Steel group SSAB markets ultra-low emissions steel to Alfa Laval, Peab
Steel group SSAB said Sept. 27 that its SSAB Zero brand of steel with ultra low emissions is being used by industrial equipment manufacturer Alfa Laval.
Alfa Laval is using the steel brand in heat exchangers, with 100 units planned this year and “significantly more” units in future, SSAB said. Alfa Laval aims to reduce emissions from its raw materials, with plans to produce the world’s first carbon neutral heat exchanger and be carbon neutral by 2030, SSAB said on its website. Epiroc is also using SSAB Zero, with Peab expected to take delivery of the grade next year, SSAB said.
SSAB Zero is made from recycled steel scrap and renewable power and biogas, with less than 50 kg of CO2 emissions per metric ton of steel in Scope 1 and 2 emissions, including those associated with purchased energy and transportation, it said.
SSAB operates electric arc furnaces in the US, which produce slab for further processing into products.
SSAB has trademarked fossil-free steel as a brand covering steel produced using direct reduced iron from green hydrogen, with availability through its HYBRIT joint venture with Swedish iron ore miner LKAB and Vattenfall. SSAB plans to deploy EAFs in Sweden and Finland, to match higher production volumes of green DRI. This will allow SSAB to produce steel commercially without using blast furnaces and iron ore with met coke, coal and oil and gas-based fuels.
EC approves acquisition of Germany’s Kloeckner & Co SE by private investment firm
The European Commission has approved the acquisition of Germany-based independent steel and metals distributor Klockner & Co SE by private investment firm SWOCTEM GmbH, it said in a statement released Sept. 27.
EC scrutiny of the acquisition occurred in response to concerns about fair competition within the distribution market for flat carbon steel products and enclosures.
The EC subsequently concluded that the acquisition would not raise competition concerns in light of the companies’ “limited combined market position” that would result from the proposed transaction.
Kloeckner & Co’s distribution and service network numbers 160 sites in 13 countries. Last year it shipped almost 4.7 million mt of products to its 90,000 strong customer base, and is particularly known for its advances in digital transformation of distribution, aiming to digitalize and largely automate its supply and service chain.
In August, the company announced that it had completed the acquisition of National Material of Mexico (NMM), an independent service center and materials supplier catering to automotive and industrial end markets in North America.
Swoctem, a company owned by German businessman Friedhelm Loh, is Kloeckner’s biggest shareholder and announced the intent of a takeover bid on March 13, as it aimed to raise its shares to more than 30% in the distributor to obtain more flexibility for future share purchases.
Under German finance law, a voluntary takeover offer has to be issued to all shareholders when shares cross the 30% threshold.
Loh, who has ties in various German steel enterprises, namely steel service center Stahlo, started investing in Kloeckner in 2016 and gained two seats on Kloeckner’s supervisory board when he increased his shares to 25.25% that year.
Platts, part of S&P Global Commodity Insights, assessed domestic hot-rolled coil prices in Northern Europe at Eur625/mt ex-works Ruhr Sept. 26, down 27.3% since March 30.
US incentives support steel decarbonisation: worldsteel forum
The Inflation Reduction Act (IRA) introduced by the US government to spur the economy, although not steel-specific, provides a good basis to support cleaner steelmaking, several global experts find.
The IRA was a key theme at worldsteel’s Open Forum – Climate Action in Antwerp earlier this month, during a session titled “Heterogeneity of steel decarbonisation pathways”, featuring the heads of international steel associations. IRA was brought up by Philip Bell, president of the Steel Manufacturers Association (SMA), who said: “I wish more governments would use that incentive-based approach.”
His wish was echoed from the EU side by Axel Eggert of Eurofer. “The EU’s steel industry is jealous of that programme; overall, it is a positive move to incentivise decarbonisation in the USA,” Kallanish heard Eggert say at the conference. He was more sceptical on the EU’s Carbon Border Adjustment Mechanism (CBAM), which he said is “going in the right direction, but is a drop in the ocean”.
The effect of IRA was put into figures by Kwasi Ampofo of BloombergNEF, who found that efforts to make green steels “get a bit cheaper with the US’s IRA subsidies”. Concretely, he assessed that using carbon capture and storage would cost on average $613/tonne, and using hydrogen on average $653/t with IRA credits. Without the credits, both methods would cost around $50 more.
One participant in the discussion highlighted the complexity of steel pricing if too many political tools are involved. “The steel markets will be confused,” said Hiroyuki Tezuka of the Japan Iron and Steel Federation (JISF). Mechanisms like subsidies already create trade disputes and dilute basic steel pricing. “And soon we are facing CBAM, too, which will be adding confusion,” he noted.
The discussion panel also included Kevin Dempsey of the American Iron and Steel Institute (AISI), Huang Dao of the China Iron & Steel Association (CISA), and Alok Sahay of the Indian Steel Association (ISA).
Christian Koehl Germany
Green steel acceptance needs work: worldsteel forum
Most steel end-users are still relatively oblivious to the challenges their businesses face from the transition to low-emission steel usage, found participants at worldsteel’s Open Forum-Climate Action earlier this month.
Speakers largely agreed that small and medium-sized users (SMEs) are still a long shot from the green steel issues discussed at the level of steelmakers. In the case of thyssenkrupp, when talking to its customers’ customers, Marcel Hilgers of the group’s Technical Customer Service found that SMEs plan to follow the big users, once they advance their transitions. But the ultimate decision would still be made at chief executive level. “It is a strategic decision,” Hilgers pointed out.
He noted that SMEs can be overwhelmed when serving big buyers that want to go green. “I have seen tenders requesting sustainable steels in the small print with so many exceptions and complex conditions,” he said at the event attended by Kallanish. This left companies insecure about how to deal with green steel, he added.
The particular challenges of the construction industry were addressed by Olivier Vassart, ceo of ArcelorMittal’s Steligence division. He noted that a premium of €200/tonne ($220) for green steel would be minimal, and would mean only GBP 1 in extra building costs per square metre in London newbuilds. But such rationales stand against an industry where most players “do not have pricing power and every penny counts”, he explained.
He noted that, to favour structural steel over concrete, the architect must be intercepted at an early sketching phase. “You cannot build a building in steel once it is designed in concrete,” Vassart said. Along the same lines, Hilgers added that policymakers, too, must be made more aware of steel as an option. “For them, concrete is simply bad, while wood is good. And with steel, they would not know if it is good or not,” he maintained.
In a general remark on consumers’ mentality, Hilgers stated: “It will take a while before people start choosing the sustainable toothbrush from the store shelf.”
Christian Koehl Germany
Ensure quick CBAM compliance, consultants warn conference
Importers of steel from outside of the EU should quickly get familiar with the Carbon Border Adjustment Mechanism (CBAM) and start collecting the relevant information from their suppliers. With CBAM just days away from implementation, however, many steel buyers will struggle to obtain data for emissions imbedded in their products, especially if these have been processed by multiple suppliers.
At a Polish Union of Steel Distributors (PUDS) meeting in Warsaw on Wednesday, Tomek Orlowski and Przemek Januchta from PricewaterhouseCoopers warned that importers will ultimately bear responsibility for incorrectly calculated emissions. Following CBAM implementation from 1 October, steel importers will need to declare details about their suppliers, including manufacturing equipment and Scope 1 emissions levels.
Also important will be to state whether the supplier needs to pay any carbon tax in their home market, as this will allow the importer to reduce the cost of its emissions by the amount of tax paid in the supplier country.
During CBAM’s transition phase, which runs till 2026, there will be a €10-15/tonne of undeclared emissions penalty, the PwC consultants said at the event attended by Kallanish.
One member of the audience argued that suppliers are not yet able to provide EU importers with detailed information about their emissions. This is made all the more complicated by multiple levels of processing along the supply chain. He gave the example of one major European importer who buys hot rolled coil that was produced by a mill that bought slab from another producer, who in turn bought raw materials from somewhere else.
To account for teething problems, the EU is easing in the procedure, meaning that importers will be allowed to modify their first two quarterly CBAM reports until the submission deadline for the third report – 31 July 2024.
However, Januchta warned: “Don’t leave it till the last minute.” The next few quarters are designed to get to know the system and push suppliers into following the regulations. It’s also a case of competition. Those importers who are quicker at adapting to the new rules will ensure business continuity, he added.
In Poland’s case, the National Centre for Emissions Management (KOBiZE) will be responsible for processing emissions data from importers and ensuring compliance, in cooperation with Polish Customs.
Under CBAM, there will be no trading of emissions allowances like happens today with the Emissions Trading System, in order to prevent speculation. An importer will be able to sell back up to one third of its unused certificates only to authorities.
Adam Smith Poland
Renewed market weakness amid China slowdown concerns OECD
The OECD Steel Committee expressed grave concern this week about the deterioration in global steel market conditions currently being driven by growing overcapacity, softening demand for steel, and government interventions in some economies, Kallanish notes.
The gradual recovery in global steel market conditions that began earlier this year was short-lived, with China’s post-Covid economic rebound not living up to expectations. The latest data point to renewed weakness in steel market conditions. Demand is starting to falter amid growing concerns over China’s real estate crisis and the impact this will have in international steel markets, the committee chair summarised after the 94th session.
Five consecutive years of global steelmaking capacity growth have led to burgeoning over-investment in the industry, with most of this concentrated in BF/BOF steel production routes. World steelmaking capacity is swelling to a record-high level of 2.5 billion tonnes in 2023, far in excess of steel demand prospects, according to the OECD. The organisation projects global capacity to surge by 56mt in 2023 alone, taking the gap between global capacity and steel production to 612mt.
“In China, land-use rights, cash grants, cash awards, tax breaks and reduced tax rates are commonly provided by local governments to steel firms to incentivise them to relocate to other regions, modernise their equipment and increase the concentration of the domestic steel industry. This is strengthening ‘national champions’ with considerable global reach that are investing abroad and securing raw material sources and technologies, including through joint ventures,” the OECD chair observes.
“Data show that [Chinese] state involvement in steel firms often comes with much larger subsidies both in the form of cash transfers and below-market borrowing, and thus has a greater potential to worsen the global steel excess capacity issue,” the summary adds.
Growth in global steel demand is expected to decline in 2024, with forecasts being ratcheted down in the wake of lower economic growth projections and risks emanating from the downturn in Chinese demand.
While the steel industry is advanced in its pathway to decarbonisation, the Committee noted that governments still need to improve the enabling conditions to accelerate this process. This includes addressing market distorting subsidies and excess capacity which undermine the industry’s ability to address this challenge.
Another key aspect is to ensure the availability of critical raw materials for the steel industry’s green transition, including strategic inputs such as ferrous scrap. Participants emphasised the positive role that market forces play in fostering scrap supply, as well as the need to work together to ensure that government policies ensure continued open access to critical minerals, the chair’s summary concludes.
Adam Smith Poland
Prices, quotas limit interest in EU HRC imports
European traders have in recent weeks noticed very little interest from buyers to make new orders of hot rolled coil from non-EU suppliers. This is due to uncompetitive offers, as well as expectations that new safeguard quota availability will be very limited in the fourth quarter of 2023 and Q1 2024.
Currently, traders in southern Europe are reporting offers at €605-645/tonne ($640-680/t) cfr for HRC. These levels are considered uncompetitive by buyers, who are preferring to destock available material rather than order new import volumes.
“We are in a situation similar to the second half of 2019,” a trader tells Kallanish. “Nobody wants to buy and the high interest rates are hitting sentiment even further.”
In addition to prices, buyers are reluctant to place new orders as they are aware that quotas for most Asian import sources as well as Egypt are expected to be rapidly used in Q4 2023 and Q1 2024.
During Q3, import quotas for South Korean HRC have been fully utilised, similarly to those for the “other countries” sub-group, which includes Egypt and Japan. Indian quotas this quarter have been 80% utilised, but traders believe that in Q1 2024, these will be fully utilised, based on orders already placed in recent months.
Only 40% of Q3 quotas assigned to Turkey for HRC have been used, but duties continue making Turkish offers uncompetitive for European markets, Kallanish understands.
“I don’t expect importers to restart ordering HRC before November this year,” another trader comments.
Emanuele Norsa Italy
European buyers push for lower heavy plate prices; mills try to resist
Italy
Restocking was limited in the country during September, with buyers constantly pressuring prices down.
Notably, bids from stockholders for commodity-grade heavy plate were reported at €670-680 ($711-722) per tonne ex-works. Re-rollers said that selling at such costs might only be profitable for someone who’s using Russia-origin slab.
Producers were trying to maintain offers for the spot market at €720-730 per tonne ex-works, while rare transactions were heard at €700-720 per tonne ex-works.
Italian re-rollers could still offer end-October delivery plate to the market.
For long-term projects, plate offers were ranging €730-750 per tonne ex-works, sources said.
As a result, Fastmarkets’ weekly price assessment for steel domestic plate 8-40mm, exw Southern Europe remained at €700-720 per tonne on Wednesday September 27, stable week on week.
Import plate offers to Italy were rare in the past week, with the dollar strengthening against the euro further limiting interest for overseas bookings. The gap with domestic prices was also too low to spur any demand for import plate.
Notably, plate offers from South Korea and Indonesia were reported at €680-690 per tonne CFR for November shipment.
Northern Europe
Fastmarkets’ weekly price assessment for steel domestic plate 8-40mm, exw Northern Europe was €820-840 per tonne on Wednesday, stable week on week.
German mills continued avoiding giving firm offers on the spot market, according to participants, with indications heard at €840-880 per tonne in the week to Wednesday. The upper end, however, was deemed totally unworkable due to available cheaper alternatives from other European suppliers.
Buyers’ estimations of achievable values were heard at €800-820 per tonne ex-works.
There was market chatter about sales from a German mill down in the spot market at the price below €800 per tonne ex-works for S355JR-grade heavy plate, but it was not widely confirmed by all sources.
“German mills are traditionally more focused on project business, particular selling higher grades [of steel plate] like foundations for offshore and windfarms, bridges, etc. Spot market is not a priority for them, only sporadic volumes to close gaps in order books, to regular customers,” a trading source said.
Restocking was also going slow in the region, despite inventories trending lower. Stockholders claimed slow sales and low prices downstream, and therefore were not rushing with fresh bookings.
Offers from one Nordic mill were heard around €790 per tonne EXW for about eight weeks delivery, same as a week earlier.
A re-roller from the Czech Republic was offering S235-grade plate to Poland and the Czech Republic at €735-740 per tonne EXW.
But sources said that the lowest prices were only possible from the producers that are using Russia-origin slab.
Published by: Julia Bolotova
Slow demand, competitive imports drag on European steel CRC price; HDG steady
European mills tried to avoid making further price reductions for CRC and HDG, citing high production costs.
Notably, offer prices in Southern Europe on CRC for delivery in late November or early December were in the range of €730-750 ($773-794) per tonne ex-works, and about €750-770 per tonne ex-works for HDG.
Buyers’ estimates of tradable values were in the range of €710-720 per tonne ex-works for CRC and no higher than €750 per tonne ex-works for HDG in Southern Europe. One source reported a bid for CRC at €700 per tonne ex-works, but producers were reluctant to accept such low prices.
Slow demand from the end-user side remained the major concern for the market, with no rebound in sight in the fourth quarter of 2023, market sources said.
“The construction sector is very slow at the moment, with no new projects,” a trader in Europe said. “Automotive demand is likely to drop further in the fourth quarter and, with prices for hot-rolled coil [the feedstock for CRC production] trending lower, I think we will soon see lower prices for CRC and HDG as well, unless mills start to reduce output.”
Fastmarkets’ weekly price assessment for steel CRC, domestic, exw Southern Europe, was €720-730 per tonne on Wednesday, down by €10 per tonne from €730-740 per tonne the week before.
The corresponding weekly price assessment for steel HDG, domestic, exw Southern Europe, was €750-760 per tonne on Wednesday, unchanged in the past fortnight.
Meanwhile, competitive offers from overseas suppliers were putting additional pressure on European prices.
“Unlike for hot-rolled coil, for CRC imports there are no quota concerns [related to EU import restrictions] and the price gap with European mills is quite workable,” a trading source in Italy said.
Offers of Japan-origin CRC for November shipment were reported at €675 per tonne CFR to Southern Europe, while CRC offers from South Korea and Taiwan were around €680-690 per tonne CFR.
A Vietnamese supplier was offering $840 per tonne CFR for 0.5mm HDG with Z100-120 coating for November shipment.
Published by: Julia Bolotova
European HRC producers reject lower bids despite low orders, citing costs
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe, at €625.63 ($662.05) per tonne on September 27, down by €2.45 per tonne from €628.08 per tonne on September 26.
The index was down by €9.25 per tonne week on week and by €18.12 per tonne month on month.
Trading in the region has been persistently weak throughout September.
Slowing consumption and a poor macroeconomic outlook were limiting purchasing activity in the spot market, according to sources.
“We can wait a couple weeks more to make any bookings; our inventories are enough for the current levels of demand [from end users],” a stockholder in Germany said.
Mills had short orderbooks and could offer HRC with 5-6 weeks lead times, sources said.
But producers tended to reject lower bids despite low orders, citing mounting input costs.
Notably, a bid for HRC in the region was reported at €590 per tonne ex-works, but an integrated mill had reportedly rejected it.
“€600 [per tonne ex-works] is already a breakeven price for us, anything lower than that would be just lossmaking,” a mill source said.
Producers avoided giving generalized offers to the market, claiming that “buyers just talk the price down and make no bookings.”
Estimations of tradeable values from the mills in Northern Europe were heard at €620-640 per tonne ex-works.
Buyers gave indications of €610-630 per tonne ex-works, and one source reported a bid a €600 per tonne ex-works, but it was not clear by the time of publication whether it was accepted by the seller.
Sources agreed that output cuts at European steelmakers could help balance the oversupplied market. Nonetheless, the effects of the reduced output will likely only be seen in the first quarter of 2024.
“We need to see European steelmakers gradually switching off furnaces – that would create supply concerns and motivate buyers to make bookings for the first quarter [of 2024]. But so far, only a few mills [have cut output],” a trading source in the region said.
Meanwhile, Fastmarkets’ calculated its daily steel hot-rolled coil index, domestic, exw Italy, was €608.96 per tonne on September 27, down by €4.79 per tonne from €613.75 per tonne the previous day.
The Italian index was down by €13.12 per tonne week on week and by €26.04 per tonne month on month.
Trading in Italy was said to be largely non-existent, with buying interest for both domestically produced and imported HRC close to nil.
Early November-delivery coil was offered by Italian mills around €630-640 per tonne delivered, which would net back to €615-625 per tonne ex-works.
Bids were reported at €570-590 per tonne ex-works on Wednesday, but those were not accepted by the mills due to the costs factor.
“Mills will defend €600 per tonne ex works as a threshold, the line they wouldn’t like to cross. [We] will see how situation with imports shapes in October, probably by the end of the month buyers will return to the market and start bookings for January delivery,” a buyer in Italy said.
Meanwhile, buying interest for imported coil was also very weak in Europe, mainly due to the long lead times, the small gap with domestic prices and safeguard-related risks.
HRC from Asian countries was said to be on offer at €600-610 per tonne CFR Italy for January arrival, with only Vietnamese mills offering below that levels – at €585 per tonne CFR.
Bids from European buyers were no higher than €540-550 per tonne CFR.
Therefore, no new business for overseas coil was reported over the past week due to the bid-offer mismatch.
Published by: Julia Bolotova