European HRC market activity slow as buyers avoid restocking
Activity in the European hot-rolled coil market remained muted on Feb. 12 as buyers have been holding back from building stocks.
“Everyone has enough material in stocks and the price-trend outlook is not positive, so there is no sense of urgency to make deals,” a trader said.
Buyers have also expressed concerns that the increase of domestic production following the restart of some of the furnaces that had been idled across Europe would not allow the prices to sustain at current level. In addition, real demand has remained slow, sources said.
“The price trend would depend on who can wait longer – mills or buyers,” another trader said.
Platts assessed domestic prices for hot-rolled coil in Northwest Europe at Eur745/mt ex-works Ruhr on Feb. 12, unchanged on day.
Tradable values were reported at Eur730-760/mt ex-works Ruhr, with the majority of tradable value indications heard around Eur740-750/mt ex-works Ruhr.
Platts assessed domestic prices for hot-rolled coil in South Europe down by Eur5/mt on day to Eur740/mt ex-works Italy on Feb. 12.
Tradable values have been reported at Eur740-750/mt ex-works Italy and one source estimated achievable prices at Eur710/mt ex-works Italy.
Author Maria Tanatar, maria.tanatar@
European HRC prices decrease slightly amid bearish sentiment
Mills in Northern Europe offered discounts for larger volumes to fill their order books, while buyers continued to postpone restocking in the hope that prices would decrease further, according to sources.
One offer was heard at €780 ($841) per tonne delivered, which nets back to about €765 per tonne ex-works.
“But [there were] no buyers [at this price] [and it] will go down easily this week or the next,” a buyer source told Fastmarkets.
A second buyer source pointed out that mills have been trying to keep prices higher by cutting production, “but in February, some blast furnaces are supposed to come on stream again.”
This could put some additional pressure on prices, the second buyer source said.
Sources estimated tradable market levels at €740-750 per tonne ex-works.
Some deals for small quantities were heard in the range of €740-760 per tonne ex-works.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €747.50 per tonne on Monday, down by €3 per tonne from €750.50 per tonne on Friday.
The index was down by €12.50 per tonne week on week but up by €15.62 per tonne month on month.
Fastmarkets calculated its corresponding daily steel HRC index, domestic, exw Italy at €747.50 per tonne on Monday, down by €1.25 per tonne from €748.75 on Friday.
The index was down by €5 per tonne week on week but up by €25.83 per tonne month on month.
In Italy, some offers were heard in the range of €745-770 per tonne ex-works. But buying remained comparatively weak, with no major deals heard in the market.
“This usually happens when prices go down,” a third buyer source told Fastmarkets, citing low demand and sufficient stocks as other factors influencing trading activity.
Market participants estimated the tradable market levels in a wide range of €725-760 per tonne ex-works.
Levels close to the lower end at €725-735 per tonne ex-works could be reached for the material with April delivery, the third buyer source said.
Offers of imported HRC from Vietnam to Italy were heard at €630 per tonne CFR.
Imported material from Japan was offered to Italy at $700 per tonne CFR, although this level was not tradable, according to a fourth buyer source.
Asian material was offered to Italy at €670 per tonne CFR, the fourth buyer source added.
Offers from Egypt to Italy were heard at €640-650 per tonne CFR and from Turkey at €680-690 per tonne CFR.
Published by: Julia Bolotova, Darina Kahramanova
LKAB selects Energiron for hydrogen DRI plant
LKAB has selected Energiron to develop a new 100% hydrogen-based direct reduced iron plant in Gällivare, northern Sweden.
Energiron, a joint venture between Danieli and Tenova, will develop the new plant, designed to have a capacity of 1.3 million tonnes/year of fossil-free DRI. The technology provider previously supplied key equipment for the hydrogen-based pilot plant commissioned in 2020 by HYBRIT, the LKAB, SSAB and Vattenfall joint venture.
“Results from the HYBRIT pilot plant revealed that direct reduced iron obtained using pure hydrogen as reducing agent delivers superior properties and qualities, compared to DRI produced using fossil-based reducing gas, such as natural gas,” Danieli explains. “Amongst the characteristics of the new installation, an electric process heater – world first in an industrial DRI plant – will heat the process gas using green electric power. This will further reduce carbon emissions down to zero, increasing the overall energy efficiency of the process.”
The output of the new DRI plant is expected to feed SSAB steelmaking plants, to produce fossil-free steel in the future, Kallanish understands.
Emanuele Norsa Italy
Industeel starts construction of new slab caster
Industeel, a European business division of ArcelorMittal Downstream Solutions, has started construction of a vertical caster at its site in Le Creusot, France. This will produce light slab up to 35cm in thickness, Kallanish learns from the company.
The investment of €52 million ($56m) aims at cutting energy consumption, reducing 10% of CO2 emissions annually, as well as reducing scarfing, transformation losses and rolling passes, and optimising the entire process. When the equipment is up and running, its 30,000 tonne/year initial capacity is scheduled to increase to 50,000 t/y. Several steel grades will be produced by the new caster for different industrial sectors including the clean energy and automotive components sectors.
The new vertical slab caster will be produced by Italian equipment maker Danieli. The equipment, which will replace ingot casting, will produce special grades of carbon, stainless steels and nickel-based alloy slab from 1,500-2,100mm widths, and 4 and 6 meters in length. Start-up is planned for May 2025. The Industeel caster will feature a wide selection of Danieli 3Q technological packages.
In 2017 Danieli revamped the other Industeel slab caster at the company’s Charleroi plant in Belgium (see Kallanish passim).
Natalia Capra France
UK conducts HRC safeguard review, expects nine-month suspension
The UK Trade Remedies Authority (TRA) has initiated two reviews of the current safeguards measure on Category 1 steel product hot rolled flat and coil steel, Kallanish notes.
The suspension review and Tariff Rate Quota (TRQ) review are in response to applications from Tata Steel UK (TSUK) and Kromat Trading Ltd. Both reviews respond to TSUK’s recent proposal to close its two blast furnaces in Port Talbot.
If adopted, the production plan TSUK submitted to trade unions for formal consultation on 19 January would significantly reduce TSUK’s capacity to produce hot rolled flat steel for a period, and would require greater imports.
“This would mean that the current level of duty-free TRQs for Category 1 steel would be insufficient for UK industrial needs. Additional imports required in place of reduced domestic production would face tariffs of 25% after they exceeded the current quota size – something we have already started to see happening as imports have increased,” TRA says.
“We are carrying out the reviews in parallel with the consultation between TSUK and trade unions. Should the consultation result in a different production plan, the TRA would take that into account in making a recommendation to the Secretary of State for Business and Trade,” it adds.
Subject to any further comments received from UK producers, the TRA intends to recommend that the safeguard measure on Category 1 products is suspended for nine months.
TRA expects the TRQ review to take longer to carry out than the suspension review. The revised TRQ regime will then replace the temporary suspension of the safeguard measure for this steel category.
Currently, TRQs are allocated to countries based on traditional trade flows. As part of this review, the TRA 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, meaning importers would be free to choose the source of imports.
“We want to avoid a situation where new imports needed to backfill reduced domestic production pay tariffs of 25%, loading additional costs onto the UK economy,” says TRA chief executive Oliver Griffiths.
Interested parties must register their interest by 25 February.
Adam Smith Poland
Italian coil derivative market stagnates
The Italian coil derivative market is suffering from weak consumption and relatively high upstream prices, in line with the weak sales performance seen in the fourth quarter last year, Kallanish hears.
Service centre clients continue to report weak demand for their products, particularly in the white goods, automotive and earth-moving machinery sectors. In the white goods industry, some clients are said to be postponing the delivery of already purchased material.
Despite the reduced consumption, sheet values have increased by around €150/tonne ($161) compared to the lowest levels seen at the end of 2023, sources say. However, there is no clear indicative price as sales are occurring only for extremely low tonnages and infrequently throughout January and February so far. Hot rolled sheet is at between €820-830/t ex-works, with some €20-30/t more charged for pickled material.
As sales are scant and for small volumes, customers have not accepted to buy volumes at the recently increased prices. Today’s transactions are insufficient for service centres to cover processing costs or the purchasing price of hot rolled coil in recent weeks.
European HRC producers have been mulling another slight increase for April delivery but, given the slow consumption, the further hike has not yet been announced. The outlook for coil derivatives consumption remains negative with squeezed margins. Domestic HRC is now at an average of €770/t base delivered, sources suggest. This however is for very small volumes.
Natalia Capra France
Scrap is the future of steel: Marcel Genet
China’s growing scrap generation will facilitate steelmaking decarbonisation in that country, but the main challenge will be to replace its integrated long steelmaking capacity with electric arc furnaces. The issue of making high-quality steel in EAFs is not down to scrap, meanwhile, but to technology investment, according to Laplace Conseil founder and president Marcel Genet.
“Scrap is the future of steel,” Genet proclaimed at Kallanish Steel Scrap 2024 in Istanbul last week. This is not least because it has the lowest operating cost process over the complete steel cycle, lowest capital cost, and is the lowest CO2 emissions process ready for net zero.
Scrap collectors, traders and steelmakers are however facing growing problems. Scrap is looked down on because of the perception it cannot be used to make the same quality of steel as in a blast furnace, because the recycling process is polluting, and because of low awareness in society. Moreover, integrated steelmakers are using scrap to try avoid decarbonising their production process, Genet pointed out.
Industry fragmentation and conflicting short-term interests, like monthly price negotiations, limit the collective effectiveness of the supply chain. A joint strategy and common agenda could improve the industry’s position, Genet said, while direct reduced iron is “scrap’s best friend” to dilute impurities and grow an accessible market.
China’s steelmaking industry developed so fast that the country had little time to accumulate much end-of-life scrap. But by 2050, Chinese crude steel output is expected to drop below 800 million tonnes/year, while scrap availability is seen surpassing 600mt, narrowing the current deficit considerably.
Genet highlighted US steelmaker Nucor as a company “consistently promoting scalable low-capex technologies in mini plants to beat behemoth plants”. Besides efficiently utilising the capabilities of scrap recycler subsidiary David J Joseph Company to supply very high-quality scrap, Nucor is investing in small modular reactors. “Nucor is providing the best example of how to manage the energy transition,” the consultant observed.
As for scrap quality, meanwhile, “the problem of making automotive sheet in an EAF is not scrap or residues. It’s investment in making high-quality steel. You need to have a tip-top, consistent hot strip mill. You need a thin slab caster. The barrier to entry is not scrap, it’s money to invest in production technology!” Genet concluded.
Adam Smith Poland
Another Polish distributor plans to delist
Bydgoszcz-based steel distributor Drozapol-Profil plans to delist from the Warsaw Stock Exchange by carrying out a compulsory buyout of shares from minority shareholders, Kallanish notes.
The firm’s revenue in the nine months through September 2023 halved on-year to PLN 46.3 million ($11.5m) and the firm sank to a net loss of PLN 5.7m versus a year-earlier profit of PLN 10.9m. Of its total shareholding, 36% is free floated.
The move follows fellow Polish distributor Konsorcjum Stali’s delisting from the stock exchange in 2020. Poland’s third-largest distributor Bowim remains listed on the stock exchange for the time being.
Adam Smith Poland