German crude steel production down as high energy prices weigh on EAFs steelmakers
In the first ten months of the year, production went down by 4.1% to 30.11 million mt compared with the corresponding period of the previous year.
“The situation is becoming increasingly difficult,” Stahl noted for the electricity-intensive electrical steel production.
Steel production via EAF Electric Arc Furnace route fell by 20.9% in October to 799,000 mt year on year, and by 12.9% year to date to 8.4 million mt compared with the same period in 2022. Crude steel production via Blast Furnace route decreased by 3.1% last month to 2.08 million mt year on year and by 0.2% to 21.70 million mt from January to October compared with the same period a year before. October pig iron production went down by 4.7% to 1.86 million mt compared with the same month a year before and by 0.4% to 19.95 million mt year to date.
In October hot rolled steel production went down by 2.2% to 2.52 million mt year on year and by 4.7% to 26.07 million mt year to date.
At the beginning of October hot rolled-coils prices stood at 625/mt base ex-works Ruhr and decreased to Eur600/mt base ex-works on Oct. 26. Platts assessed hot-rolled coil in Northwest Europe down Eur5/mt on the day at Eur660/mt ($722.172/mt) ex-works Ruhr Nov. 20. The price rose due to restoking and production cuts.
With around 40 million tons per year, Germany has the largest steel production in Europe. Sthal is the voice of steel producing companies in Germany, which have set the goal of producing their steel in a CO2-neutral manner by 2045, thus saving a third of total industrial greenhouse gas emissions.
Low real demand challenges European HRC price rise
Demand from major end users has remained low and market sources had a largely pessimistic outlook for steel consumption in the first quarter.
The price recovery in November has been supported by restocking, rising import offers and effects from production cuts across Europe. Distributors, however, have been acquiring smaller lots of coil as they have been cautious to increase stocks.
“Real consumption is still weak, with apparent demand higher supported by restocking,” an Italian service center said.
“Real demand remains low, and restocking is done for limited volumes as buyers are concerned and do not want to build stocks in such market,” a mill source said.
The planned restarts of some blast furnaces in the EU also made buyers question the sustainability of the price recovery.
Platts assessed domestic prices for hot-rolled coil in Northwest Europe stable on day at Eur660/mt ex-works Ruhr on Nov. 21.
Tradable values have been reported at Eur640-680/mt ex-works Northwest Europe, with majority of data heard at Eur650-670/mt ex-works Ruhr.
Several sources said that the steelmakers were intending to increase offers again soon to achieve prices above Eur700/mt ex-works Northwest Europe in the first quarter.
Platts assessed domestic prices for hot-rolled coil in South Europe stable on day at Eur645/mt ex-works Italy on Nov. 21.
Tradable values have been reported at Eur640-650/mt ex-works Italy and offers for limited lots of December delivery coil have been heard at Eur640/mt delivered Italy and for January delivery, at Eur670-680/mt delivered Italy.
ArcelorMittal supplies low-emission steel to Schneider Electric
Schneider Electric will use ArcelorMittal’s XCarb low-carbon-emission products for its automation systems, electrical cabinets and enclosures, Kallanish notes.
This steel is made in the Spain-based Sestao plant by the electric arc furnace method using recycled scrap and 100% renewable electricity.
“Our XCarb steel will be used by Schneider Electric to manufacture their new PanelSeT SFN floor-standing enclosures built to protect large electrical panels for industrial automation, power distribution and electronic applications,” ArcelorMittal explains.
The supply is part of the company’s efforts on sustainability and reducing CO2 emissions. Schneider Electric’s commitment is to be net-zero-ready across its operations, with a 25% carbon reduction target across its entire value chain by 2030.
The company estimates to increase by 50% the volume of low-carbon materials used in its products as part of the ongoing 2021-2025 sustainability impact programme.
Todor Kirkov Bulgaria
German power pricing benefits mills, hurts fabricators: WSM
The power pricing scheme as envisaged by the German government favours big groups, but puts small and medium-sized fabricators at a disadvantage. According to fabricators association WSM, its typical member company next year will have twice the power costs of a steel mill.
The government’s recent package to alleviate manufacturing industries from their electricity costs only supports big energy consumers, WSM states. “For WSM’s 5,000 plus member companies, it is a slap in the face,” says the federation’s managing director, Christian Vietmeyer. “Goliath is profiting, while David is left behind.”
According to calculations by WSM, the reduction of grid fees and taxes will see big groups pay a power price of €0.08.3 ($0.09.1) per kilowatt hour in 2024, whereas the cost for medium-sized steel fabricating companies will be €0.16.3/kwh, Kallanish notes.
This outcome is absurd in so far as “many companies of our industry make components that are relevant for the energy transition, used in wind power plants, electric vehicles and railways,” Vietmeyer points out. With twice the power costs for steel-working companies as opposed to steelmaking mills, “you cannot prepare progress”, he adds. “It is nothing short of ridiculous that policymakers are trying to paint their energy price package as a positive feat.”
The higher costs will keep discouraging companies from producing in Germany and may instead drive them abroad, if they have that option. Comparing international prices, WSM states that power for German domestic producers costs 2.5 times as much as in France, 2.4 times as much as in China, and 3.3 times as much as in the USA. “It is foreseeable that we will lose our competitiveness in the international comparison,” Vietmeyer concludes.
Christian Koehl Germany
Spanish steelmakers warn of tube, profile import misdeclaration
Spanish steelmakers’ association Unesid has informed the country’s Tax Agency that non-European origin pipe, tube and steel profiles are being imported without complying with the EU’s trade regulations. These products are used in the building of photovoltaic energy installations, Kallanish notes.
“Some importers declare these products as solar structures to avoid the EU regulations for steel imports, just because they have some perforations,” says Unesid general director Andrés Barceló. This misclassification causes serious damage to the market and local economy, he adds.
Spain is massively investing in sustainable energy projects to meet EU decarbonisation objectives. In 2022, almost 4.5 gigawatts of photovoltaics were installed with a total capacity reaching 19.8GW. The country’s target is to have 65GW capacity in 2030, which will require around 100,000 tonnes/year of pipe, tube and profiles.
“This strong investment could generate great added value locally since we have the industry with the capacity to provide this material competitively. Therefore, it is essential that these materials coming from outside the EU pay safeguard duties following the provisions of customs regulations,” Barceló concludes.
Spanish Tax Agency trade data show that between June and August, Chinese-origin imports of the products reached 21,899 tonnes. The total figure from third countries amounted to 25,686t.
Todor Kirkov Bulgaria
Thyssenkrupp demands policy-industry roundtable after German budget cutbacks
The recent court ruling against the German government’s budget towards climate protection measures will have repercussions on the steel industry’s ambitions, says thyssenkrupp Steel chief executive Bernhard Osburg.
Last week, the country’s highest court in Karlsruhe ruled that the government cannot use €60 billion ($66 billion) in credit facilities that were lined up to fund long-term energy transition projects. The decision especially hurts the climate and transition fund KTF. Policymakers must now find an alternative way to proceed with the transition of German industries towards emission-free manufacturing, Osburg demands. “If we fail to get a grip on this, Germany might as well forget about its climate targets,” tk Steel’s ceo is quoted as saying by national media.
Osburg made his statement on Monday, when the steelmaker lay the foundation for its encompassing transformation towards direct reduced iron-based steel production. This involves the construction of a modern hot strip mill and slab storage yard, and the conversion and new construction of two continuous casters and two new walking beam furnaces. The investment of €800 million aims to meet the changing needs of the market, meaning the demand for lower tolerances, higher strength and optimised surfaces, Kallanish hears from tk Steel.
On the sidelines of the ceremony, which was attended by North-Rhine Westphalia state’s economic affairs minister, Mona Neubaur, Osburg issued the call for a “transformation summit” at a political level. The issue is big and pressing enough to have led German Chancellor Olaf Scholz himself to call a meeting with representatives of the national and state governments, companies, and the unions, Osburg said.
Christian Koehl Germany
Lhyfe eyes steel collaboration, hydrogen DRI scale-up
French hydrogen producer Lhyfe is in talks with steelmakers in Europe for possible collaborations and hydrogen production plant development, head of the industry division Frederic Naudi tells Kallanish.
In the short term, the firm aims to switch from grey to green H2 in heat treatment, as well as the annealing process where grey H2 is already used in limited quantities. The company is also targeting the use of hydrogen in reheating and electric arc furnaces. The challenge is to “test and prepare the ground for this transition”, including scaling up both H2 production and renewable energy procurement. Lhyfe is currently testing the use of hydrogen in high volumes for direct reduced iron plants.
As storage and transport technology would make costs rise, and DRI and EAFs require high volumes of hydrogen, Naudi believes the best option is “on site supply”. This means building dedicated production plants close to the equipment they will feed.
“We need high-capacity production plants in hundreds of megawatts and that’s what we are working on, not only on possible steel industry applications but also on other sectors such as chemicals. The challenge is now to implement mega units,” Naudi explains. He adds that the company is collaborating with electrolyser producers, with the aim of building new, larger equipment capable of guaranteeing industry supply. It is also boosting renewable energy supply security.
“We need to have extra capacity of [energy] supply in order to have … maximum availability … but for that, we need to get this energy from further away, a longer distance, which is something that will get more and more complicated in the future, because to qualify as green energy it needs to be close to the user. Maximising the green energy in hydrogen production is the challenge,” Naudi observes.
Lhyfe is not importing renewable sources today as it manages to satisfy its needs locally, “but as the projects become larger the issue will be on the table and it is going to be difficult to source green energy from countries outside Europe,” he says. Procuring an energy mix including low-carbon nuclear sources, abundant in France, is not an option for the company, which is focusing on 100% green power.
“But we are open to that in case of impossibility to get hold of renewable sources … If we put together all the industry sectors to supply in Europe, a huge amount of clean energy will be required in the future. The mix between low-carbon and renewable energy will probably exist. If there is such a mix and if there are different actors in the sector, our strategy is to stick with the green part,” Naudi notes.
The executive is convinced that hydrogen-based DRI is the best option for steel industry decarbonisation. Switching from natural gas to hydrogen feed in annealing furnaces, meanwhile, will reduce the amount of hydrogen needed thanks to oxygen treatment, Naudi says.
“An electrolyser’s green hydrogen processing produces large amount of oxygen – for 1kg of hydrogen we produce 8kg of oxygen … When you mix them in the combustion, performing an oxy-combustion, you reduce the amount of hydrogen you need, that is why the amount of hydrogen produced is not the same as gas because we improve the combustion by using oxygen,” Naudi explains.
By 2030, hydrogen demand from industry will outstrip supply. The sector needs time and investment to build European gigafactories for electrolysers and train new skills. Naudi believes it is only a matter of time before European players scale up supply and see a future supply and demand balance.
“We are trying to do as much as possible at the maximum speed to sort all the current constraints,” he notes. Lhyfe plans to decrease green H2 prices by scaling up technology. At present, the company is producing and selling H2 at competitive prices thanks to French subsidies, which are designed to fill the gap between green H2 and fossil-fuel hydrogen prices. By scaling up production, in time, costs of electrolysers and components will reduce, making green hydrogen competitive.
A start-up created in 2017 with a presence in 11 countries and looking to expand, the French hydrogen firm is involved in 93 projects – 20 of which are at an advanced stage of development. Aiming to be one of the leaders in green hydrogen production in Europe, the company is targeting a total installed capacity of 55MW in 2024, 200MW in 2026 and over 3GW by 2030.
Natalia Capra France
Beltrame raises merchant bar prices in Europe
Italian merchant bar maker Beltrame is raising its offers in all European countries by €30/tonne ($32) effective this week, a source close to the company confirms to Kallanish.
The steelmaker is said to have enough orders until the end of the year from European countries and sees some demand dynamism across the continent.
The increases are in line with high processing costs, including the shortages of and price hikes for scrap, whose prices are forecast to continue to increase in December.
Merchant bar stocks throughout Europe are medium-low and customers are in need of purchasing for year-end delivery, for book-keeping reasons.
With scrap forecast to continue to increase, the steelmaker is considering a second step of hikes for merchant bar for January delivery, Kallanish notes.
Natalia Capra France
European HRC buyers cautious with bookings, but mills remain bullish
The pace of restocking was quite slow in the spot market, with buyers seen unwilling to commit to big tonnages.
“Buyers are still unsure what will happen with prices, so they are very careful about buying for stock,” a steel service center source in Northern Europe told Fastmarkets.
Deals for German HRC with six- to eight-week delivery were done at €650-660 ($710-721) per tonne ex-works, sources said, while offers for similar material from an integrated mill in Northern Europe were heard at €660-680 per tonne ex-works.
For first-quarter production, some mills are looking to increase prices further, sources said, with price indications heard at a minimum of €700 per tonne ex-works.
“The current price rises are cost-driven, supported by a revival in apparent steel demand amid lower supplies. But consumption is still weak, so any new rises [would be] questionable,” a buyer source told Fastmarkets.
Producers negotiating long-term contracts with end users for the first half of 2024 were said to be looking for €750 per tonne for HRC and €850 per tonne for hot-dip galvanized (HDG) coil – in line with flat steel contracts for the second half of 2023.
“Mills are unwilling to drop prices in the spot market just two weeks after they announced price rises, especially while they negotiate with the automotive sector,” a trader source in German told Fastmarkets.
“We will see the outcome of negotiations closer to mid-December,” the source added.
Several buyer sources told Fastmarkets that they planned to restock for February delivery in mid-December because they expected to have a “more clear market picture by that time.”
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €656.25 ($717.19) per tonne on Tuesday, up by €1.25 per tonne from €655.00 per tonne on Monday.
The index was up by €3.25 per tonne week on week and by €43.12 per tonne month on month.
In Southern Europe, Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy at €635.00 per tonne on Tuesday, unchanged from Monday.
But the index was up by €5.00 per tonne week on week and by €38.33 per tonne month on month.
For January-February delivery, Italian mills plan to increase offers by another €40-50 per tonne, with price ideas voiced at €660-680 per tonne ex-works, sources said.
In contrast, market participants told Fastmarkets that the tradable value was about €630-640 per tonne ex-works on Tuesday.
Market activity in Italy was quite slow on Tuesday due to still-weak real steel demand, sources said.
“Consumption is still weak, but prices [for HRC] in November still increased due to restocking production cuts at mills. The question is whether the uptrend will stick in Q1 [2024],” a steel service center source in Italy said.
Import offers were also moving up, with January shipment Asia-origin coil on offer to Italy at €620-640 per tonne CFR.
And Indian HRC was on offer in Italy at €640 per tonne CFR.
