German government agrees on converting national power generation
The German government announced on Monday a strategy for the country’s future power supply, from power plants that will be driven by natural gas and, eventually, hydrogen. The announcement follows months-long debates within the governing coalition of Social Democrats, Greens and Liberals.
The new strategy foresees the construction of gas power plants with a joint capacity of 10 gigawatts, which will be supported by the government’s Climate and Transition Fund, Kallanish understands. The cost for this endeavour is estimated to reach €16 billion ($18 billion) over the next 20 years.
Germany has been phasing out coal-based as well as nuclear power production for years. The new plants will initially operate on natural gas and be suitable for conversion to hydrogen, as soon as hydrogen production costs allow. That conversion is projected to occur in the second half of the 2030s.
In a statement following the announcement, German steel federation WV Stahl says it welcomes the government’s decision as “an important stepping stone for our supply safety”.
Its managing director, Kerstin Maria Rippel, underlines the importance of securing the way towards climate neutrality, while also keeping Germany functional as a location for manufacturing industries. “In addition to the urgent expansion of renewable energies, we need to make sure that our steel production has safe power supplies even in times of little wind and sun,” she says.
Christian Koehl Germany
Assofermet notes weaker scrap demand but sustained offers
Declining Italian scrap demand at the end of January has created some concern among suppliers, says local steel trade association Assofermet in its latest market note obtained by Kallanish. The low availability of quality scrap is persisting and has contributed to the price stability observed in the market.
“It is important to remember that the sale of finished products has essentially remained unchanged, with consequent difficulty in passing on the scrap price increases already recorded in December to the finished product … January started with price hikes and a good flow of deliveries … Offers from collection companies, merchants and traders were at good levels, satisfying the needs of all steel mills, reducing warehouses’ stocks, partially giving up hope of further increases,” the note states.
It adds however that the picture at the end of January appeared less positive compared to the beginning of the month, with demand weak but offers sustained overall. This “could become a point of concern for the month of February, also in light of a possible slowdown and output cuts by two important producers,” the association adds.
Assofermet recorded relatively low demand for pig iron last month. At the same time, supply from Russia and Ukraine also decreased. Prices in Turkey are in line with the Italian market, as well as those recorded on the Chinese and Indian markets. The pig iron price differential of about $50-60/t persists between the European and US markets.
While scrap prices are stable for the moment in Italy, pig iron values increased last month to $440/t cfr and are seen rising further, Kallanish notes.
Natalia Capra France
Eurofer urges decarbonisation support following EU 2040 target
EU steelmakers back carbon neutrality by 2050 but require further much needed support, says Eurofer in response to the latest announcement by the European Commission of a 90% target on decarbonisation by 2040.
“The EU steel industry has launched over 60 projects that will deliver major emission reductions by 2030 if supported effectively. A 90% headline target for the whole of the EU by 2040 means almost a full decarbonisation of energy intensive industries such as steel. In the absence of the right enabling conditions and of a drastic ramp-up of investments required for the transition, such a target puts the economic and technical feasibility of EU climate policy and its interaction with other policies such as energy, trade and competition to the test,” says Eurofer director general Axel Eggert.
The association adds there is a concrete risk of deindustrialisation in Europe if the transition is not supported, Kallanish notes.
Eurofer has called again for the EU to ensure the supply of affordable clean electricity and hydrogen to support the transition. It also reminded the European Commission that only an “assertive trade policy levelling the playing field with other regions that do not share the same climate ambition” can make EU industry viable.
The Commission published on Tuesday a detailed impact assessment on possible pathways to reach the agreed goal of making the EU climate neutral by 2050. Based on this impact assessment, the Commission recommends a 90% net greenhouse gas emissions reduction by 2040 compared to 1990 levels.
“With their integrated innovation ecosystem across the full manufacturing value chain, European steel companies have already identified the technological solutions for the transition to climate neutrality. However, as acknowledged also in the Commission Communication, the enabling conditions still fall short. In view of the next legislative cycle, we call on the EU institutions to urgently put in place an investment-friendly framework for a successful industrial transition in Europe,” Eggert concludes.
Emanuele Norsa Italy
Tata Steel confirms relaunch of BF6 at IJmuiden
Blast furnace number 6 at Tata Steel IJmuiden, in the Netherlands, is once again producing pig iron, after being fired up last week following long-lasting renovation works, Kallanish notes.
With the relaunch of BF6, IJmuiden returns to operation at full capacity. Last week, TV Narendran, chief executive of Tata Steel, anticipated the relaunch of production at the furnace and stressed that this will also help the supply of feedstock to the UK, where the group has decided to close all blast furnaces at Port Talbot.
“BF6 is one of the most efficient operating blast furnaces in the world. This means CO2 emissions per tonne of steel are lower than almost all other blast furnaces in the world,” Tata Steel notes. During the relining, extractor hoods were installed to further reduce emissions.
The relining of BF6 was the last to be carried out by Tata Steel in Europe. The furnace will be permanently decommissioned from 2035 as part of Tata’s plan to produce steel without the use of coal or coke.
Emanuele Norsa Italy
Marcegaglia increases stainless tube prices
Italian re-roller Marcegaglia is updating its price list for stainless and specialty tube products, Kallanish learns from a company representative.
Effective next week, the company will increase values for further processed tubes and some niche products that require special processing. This is owing to climbing processing and distribution costs. “The recent market dynamics and changes in the costs of raw materials, logistics and other variables have in fact made it necessary to update our prices in order to maintain the quality of our service and guarantee the continuity of our operations,” says Marcegaglia Specialties purchasing and sales director Egidio Bini.
The increases will amount to €250/tonne ($268) on average. The European stainless steel market deadlock is continuing this year with weak orders for coils and derivatives such as sheet and tube. Italy and Germany are seen as particularly slow markets.
Natalia Capra France
Germany ready to fund ArcelorMittal decarbonization projects
The financial support is subject to approval by the EU competition authority.
“With our group strategy XCarb, we are working on a groundbreaking project for the future of steel production … in Bremen and Eisenhuttenstadt,” CEO of ArcelorMittal Europe — Flat Products, Reiner Blaschek said.
“After a long period of evaluation by the authorities, we are happy to be able to take the next step towards climate-neutral steel production in Germany with this news from the federal government: the first hurdle has been overcome. By using green hydrogen, we could save more than 6.3 million mt of CO2 annually by 2030 and produce 3.4 million mt of CO2-reduced steel in both plants.”
The plan is to build electric arc furnaces in Bremen and Eisenhuttenstadt, which will eventually be powered by renewable electricity and increased use of recycled scrap should produce steel.
In addition, a direct reduction plant is to be built in Bremen in which the preliminary product sponge iron will be produced from iron ore, initially with natural gas and, in the long term, with green hydrogen.
Sponge iron is to be used in Bremen and Eisenhuttenstadt for steel production to reduce emissions even further.
As a first step, ArcelorMittal aims to reduce CO2 emissions by around 60% by 2030.
Company executives said the next main issue will be to have sufficient quantities of renewable energy and green hydrogen at competitive prices.
EU HRC market activity sluggish due to healthy inventories
“There is hesitation among buyers to restock and they stick to back-to-back trade of smaller lots,” a mill source said. “Restocking that started in January quickly faded.”
Deals were heard at Eur720/mt ex-works Ruhr, which was deemed unrepeatable by the market. Tradable values were reported in the Eur720-780/mt ex-works Ruhr range, with most tradable value indications heard in the Eur740-760/mt ex-works Ruhr range. Offers were reported at Eur720/mt ex-works Benelux from a reroller.
Platts assessed the price of domestic HRC in Northwest Europe stable on the day at Eur750/mt ex-works Ruhr on Feb. 6.
Some market participants were concerned about the price trend’s sustainability due to lackluster demand. However, mills remained firm with offers owing to healthy order books and a lack of interest in imports.
“Import prices are moving up due to rising freight costs caused by need to divert the ships around Africa instead of going though Suez Chanel,” a Germany-based trader said.
Asian mills offered HRC in the Eur660-680/mt CIF Antwerp range for end-second quarter arrival and third-quarter delivery cargoes. The offers did not fetch any bids as buyers were unsure of safeguard quotas for the second quarter and whether they could extend to the third quarter. Offers at the lower end of the range were heard for material from Vietnam with delivery in the third quarter, resulting in too lengthy lead times to attract buying interest.
Platts assessed the price of imported HRC in Northwest Europe up Eur10/mt on the day at Eur670/mt CIF Antwerp on Feb. 6.
Author Rituparna Nath, rituparna.nath@spglobal.
Prices steady in dull trading for steel HRC in Europe
HRC buyers in Europe continued to postpone restocking due to weak sales to end-users and sufficient inventories, market sources said.
“Our sales to the automotive industry during January were lower than we planned,” a stockholder in Germany said. “There is no immediate need to book new tonnages [of HRC] for stock.”
As a result, mainly hand-to-mouth bookings have been reported recently, with buyers purchasing “only what’s absolutely necessary,” Fastmarkets heard.
In Northern Europe, buyers’ estimates of tradeable values were heard at €750-770 ($807-828) per tonne ex-works for April-delivery coil.
Despite slow trading in the spot market in the past couple of weeks, European mills felt no pressure to reduce their prices because they had good order books for first-quarter-rolling HRC, market sources said.
Official offers from mills in Northern Europe were still being reported at €780-820 per tonne ex-works for April-delivery HRC.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €759.58 per tonne on Tuesday, down by €0.42 per tonne from €760.00 per tonne on February 5.
But the index was up by €2.70 per tonne week on week and by €64.58 per tonne month on month.
Meanwhile, in Southern Europe, Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy at €752.50 per tonne on Tuesday, stable day on day.
The index was down by €1.25 per tonne week on week but up by €62.92 per tonne month on month.
Official offers from Italian mills for March- and April-delivery coil were heard at €780 per tonne delivered (€765-770 per tonne ex-works), while one producer was reported to be offering HRC at €800 per tonne delivered (€785-790 per tonne ex-works).
The Italian market was also quiet, with buyers taking a wait-and-see stance and only restocking special grades and sizes if needed.
Estimates of tradeable values were heard in the range of €745-760 per tonne ex-works on Tuesday.
“Due to low demand downstream, buyers have sufficient stocks and [are holding back from] purchases,” a steel service center said.
On Tuesday, two sources told Fastmarkets that Vietnamese HRC suppliers have reduced their offers of late-March/early-April shipment HRC to Europe. The most recent prices were reported at €635 per tonne CFR to Southern Europe early this week. This was due to weak demand domestically, market sources said.
Despite the large gap to domestic prices, market sources were in no hurry to make bookings, taking into consideration all the associated risks.
“Vietnam falls into the ‘other countries’ category [for imports into the EU], so there is quite a big risk of [being required to] pay the duty on arrival [of HRC material at ports],” a buyer in Italy said. “And of course, we still have logistics issues due to the Red Sea crisis.”
Suppliers in Taiwan, Japan and India were offering HRC to Italy at €660-690 per tonne CFR.
Published by: Julia Bolotova
