases by Chinese steel companies were cautious at the start of this week as market players were skeptical about further improvement in consumption. Trading sentiment was positively influenced by macroeconomic data for August. Given the prices of raw materials, HRC prices are unlikely to fall significantly, but the imbalance between supply and demand is expected to increase.
Source: GMK Center
Looming US autoworkers strike rattles steel, scrap markets
A potential strike in the US automotive industry continued to rattle metals markets Sept. 14 as labor contacts between the United Auto Workers union and the Big Three automakers—Ford, General Motors, and Stellantis—were set to expire at 11:59 pm ET.
UAW President Shawn Fain said Sept. 13 the union would start targeted strikes at an undisclosed number of facilities at each company if new tentative agreements are not in place. A coordinated strike would mark the first simultaneous labor stoppage at the Big Three automakers’ production facilities, with the UAW representing roughly 145,000 members.
If the union moves forward with a strike, the plants that have been selected to strike were to be announced at 10 pm ET Sept. 14, while Fain told members that if their plant is not included, they should remain on the job.
The potential US strike comes as Canada’s autoworkers union, Unifor, is also in negotiations with automakers as its contracts expire Sept. 18.
Steel
Steel currently accounts for about 54% of the content of the average vehicle, according to the American Iron and Steel Institute. On average, 900 kg, or just under 1 st, of steel is used per vehicle, according to the World Steel Association.
US mills shipped a net total of 89.5 million st of steel in 2022, with 14% of domestic shipments going to the automotive industry, according to AISI data. The auto sector was the third-largest end market for steel in 2022, behind construction and service centers, which accounted for 30% and 24%, respectively, of total net steel shipments.
Concerns over a potential autoworkers strike already were having an effect on US flat-rolled steel prices and are clouding the demand outlook.
Sentiment for finished steel prices was more bearish for September than August, with market participants expecting prices to either stay flat or face more pressure, an S&P Global Commodity Insights US steel market survey showed Sept. 7.
In the survey of US producers, distributors, traders, and end-users, 100% expected finished steel prices to stay flat or decline further in September, up from 83% in August.
The Platts TSI US hot-rolled coil index, a benchmark for US flat-rolled steel pricing, has fallen $40/st since the start of September and is down $70/st from a month ago. The Platts TSI US HRC index was last assessed at $720/st on an ex-works Indiana basis Sept. 14. This is the lowest US HRC prices have been since early January, according to S&P Global pricing data.
Prices for hot-dipped galvanized sheet, which is used heavily in automotive applications, also have weakened in recent weeks. Platts assessed the TSI US HDG with the hot-rolled substrate at $890/st Sept. 14, down $60/st from the start of September, while the TSI US HDG with the cold-rolled substrate was assessed at $920/st, also $60 lower by the same comparison.
The whole flat-rolled steel market had stepped back from spot buying this week as participants awaited the outcome of the UAW contract negotiations, a trader said. Looking at a potential strike, the source didn’t expect to see any immediate effect on the market, but anticipated impacts on supply if a work stoppage lasted around three weeks or more.
“This is when you will see production being taken out,” the source said based on conversations with a mini-mill.
The source explained that pricing on HRC products was already near the cost of production for the mills, leading him to believe that cuts in supply could add to greater uncertainty in the market.
A separate trader was similarly concerned about potential volatility to flat-rolled finished steel products resulting from work stoppages.
“It really depends on how long it lasts and how mills react,” the source said referring to the potential for production cuts from US producers.
Still, other sources remained bearish, citing the potential for oversupply.
“We could possibly see prices tank with the overabundance of metal that may end up flooding the market,” said one Midwest service center source who was continuing to place spot orders on an as-needed basis.
Other buy-side sources were similarly holding back on placing spot orders, citing uncertainty from the contract negotiations whether directly involved in the automotive sector or not. One source was seeing dampened activity from multiple customers, including those involved in the construction sector.
Scrap
Steelmakers have long been looking toward the end of the autoworkers’ union contract with concern, and with maintenance outages at four key mini-mills in September, some have foreseen a potential supply overhang in finished steel if the negotiations hit an impasse, a scrap dealer in the Midwest said.
“Prime scrap settled lower by $50/lt for September, but some dealers are instead holding onto their busheling supplies rather than selling,” the dealer said. “The general sentiment is that if the strike gets worked out relatively quickly, there could be an uptick for steel as well as scrap. Auto plants are a key source of busheling, so supply could be tighter at least by the time November scrap price discussions get underway.”
A prolonged autoworker strike would be more clearly bearish for obsolete grades of scrap, which were supported at mostly sideways pricing in September buy-week negotiations by a lack of available supply, another Midwest scrap dealer said.
“An auto strike can be very bad for scrap demand. There are a huge number of scrap buyers making products that flow into the auto industry,” the dealer said.
Author Justine Coyne, Alexandra Szczupak, Greg Holt
Tata Steel close to agreement with UK government on funds for Port Talbot
While the UK government has declined to comment “on ongoing live negotiations” unions said that not only was the intervention “long overdue, but imposing a program without proper worker consultation is unacceptable.”
Tata UK, part of India’s Tata Steel group, is in talks with the UK government to secure funds to help the mill in its transition towards a much lower carbon intensity production, switching its blast furnace steelworks at Port Talbot in south Wales to electric arc furnace based production.
The switch to EAF based production is expected to cost up to GBP1.2 billion ($1.5 billion) with the company looking to secure around GBP500 million in subsidy. However, the switch would lead to redundancies as EAFs need fewer workers to run.
“GMB has urged ministers and Tata Steel to have a longer-term view on the decarbonization of steel. It is not a just transition if thousands of jobs are sacrificed in the name of decarbonization on the cheap,” the GMB union’s Charlotte Brumpton-Childs said.
“We wholeheartedly support the move to modernize and decarbonize the industry, in fact we have sought this type of investment for years. But ignoring technologies outside of Electric Arc Furnaces will mean tens of thousands of people will lose their livelihoods.”
A Tata Steel spokesperson told S&P Global Commodity Insights that “Tata Steel is continuing to discuss with the UK government a framework for continuity and decarbonization of steel-making.”
He gave no details on the timing on a decision but stressed that “any significant change is only possible with government investment and support, as also seen in other steel-making countries in Europe where governments are actively supporting companies in decarbonizing initiatives.”
The steel industry is responsible for around 5% of CO2 emissions in the EU and 7-8% globally. In Europe several projects have been announced to cut carbon emissions by 55% by 2030 and reach climate neutrality by 2050.
In Europe, Tata Steel is one of the largest steel producers, with two operating steel-manufacturing facilities — Port Talbot in the UK, which has a capacity of 5 million mt/year and the other IJmuiden in Netherlands with a capacity of 7.5 million mt/year. Both facilities produce flat steel products.
In October 2021 Tata Steel separated its UK and Netherlands operations into Tata Steel UK and Tata Steel Netherlands, which operate as two independent companies.
In the UK, steel production accounts for 2.7% of UK emissions. Over 80% of UK steel is made via the blast furnace route at Tata Stee’s Port Talbot and British Steel’s Scunthorpe plant, which together produce 5.9 million mt/year of steel and are responsible for 95% of emissions from steelmaking in the UK, according to a UK government report. The three main technology pathways likely to help UK steel-making reach net zero are: electric arc furnaces using recycled scrap steel; direct reduced iron using green hydrogen; and using carbon capture, utilization and storage (CCUS) technology with existing steelmaking infrastructure.
Author Annalisa Villa
Some post-summer restocking seen in European steel beam market
Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Northern Europe, was €720-780 ($773- 838) per tonne on Wednesday, widening downward by €30 per tonne from €750-780 per tonne on September 6.
One trader in Northern Europe said that despite low construction consumption there were “a lot of orders for stock replenishment” at around the $750-per-tonne level.
But sources said purchasing activity varied from place to place, with a second market participant reporting little need for restocking amid weak demand.
Fastmarkets heard that mills were pushing for higher levels, however sources were skeptical of the tradability of material being sold at increased prices.
Meanwhile, ferrous scrap prices in Turkey’s bellwether market remained rangebound in the week, with the market muted due to weak finished sales and negative economic conditions.
Fastmarkets’ calculation of its daily index for steel scrap heavy melting scrap 1&2 (80:20 mix) North Europe origin, cfr Turkey, was $370.24 per tonne on Wednesday, up $1.23 per tonne from $369.01 per tonne on September 6.
Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Southern Europe, was €720-790 per tonne on Wednesday, widening from €750-780 per tonne on September 6.
Published by: Holly Chant
European steel hollow sections prices flat, restocking slow
Fastmarkets’ weekly price assessment for steel sections (medium), domestic, delivered Northern Europe, was €770-800 ($827-859) per tonne on Wednesday, stable week on week.
The corresponding weekly price assessment for steel sections (medium) domestic, delivered Southern Europe, was €770-800 per tonne on Wednesday, unchanged from a week earlier.
Market sources said that there was little need for restocking due to weak demand, with one trader in Northern Europe expecting the poor demand for beams to endure throughout 2023 due to the low consumption by the construction industry.
“This year we will take all the losses in one [hit], and probably next year it will be better,” the same trader said.
A source in southeast Europe said that prices in Romania and Poland were stable in the week, around €710 per tonne CPT on a theoretical weight basis. The source added that offers from Turkey had been heard at $750-800 per tonne FOB.
Meanwhile, costs for hot-rolled coil feedstock in Europe have fallen in the past seven days amid low demand and expectations of a large volume of imports being cleared through customs in the fourth quarter.
Fastmarkets’ daily calculation of its steel hot-rolled coil index, domestic, exw Northern Europe, was €642.08 per tonne on Wednesday, down by €6.52 per tonne from €648.60 per tonne a week earlier.
Published by: Holly Chant
Thyssenkrupp establishes new Decarbon Technologies segment
Thyssenkrupp AG is establishing a new segment called Decarbon Technologies, as part of the reorganisation of its portfolio and launch of a group-wide performance-oriented programme, Kallanish hears from the group.
At the start of the new fiscal year, on 1 October 2023, its units thyssenkrupp rothe erde (Business Unit Bearings), thyssenkrupp nucera, Uhde and Polysius will be combined in the Decarbon Technologies segment. Each of the units in itself possesses key technologies for the decarbonisation of manufacturing industries.
With the creation of the new segment, thyssenkrupp is seeking a position as a technology leader for the energy transition, and giving full visibility to its extensive capabilities for the green transformation, it says.
The new Decarbon Technologies segment will in future have around 15,000 employees and generate annual sales of around €3 billion ($3.3 billion). The segment’s headquarters will be located in Dortmund due to its geographical proximity to the businesses. Further locations in growth regions such as the Middle East are being targeted.
The establishment of corporate and company co-determination in the form of a supervisory board and a works council is planned. The segment will be managed by thyssenkrupp AG chief executive Miguel López.
Christian Koehl Germany
German industries urge Berlin to alleviate power prices
Germany’s steel industry, among other manufacturing industries, has called on the federal government to step up a decision in favour of a temporary “bridge electricity price”, Kallanish notes.
National federations and workers’ unions from the steel, glass, chemicals, construction materials and nonferrous metals sectors issued in August a unanimous call to policymakers for a decision on how to make electricity affordable for industrial users. They joined to form the Allianz pro Brückenstrompreis – Alliance for a Bridge Electricity Price.
They have now issued another urgent appeal, after a recent meeting by the government on industrial matters failed to bring a result. The meeting “missed out on the opportunity to send a clear signal for a climate-neutral industry in Germany,” says Kerstn Rippel, managing director of Wirtschaftsvereinigung (WV) Stahl. Along with the other associations, WV is pleading for an introduction of the bridge price as of January 2024.
The plea was also carried to the European Commission by the minister presidents of the German states. “This strong signal set in Brussels must now also be heard in Berlin, where the budget is currently being negotiated,” says Bernhard Osburg, chief executive of thyssenkrupp Steel and current president of WV Stahl. “Now is the time to set the course for affordable electricity, because enormous future investments in the transformation of our industry must now be pushed forward.”
The joint call was also echoed in Switzerland by Swiss Steel. The firm runs most of its production in Germany through Deutsche Edelstahlwerke, which employs thousands of people, it notes. “This is about nothing less but the future of Germany as a location for industries,” Swiss Steel says in a statement.
Christian Koehl Germany
