Polish domestic rebar prices down on weaker demand, wire rod steady
Rebar
Last week, mills were offering rebar at prices in the range of 2,800-2,850 zloty ($665-676) per tonne CPT, which would net back to about 2,780-2,820 zloty per tonne ex-works, buyer and consumer sources told Fastmarkets.
Similar figures were shared by another distributor source, who estimated mills’ offers in the range of 2,830-2,850 Polish zloty per tonne CPT, which would net back to 2,810-2,820 zloty per tonne ex-works.
But workable prices for rebar were about 2,800 zloty per tonne CPT, which would net back to 2,780 zloty per tonne ex-works, according to the majority of sources.
Deals have been concluded at even lower prices, however, albeit for large quantities. Notably, during the assessment week, a transaction for around 1,000 tonnes of rebar was reported at 2,750 zloty per tonne CPT, which would net back to 2,730 zloty per tonne ex-works.
In the secondary market, rebar prices were reported around 2,820-2,830 zloty per tonne CPT. Distributors were compelled to reduce their offers from 2,850 zloty per tonne CPT, reported last week, because such prices turned out to be unsustainable.
“Traders stopped buying because they had purchased enough, and although construction projects slowly started to pick up, soon they will be frozen [to a standstill] because of the winter season,” a distributor source told Fastmarkets.
Similar concerns were shared by another buyer source. “The main concern is that demand is too weak already,” this source said. “And it usually slows down in the fourth quarter of the year due to the winter cold.”
Consequently, Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, exw Poland, was 2,730-2,810 zloty per tonne on October 20, down by 20-50 zloty per tonne from 2,780-2,830 zloty per tonne the week before.
Some market participants were optimistic about the future after the recent parliamentary elections in Poland. Three opposition parties that promised to restore democratic standards in the country together won more than 54% of the votes. This put them in a position to form a coalition majority.
“If the Polish government becomes democratic again, there are chances that the country will benefit soon from EU funds. This will give a boost to many infrastructure projects, of which there are very few now,” a distributor source told Fastmarkets.
The first positive effects from the elections were already obvious, according to another consumer source, because the Polish zloty was becoming stronger.
According to online currency converter Oanda.com, on October 23, the Polish currency was trading at 4.46 zloty to €1, and 4.21 zloty to $1. On October 16, when the first exit polls were announced from the election, it was 4.53 zloty to €1, and 4.31 zloty to $1.
In comparison, on September 25, it was trading at 4.61 zloty to €1 and 4.33 zloty to $1.
“The Polish zloty is getting stronger, and this means that imports will become more competitive,” a consumer source told Fastmarkets. He was also optimistic about the development of the construction sector, saying that some residential projects have started.
Wire rod
Polish mills offered wire rod about 3,000-3,100 zloty per tonne CPT in the week to October 20, sources told Fastmarkets. But the market would not accept prices of more than 3,000 zloty per tonne CPT.
The workable price varied in the range of 2,800-2,900 Polish zloty per tonne CPT, according to the market sources.
Deals for small and medium tonnages were reported around 2,850 zloty per tonne CPT during the week.
But demand was still comparatively low. “It is a ‘dead’ season now,” a distributor source told Fastmarkets. “Customers have purchased the quantities they needed for October, and are waiting for November offers. Demand is a little bit better, but I do not see any restocking, and [construction sector] activity is still weak.”
Fastmarkets’ weekly price assessment for steel wire rod (drawing quality), domestic, delivered Poland, was 2,800-2,900 zloty per tonne on October 20, unchanged from the previous week.
In the import sector, overseas wire rod suppliers to Poland also attempted to push up their prices. According to a distributor source, all mills wanted to increase their prices to at least €610 per tonne CPT for mesh-quality wire rod.
A deal for “a few hundred tonnes” of mesh-quality wire rod from Ukraine was reported at €575 per tonne DAP during the week to Friday, however.
Offers of similar material from Moldova were heard at €615 per tonne CPT.
Slow demand inhibits trading in European HRC market
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €610 ($646.20) per tonne on Monday, down by €3.13 per tonne from €613.13 per tonne on Friday October 20.
The index was down by €4.75 per tonne week on week, and down by €19.79 per tonne month on month.
Trading remained slow in the Northern European HRC market.
Despite mills attempting increase prices, these increases were not realized due to weak demand.
“Mills are hungry for orders at the moment and can offer a four-to-six-week delivery period. Restocking could begin again in November for January delivery,” one trader source said.
Even the smallest price increases for HRC are difficult to push through given the lack of demand, buyer and mill sources said.
In the week to October 20, offers were reported at around €635-645 per tonne ex-works from integrated mills in Northern Europe.
Meanwhile, buyers’ estimates of achievable levels were no higher than €600-620 per tonne ex-works.
Despite production cuts having been initiated to rebalance supply-demand dynamics, these cuts have not yet had an effect on the market due to low consumption and high stock levels, sources said.
In Southern Europe, the corresponding daily steel HRC index domestic, exw Italy was €602.50 per tonne on Monday, up by €5.83 per tonne from €596.67 per tonne on October 20.
The Italian index was up by €7.50 per tonne week on week, but down by €16.04 per tonne month on month.
Producers in the region were offering coil at €620-630 per tonne ex-works for late November-December delivery, while buyer’s estimates of tradeable levels were reported at €590-600 per tonne ex-works.
Import HRC offers were scarce on Monday.
Asia-origin HRC imports for end-December shipment were on offer to Italy at €600 per tonne CFR.
Published by: India-Inés Levy
Hubs to supply mature markets ‘green’ DRI: Woodmac
Mature markets with higher carbon prices will move from importing finished steel from more emissions-intensive producers, such as China and India, to importing green direct reduced iron to manufacture low-emission steel using electric arc furnaces. The Middle East, Australia and Brazil will meanwhile emerge as DRI export hubs, says Wood Mackenzie.
The EAF share of global steel production will increase from the current 28% to almost 50% by 2050, according to the base-case scenario, requiring at least 550 million tonnes of new EAF capacity. The required investment will be as much as $130 billion, Woodmac says in a new report seen by Kallanish.
DRI’s share of total metallics demand will rise from 6% currently to 13% by 2050, with production growing nearly five times faster than total metallics demand, to 320mt, it continues.
The consultancy expects almost half of all DRI produced by 2050 to be hydrogen-based. As new processing hubs emerge, by 2050, almost 25% of DRI supply will be traded, compared with just 7% now.
Europe, China, Japan and South Korea will be the epicentres of green DRI demand as they move to decarbonise.
The Middle East and Australia will see the share of renewables in their power mix exceed 50% and 75%, respectively, by 2050. Availability of land and attractive renewable power costs should support delivered hydrogen prices of $2-3/kg by 2050.
The Middle East boasts ample low-cost gas supply through to 2050, supporting gas use for blending with green hydrogen. Australia has significant undeveloped gas resources.
Australia’s iron ore will require smelter technology to achieve DR grade, while Brazil has high-grade ore but faces operational challenges at mine sites. The Middle East meanwhile imports ore feedstock from both and will see Vale set up metallics mega hubs going forward. The region already has the DRI technological edge.
Woodmac expects the industry to face a gap of around 200mt of high-grade ore supply by 2050.
In the EU, producing EAF steel using imported Middle Eastern DRI will be up to 15% cheaper than making steel using locally manufactured DRI. Woodmac expects the EU to be the largest importer of DRI globally, accounting for over a third of total trade by 2050.
China is likely to look to a mix of imported and locally produced DRI. While imports from the Middle East will be more competitive, China is also likely to invest at home to support its massive domestic steel sector.
Woodmac expects DRI capacity to double over the next three decades, requiring up to $80 billion of capital investment.
“The increased use of scrap through recycling is the final part of steel’s decarbonisation jigsaw,” the consultancy says, but as the cost of greener steel rises, quality will take precedence over quantity. Technology and streamlining the scrap supply chain will be necessary to limit impurities in scrap.
Mature economies will emerge as future scrap hubs as well as key markets for DRI imports.
For China, recycling offers a huge potential advantage for local steelmakers. But scrap availability will only gather pace in the latter half of the forecast period, as the majority of China’s construction boom ‒ a major source of scrap as buildings are demolished ‒ has taken place since the 2000s and has a lifespan of 30 to 50 years, Woodmac concludes.
Adam Smith Poland
Liberty pauses hot metal production in Europe
Liberty Steel has idled one blast furnace each at its Ostrava and Galati steelworks, bringing to a halt its hot metal production in Europe.
Its blast furnace at the Dunaferr works in Hungary was idled in the summer.
Ostrava’s BF no.3 has been stopped for two weeks from 23 October due to weak steel demand across Europe on account of macroeconomic issues. During the stoppage, the firm will carry out a short programme of care and maintenance to increase the stability and reliability of the furnace, an Ostrava spokesperson tells Kallanish.
Full employment will be maintained, while customers’ orders will still be produced as the relevant rolling mills will remain in production using pre-prepared stock.
The Galati steelworks’ BF no.5 has been stopped due to severe weather in the Black Sea and “dramatically” low water levels on the Danube River. This has impacted the delivery of enough raw materials to safely run the furnace, a Galati spokesperson observes. The firm plans to restart the unit later this month.
Last month, Ostrava began the closure of its VKB 11 coke oven, one of three at the works, due to inefficiency and growing unprofitability amid overcapacity in the market (see Kallanish passim). Over the summer, Galati received approval from a local Belgian court to acquire the coil rolling mills of Liberty Liège.
Adam Smith Poland
EU restocking to support prices, China unpredictable: panel
Flat steel prices in Europe will be supported by blast furnace mills cutting production amid losses, which will spur buyers to book product for first-quarter delivery. However, China remains an unpredictable element that could destabilise the current price floor. So said participants at Kallanish Flat Steel 2023 in Istanbul last week.
Demand is more stable than expected, said Mario Borsese, co-founder & managing partner at DP Trade, adding that stockists have adapted to keeping low inventories after the lessons of 2022. The lead times of producers determine the market trend. European BF mills are “losing massively” today and, since China is not cutting production, will need to reduce output to survive. This will spur a wave of buying for January and February delivery, Borsese commented.
Vogel Stahl owner and director Friso de Vries agreed that prices have bottomed but cautioned: “We’re currently protected by raw materials prices which are putting a floor under steel prices and preventing mills’ margins from diminishing.” But much depends on China, where building permit issuance is down 20% this year. “That’s the future pipeline for construction steel demand. So, I don’t feel very comfortable, not yet,” he added.
ArcelorMittal Flat Carbon Europe head of operational marketing & pricing Bart Staelens pointed out customers have learned to live with lower inventory levels, to limit the impact of shocks. “We do not see a crash in demand,” he observed. The displacement of Asian steel tonnages to Europe, amid rising Chinese exports this year, “shows the safeguard system is not creating a structural supply shortage in Europe”, he added.
Yildiz Demir Celik deputy general manager commercial Selçuk Yilmaz meanwhile said post-earthquake reconstruction still represents a big steel demand opportunity in Turkey. However, this is likely to materialise only from 2025 once the economy recovers.
On the topic of the Carbon Border Adjustment Mechanism (CBAM), Borsese was adamant it will forever change steel trade from 2026. For Chinese BF investments across Asia, the EU will no longer be a destination market – “it will be over”, he noted. This also goes for Indian steel, which currently has a big presence in Europe.
Ian Roper of Kallanish Consulting Services said CBAM is sure to lift the consumer cost of steel. It will hit manufacturing sectors in Europe with still higher input costs amid already high energy and carbon costs.
While there are still many aspects to be improved about CBAM, it is necessary to create a level field in Europe, added Staelens. The demand by society to improve the climate is growing. “Customers are starting to understand what is the value [of low-emission steel] for them. And they are ready to pay a premium,” he concluded.
Adam Smith Poland