Polish buyers reluctant to accept higher rebar, wire rod offers
Rebar
Polish mills increased their offers of rebar to 2,950 Polish zloty ($738) per tonne CPT this week, the equivalent of 2,920 zloty per tonne ex-works, sources told Fastmarkets.
Last week, rebar was offered mainly at 2,900 zloty per tonne CPT, equivalent to 2,880 zloty per tonne ex-works. These offers were also available in the market this week, and they were estimated by Fastmarkets’ sources to be tradable.
But buyers were reluctant to accept new prices, sources said, with no major deals heard in the market.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, ex-works Poland was 2,880 zloty per tonne on Friday, narrowing from 2,870-2,890 zloty per tonne on January 26.
“The construction sector is about to begin [activity] in the March-April period, and demand will probably improve, but so far, it is rather slow,” a buyer source told Fastmarkets.
“Demand is rather average; the clients are in a wait-and-see mode,” a trader source said.
There were not many transactions this week, a distributor source said.
On the secondary market, rebar prices were heard in the range of 2,770-2,890 zloty per tonne CPT.
Import offers from Germany to Poland were heard at €660 ($715) per tonne CPT.
Wire rod
Polish mills reportedly offered wire rod for February delivery in the range of 3,100-3,300 zloty per tonne CPT. Offers were at a similar range in January, with the low end around 3,050 zloty per tonne CPT.
“Demand is very, very weak [this week]. Our market does not accept prices over 3,000 zloty per tonne CPT,” a distributor source told Fastmarkets.
The distributor estimated tradable prices in the range of 2,850-3,000 zloty per tonne CPT, but the lower end of the range was not confirmed by other market participants. According to Fastmarkets’ sources, a price of 2,850 zloty per tonne CPT would be too low considering high production costs of the mills.
Other market participants estimated workable prices in the range of 2,900-3,000 zloty per tonne CPT.
Some limited tonnages were traded at 3,100 zloty per tonne CPT this week.
Thus, Fastmarkets’ price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,900-3,100 zloty per tonne on Friday, unchanged week on week.
Offers of imported material from Italy to Poland were heard in the range of €675-700 per tonne CPT.
Ukraine continued to offer mesh-grade wire rod at €660-670 per tonne CPT, Fastmarkets heard, and some deals for such material were concluded at prices in that range.
Published by: Darina Kahramanova
SSAB expects increased steel shipments in Q1 despite subdued demand
The forecast was made in the company’s financial report for the fourth quarter and full year of 2023, published on Wednesday January 31.
In Europe, only one out of seven industry sectors, which are the main consumers of steel, has a “strong” outlook in terms of demand for the first quarter, SSAB said. This is the energy sector, due to the increased demand for the generation of renewable power.
The prospects for the construction sector in the Nordic region, however, remained gloomy.
The company defined the outlook of the other five industry sectors – heavy transport, automotive, construction machinery, materials handling, and service centers – as “neutral.”
SSAB added that there were some signs of a slowdown in demand from the automotive and heavy trucks sectors in Europe, despite positive indications from the sectors producing railcars and vessels in the US.
Indeed, some steel service centers in Northern Europe said that during January their flat steel sales to the automotive sector were around 10-15% less than planned.
In terms of service centers, SSAB said that there was some potential for restocking in the first three months of 2024.
SSAB expected that the two divisions of the company in Europe and the US would make 5-10% more shipments in the first quarter of the year compared with the last three months of 2023. Shipments of SSAB Special Steels were expected to be even higher, increasing by more than 10%.
The company noted that the expected improvements for SSAB Europe and SSAB Special Steels were related to seasonal factors, notably restocking. Indeed, restocking activity in January and reduced supply in the European market, due to output cuts, both supported price rises for flat steel products.
During January, the price of hot-rolled coil in Northern Europe moved up steadily. Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, averaged €731.73 ($792.22) per tonne for the month, the highest since May 2023.
Market sources told Fastmarkets, however, that the current price rise was entirely supply-driven, because many blast furnaces in Europe had not restarted operations. They were uncertain whether the upward trend would continue into the second quarter of 2024.
Green steel sales gain pace
SSAB hoped that demand for green steel globally would continue to grow steadily.
“There was increased interest in products with no carbon dioxide emissions during 2023, and we delivered more than 50,000 tonnes of SSAB Zero,” the company added. SSAB described this product as the “world’s lowest emissions steel product on the market.”
SSAB claimed that its SSAB Zero products were fossil-free for Scope 1 and 2 CO2 emissions.
According to Fastmarkets’ sources, the demand for green steel was very patchy in Europe and was mainly restricted to end-users. Only limited volumes have been traded in the market recently, with the automotive industry seen as a major consumers of such products.
Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €150-250 per tonne on Thursday, unchanged since mid-December 2023.
SSAB’s key indicators in Q4 2023
According to SSAB’s financial report, the group’s crude steel production amounted to 1.71 million tonnes in October-December 2023, up from 1.64 million tonnes in the corresponding quarter of the previous year. Throughout 2023, SSAB’s crude steel production totaled 7.78 million tonnes, compared with 7.29 million tonnes in 2022.
Steel shipments, however, were a bit weaker in the last quarter of the year, reaching 1.49 million tonnes compared with 1.50 million tonnes in the corresponding quarter of 2022.
This was related to a seasonal market slowdown and planned maintenance at SSAB facilities, Fastmarkets understands.
Company revenue in the fourth quarter came to 26.47 billion Swedish kronor ($2.54 billion), down from 30.14 billion kronor in the corresponding quarter of 2022.
SSAB’s adjusted operating income for the fourth quarter of 2023 amounted to 2.40 billion kronor, compared with 3.77 billion kronor in the fourth quarter in 2022.
“The decrease compared with last year’s record high level,” it said, “was primarily due to a weaker market and lower steel prices, especially in Europe.”
Published by: Julia Bolotova, Darina Kahramanova
USSK fourth-quarter shipments, earnings rise amid lower prices
US Steel Kosice (USSK) increased shipments 43% on-year in the fourth quarter of 2023 to 1.02 million net tons. Raw steel production surged 87% to 1.1mnt, with capacity utilisation at 87% versus 47% a year earlier, Kallanish notes.
Average realised sales price fell 20% on-year to $770/net ton. Despite this, net sales grew 13% to $823m and Ebitda turned to positive $3m versus a $48m loss a year earlier. The lower sales prices were partially offset by labour and spending efficiencies due to higher shipments, parent US Steel says. Meanwhile, iron ore, scrap, and alloy costs were lower.
Meanwhile, US Steel’s Flat-Rolled segment shipped 242,000nt of coal to USSK in Q4 versus zero a year earlier.
Hot and cold rolled coil accounted for 60% and 10% of shipments respectively, with coated coil comprising 20%. In terms of revenue, coated accounted for 35%, with semi-finished steel also appearing at 5%. Construction (34%), service centres (22%) and automotive (16%) were the main markets by volume.
In full-year 2023, USSK shipments rose 4% on-year to 3.9mnt, while raw steel output grew 14% to 4.4mnt, with capacity utilisation at 88% versus 77% a year earlier. Net sales fell 17% to $3.55 billion, while Ebitda was down 81% to $98m.
The Flat-Rolled segment shipped 874,000nt of coal to USSK in 2023, while a year earlier USSK sourced 144,000nt of iron ore from the segment.
Adam Smith Poland
Car purchases to fall amid tighter economics: BMI
Global growth in vehicle purchases will slow to 4.3% in 2024 as pent-up demand caused by the shortages of previous years is exhausted and tighter economic conditions take hold, says BMI autos and infrastructure research head Anna-Marie Baisden.
“Our global economists expect weak sentiment, tighter monetary policy and still high – although easing – inflation to weigh on domestic demand in 2024, which is likely to have a knock-on effect for big-ticket purchases such as vehicles,” Baisden noted during a webinar last week attended by Kallanish.
BMI expects the Middle East and North Africa to be the best-performing region in 2024 with a surge in vehicle sales of 17.1%, following 7.9% growth in 2023.
According to BMI autos senior analysts Joshua Cobb, electrification will also face growing headwinds from increased operating costs, reduced electric vehicle (EV) purchase subsidies and the price war. “This will spur new EV financing trends, increased risk of protectionism, manufacturing optimisation and new retail models. We expect the EV markets in large economies with high rates of EV adoption will move from the ‘first adopter’ stage to the ‘mass adoption’ stage in 2024,” he noted.
This will result in a more price-conscious consumer base which will require lower vehicle prices to promote continued electrification of road transportation, BMI claims.
The cost challenge will be heightened by the phaseout of EV purchase incentives, mainly in Europe, and imposition of EV charging fees and road-use taxes. This will be somewhat offset by the easing cost of batteries, Cobb continued.
BMI notes the EU and North America are aiming to decrease their reliance on China in their respective EV supply chains.
A number of key elections will be held in 2024, and these will have implications for the autos industry due to shifts in policies and geopolitical alignments, it notes. The ongoing Hamas-Israel conflict will also drag down the ability of importers to import vehicles for the Israeli, Palestinian and Jordanian markets, and increase risk to Egypt’s vehicle imports as well.
According to BMI, free trade agreements will be one of the most financially efficient ways for developing markets to attract EV-related investments in 2024 amid the ongoing subsidy war and supply chain de-risking trends. “Risks to vehicle production stemming from flooding, droughts and other severe natural disasters will endure in 2024,” it concludes.
Uncertainty looms over French longs market
French long products prices are seen declining slightly in the coming weeks as consumption in the country remains uncertain. Market sources report back-to-back sales and little restocking.
Purchasing groups have bought to replenish stocks but say they are being “prudent”. They are trying to rebuff high sheet and tube prices, in line with coil increases implemented by EU producers, and are not managing to pass increases on downstream. Activity in several end-user sectors continues to stagnate.
Compared to December, French rebar has lost some €20/tonne ($21) on average. EU producers are now more willing to negotiate. With their current high processing costs, some are resorting to production stoppages to balance supply with demand.
Buyers who spoke to Kallanish believe consumption for both long and flat products will be in line with 2023 and see no space for increases. With scrap values flat, construction steel prices are also seen relatively stable this month. Margins for distributors are reported to be under pressure, a source comments.
French rebar values are flat, hovering at €630-635/t delivered on average.
Natalia Capra France