European Commission President Ursula von der Leyen has suggested Mauritania use its renewable energy resources to produce low-emission steel for export to Europe, Kallanish notes.
Von der Leyen, together with Spanish Prime Minister Pedro Sanchez and European banking and industry representatives, met with Mauritanian President Mohamed Ould Cheikh El Ghazouani in Nouakchott last week to discuss regional security, migration and green hydrogen development.
The Commission President said the EU wants to produce 10 million tonnes/year of green hydrogen by 2030, but also needs to import another 10mt and is therefore looking for partners abroad. With the right investment and infrastructure, Mauritania can harness over 350 gigawatts of renewable energy from the wind and sun, she added.
But, somewhat surprisingly given the concerns over deindustrialisation in Europe, von der Leyen also suggested Mauritania go into green steel competition with the EU.
“Mauritania is … Africa’s second-largest iron producer and the majority of your iron is exported as raw ore,” she noted. “But if we have clean energy coming into the game, the processing into green steel could stay here in Mauritania and that’s a huge step because this is the added value, this is where the jobs are, this is where the prosperity is.”
“You could export iron and premium green steel. The technology works, but … the production of green steel needs an essential input and that is green hydrogen,” she continued.
“Demand for Mauritania’s green hydrogen and potentially green steel is set to grow exponentially in the European single market … This is an excellent business case,” von der Leyen opined. The Commission will support building the required infrastructure and training the local workforce, she added.
A European business mission will visit Mauritania in March to explore investment opportunities, following up on the 8 February meeting in Nouakchott.
German steel traders and producers expected prices to remain strong during February, though the expectation was less firm month on month as mills tried to aim for higher prices but buyers held back, according to an S&P Global Commodity Insights survey.
The February index for traders’ sentiment stood at 60 points, compared to 68.75 points in January, data from S&P Global’s German Steel Sentiment Survey showed.
The index for producers’ sentiment was 62.50 points, compared with a January index of 87.50 points, showing that producers were significantly less firm compared to traders regarding near term price increases.
The overall index for prices was at 61.25 points, compared with 78.13 points for January.
Overall, steelmakers in Europe were aiming for higher prices for steel products.
One European long steelmaker expected prices in Germany for long steel products to remain stable or firm up. “We could cut down capacities rather than lowering prices,” the source said, adding there did not seem to be any fundamental reason for prices to go down.
“Medium sections prices are the lowest level in the last three years,” the source said. “Energy prices are still high. Not at [Russia-Ukraine] war levels but still high. Scrap seems to be still strong, but market is not ready to accept current high prices which is not workable for mills.”
One long steel distributor in the Benelux region expected prices to remain stable during February. “Demand is overall too weak, for prices to be able to increase.”
Platts assessed European medium sections price (category 1, S235 JR) unchanged week on week on Feb. 7 at Eur780/mt ($840/mt) delivered, according to S&P Global Commodity Insights data. Platts assessed Northwest Europe Rebar down Eur2.50/mt week on week at Eur632.50/mt ex-works.
On the flat steel side, sources reported strong prices, though trading activity in the European hot-rolled coil market remained muted. Platts assessed domestic prices for hot-rolled coil in Northwest Europe unchanged day on day at Eur745/mt ex-works Ruhr on Feb. 8.
The overall index for German inventory sentiment reflected that the market unanimously expected stock levels to remain stable during February. The index for the month stood at 50 points compared with 46.88 points in January.
The index for steel producers for February was at 50 points, compared with 37.50 points in January. The index for traders’ sentiment stood at 50 points, compared with 56.25 points for the previous month.
One European long steelmaker said while inventory levels were low, “everyone is waiting for prices to cut down”, so he expected inventory levels to remain stable at current levels.
The long steel distributor also expected inventory levels to remain stable at low levels “due to weak demand and near-term uncertainty regarding price direction.”
“The market is very quiet, buyers do not need material as they have enough coil in stocks,” a German service-center source said. “And prices are rather high now, distributors often struggle to transfer the rising prices to their clients.”
Production to fall
Market sources expected production levels to either be cut or maintain low capacities due to weak demand.
Some long steel producers had already cut production, sources said. The Benelux-based long steel distributor source also expected that mills might cut production levels during the month due to weak demand.
The index for production outlook was around at 38.75 points, compared with 46.88 points for January. The index for traders’ sentiment was 40 points, down from 43.75 points. The index for producers’ sentiment was at 37.50 points, down from 50 points as producers were more bullish regarding production activity than traders.
The UK is to review the suspension of the safeguard import quotas on hot-rolled coil in response to Tata Steel UK’s plan to idle its two blast furnaces later this year ahead of building an electric arc furnace, the UK Trade Remedies Authority said Feb. 9.
The TRA’s preliminary view would be to suspend the measure for nine months because Tata Steel is the UK’s sole HRC producer.
Tata Steel hopes to commission its EAF early 2027 and will import steel products for customers from its Dutch and Indian operations or third parties until then.
“Given the importance to the UK economy of managing the projected reduction in domestic production of hot rolled flat and coil steel, we are carrying out the reviews in parallel with the consultation between Tata Steel UK and trade unions,” the TRA said.
Tata’s UK blast furnaces have an installed capacity of 5 million mt/year but produced 3.2 million mt in the past few years. The new EAF will have a capacity of 3 million mt/year.
News of the possible suspension of quotas was welcomed by market participants.
“A suspension would open the market up to free and fair competition and will be welcomed by traders, service centers and traders alike,” one UK trader said.
The TRA has opened a tariff rate quota review parallel to the suspension review as Tata Steel and UK trader Kromat have applied for a review whether the current tariff-rate quotas would be appropriate overall. The TRA expected the TRQ review to take longer than the suspension review.
It is considering whether it is appropriate to change the method of allocation to give importers an individual allocation of TRQs. The proposed scheme would not tie quotas to an individual country so that importers would be free to choose the source of imports.
TRA is collecting feedback until Feb. 25 for both reviews.
Similar to the EU’s safeguard import quotas on steel, the UK’s were set to expire June 30 but the TRA has been investigating whether they should be extended by two years.
UK HRC import quotas balances differ by origin.
UK steel trade organization ISTA said earlier this year the import quota system would need to be overhauled not only because of the idling of blast furnaces but also because Tata Steel has already been importing HRC from India to substitute its UK production over the past year.
The UK is a net steel importer. In 2022, the UK met 55% of its demand with imports, according to UK Steel.
The import quota for hot-rolled coil of the other country quota — which includes Indian material — in the current quota period (Q1 2024) was exhausted by Jan. 18. The quota was set at 22,589 mt. Any excess material faces a 25% duty.
The quota for the EU remained open as 262,006 mt of material — as of Feb. 9 — can still be imported. The quota for Taiwanese material has achieved critical status, which means a duty deposit needs to be paid as the quota is at risk of exhaustion — 1,378 mt could still be imported Feb. 9. The quota for Turkey remained open, at 37,100 mt.
Author Laura Varriale, email@example.com
The European Commission initiated a review into a possible extension of safeguard quotas on steel imports into the European Union, according to a notification in the Official Journal Feb. 9.
According to the EC, 14 EU member states sent a request to extend the tariff-rate quotas to 2026.
“The request contains sufficient evidence suggesting that the safeguard measure continues to be necessary to prevent or remedy serious injury and that Union producers are adjusting,” the EC said.
As part of the extension investigation, the EC will review the allocation of tariff rate quotas, products as well as categories. The deadline for feedback is Feb. 26.
Market participants mostly welcomed the investigation Feb. 9.
“We need the safeguard extension,” an Italian flat steel service center source said. “Otherwise imports would flood the European market, and the prices would collapse. Neither mills nor distribution need the removal of safeguard.”
European market participants have been warning of the redirection of trade flows while the US is holding up its section 232 measures on imports as European producers are making costly technical changes at steel plants to decarbonize.
“The mills need the steel prices to remain higher to cover the costs of green transition, and exposure of the European market to import without safeguard would make it more challenging,” a European flat steel mill source said.
One European long steel buyer hoped for an update of specific country quotas.
In the current quota period, running from Jan. 1 to March 31, the hot-rolled coil as well as the wire rod other country quotas were exhausted swiftly after opening Jan. 3. The country-specific quota for hot-dipped galvanized coil for automotive use was also exhausted swiftly. Other steel import quotas remain open as of Feb. 9.
“The safeguard is a legitimate and indispensable tool for stabilizing the EU steel market and ensure the sustainability of the European steel industry, which is on its way to decarbonisation,” Axel Eggert, director general of the European Steel Association, or Eurofer, said Feb. 9.
“Massive, market-disruptive import surges from third countries, mostly with little or no climate ambition, further jeopardize the transition,” Eggert said.
Eurofer particularly warned of excess capacity being directed toward Europe without safeguard quotas, as particularly in Southeast Asia, the Middle East, and North Africa steel production is increasing, while China was close to record steel exports in 2023.
“Consequently, the European Union has become a primary target for trade deflection, with steel exports increasingly redirected towards its market,” Eurofer said.
The UK, which has set up its own steel safeguard quotas, is also investigating extending its safeguards while reviewing a temporary extension of the HRC import restrictions for nine months as Tata Steel UK will idle its two blast furnaces this year and not produce HRC until its electric arc furnace starts 2027.
Authors: Laura Varriale, firstname.lastname@example.org, Maria Tanatar, email@example.com, Rabia Arif, firstname.lastname@example.org