Day: 21 December 2023

A vessel carrying steel coils from Korean steelmaker Posco — with the business executed via trading company Samsung — to a number of Turkish buyers has been hijacked by pirates off the coast of Somalia.

The mill is in negotiations with the pirates with a view to freeing the vessel — the Maltese-flagged 41,607dwt Ruen — which was on its way to Gemlik port in Turkey, as of 13 December. There is about 40,000t of coil on board for a handful of buyers, including a pipemaker and automaker, according to market sources.

The vessel entered the risk area of the Gulf of Aden/Southern Red Sea on 15 December, and has been off the central Somalian coast since 18 December, according to vessel tracking software.

“We are working in close co-operation with the relevant authorities on this matter and are unable to comment further at this time,” a spokesperson for the West of England Insurance Services, which insures the vessel, said.

Mill sources in Turkey said the seizure could interrupt shipments from Asia into the region, supporting coil prices. Traders and Turkish buyers suggested shipowners and charterers may try to avoid the Red Sea/Suez Canal route, opting for the much longer and costlier alternative of travelling around the Cape of Good Hope and up the eastern coast of Africa. This would also impact costs for sailing into the Mediterranean region. Some estimated it could add 35 days of transit time.

Shipping through the Red Sea/Suez Canal route has already been complicated by recent attacks on container vessels, with a number of carriers saying of late they would also sail around the Cape of Good Hope, increasing costs and adding transit time. Some mills will stop selling on a cfr basis, leaving the risk with buyers, one trader said.

A Turkish buyer of Asian slab said it could increase costs by about $25-30/t. There is also a risk that EU buyers with material on the water intending to clear into the 1 January quota may see their shipments delayed.

By Colin Richardson and Lora Stoyanova

European mills continued to offer HRC in the range of €700-740 ($764-808) per tonne ex-works for February-March delivery. But market activity was seen as gradually slowing due to the approaching Christmas holidays and no major deals were heard.

According to a producer source, the workable market level for Northern Europe varied in the range of €700-710 per tonne ex-works.

But buyer sources estimated the workable level to be lower, between €680 per tonne and €695 per tonne ex-works.

Thus, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €690.42 per tonne on December 19, decreasing slightly by €2.71 per tonne from €693.13 per tonne on December 18.

The index was up by €3.92 per tonne week on week and by €32.50 per tonne month on month.

Market participants told Fastmarkets that prices could increase further in Northern Europe in the first quarter of 2024. But this might be hard to achieve if more blast furnaces restart operations next year and supply increases.

Meanwhile, offers in the Italian market remained unchanged in the range of €685-725 per tonne ex-works, depending on the supplier.

Two buyer sources estimated the workable level in the range of €670-680 per tonne ex-works. But a third buyer source indicated that a slightly higher level can be achieved, reaching €685-695 per tonne ex-works.

A fourth trading source told Fastmarkets that he estimated the workable level at €705 per tonne ex-works.

In Southern Europe, Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €686.25 per tonne on December 19, increasing by €0.42 per tonne from €685.83 per tonne on December 18.

The Italian index was up by €13.96 per tonne week on week, and up by €43.33 per tonne month on month.

A fifth trader source told Fastmarkets that buyers would have to accept the new prices after the holidays. The reason for that is the limited offering in the Italian market.

The source added that the European producer with the highest prices offered a larger range of products. Thus, buyers who needed products covering particular specifications would have no choice but to pay higher after the holidays.

Regarding imports, very few offers were currently available in the Italian market. “Some offers from Japan and Taiwan were heard at $660 per tonne CIF for March shipment and expected delivery in May”, the fifth source said.

According to them, “slightly lower offers were heard from India” for shipment in February.

The European Commission has moved to extend import quotas for Russia-origin steel slab for four more years, according to an official notice published on Monday December 18 in the Official Journal of the EU.
This comes after multiple sources told Fastmarkets last week that it was likely the quotas would be extended for a further four years, with an annual decrease in quota volumes.

The details of the new twelfth package of the EU sanctions against Russia in response to its invasion of Ukraine were published in the EU Official Journal on December 18. These included restrictions on imports of some ferroalloys and pig iron.

While the main purpose of sanctions is to limit trade flows, sources were quick to point out the latest package is set to extend the existing quotas for Russian slab until 2028.

Notably, the EU document said that from September 30, 2024 until September 30, 2028, a total of 10.9 million tonnes of semi-finished steel products falling under CN code 7207 12 10 (steel slab) would be allowed to enter the EU market without restrictions.

The annual quotas, however, are set to be reduced each subsequent year.

Notably, 3.185 million tonnes of Russian slab will be allowed to enter the EU between 1 October, 2024 and 30 September, 2025; 2.998 million tonnes between 1 October, 2025 and 30 September, 2026; 2.623 million tonnes between 1 October, 2026 and 30 September, 2027; and 2.061 million tonnes between 1 October, 2027 and 30 September, 2028, according to the EU Official Journal.

The current quota for Russian slab, which runs until September 30, 2024, is set at 3.75 million tonnes.

Meanwhile, Russia-origin billet imports (code 7207 11) will be banned effective 1 April, 2024. Billet and slab quotas were the part of the Commission’s eighth sanction package against Russia in response to its war in Ukraine.

The lobby to extend quotas was led by the European re-rollers, the main consumers of slab, namely in Belgium, Italy, Czech Republic.

Following the news of the slab quota extension, market sources told Fastmarkets they had seen an immediate increase in prices for Russia-origin slab to the EU.

Notably, the only non-sanctioned slab supplier to the EU has increased offers to Italy to $640 per tonne CFR, in line with offers of “premium mills” from China for plate-quality slab, sources said.

In the week to December 15, December offers from this supplier had stood at $600 per tonne CFR, to Italy.

“This decision [to extend the quotas] practically legalizes import of Russian slab and gives buyers a green light to book from Russia. Such a disgrace,” a source in the EU market told Fastmarkets, expressing their disappointment at the move.

Vlada Novokreshchenova in Dnipro contributed to this report.