Salzgitter signs 122 MW solar PPA with Octopus for green steel project
Salzgitter Flachstahl and Octopus Energy have signed a 10-year power purchase agreement for 112 MW from the Schiebsdorf solar farm currently being built in Brandenburg state in Germany, it said Feb. 21.
UK-based utility Octopus, which manages a Eur7 billion portfolio of green energy projects, is to supply 126 GWh/year to Salzgitter for its Salcos green steel project.
“This latest PPA adds another significant source of clean electricity to power our operations, create green hydrogen and ultimately produce greener steel for our customers,” said Ralph Schaper, Salzgitter’s head of energy procurement.
Salzgitter already secured a 50 MW PPA from EnBW’s new He Dreiht offshore wind farm, 114 MW from Iberdrola’s Baltic Eagle offshore wind project as well as an 80 MW hybrid wind/solar PPA with Friesen Elektra.
Salzgitter in April 2023 received a Eur1 billion state grant for phase 1 of Salcos to produce up to 1.9 million mt/year of crude steel from 2026.
The project includes a 100 MW electrolyzer to produce around 9,000 mt/year of the required hydrogen on site from 2026.
According to Salzgitter, full implementation of stage 1 of Salcos would replace some 2.5 million mt of CO2/year.
Octopus meanwhile plans to invest over Eur1 billion in Germany’s clean energy infrastructure by 2027, it said.
The company acquired the Schiebsdorf solar project in January via its Sky fund. The project is to enter operations later this year and is the largest solar farm in Octopus’ renewable energy portfolio.
Octopus Energy Generation’s fund management unit will also announce more deals “very soon,” said co-head Alex Brierley.
PPA consultancy firm Pexapark advised on the deal. According to Pexapark, some 18 solar PPAs with a combined capacity of 1.77 GW were signed in Germany in 2023 with the country expected to surpass Spain as the top market for PPAs in Europe this year.
The Platts-Pexapark PPA (3Pi) index for a standard 10-year solar PPA in Germany was pegged at Eur43.02/MWh on Feb. 19. This level would put the deal at a theoretical value of around Eur54 million ($57 million) over its 10-year lifespan.
Platts is part of S&P Global Commodity Insights, which is a minority stakeholder in Pexapark.
Author: Andreas Franke, andreas.franke@spglobal.com
German steel distributors’ January sales rise 74% on month
German steel distributors’ sales saw a robust rebound in January, reaching 807,924 mt, up 73.7% from the prior month, German steel stockholders’ association BDS reported Feb. 21.
The rise in steel sales and ensued destocking have drawn down inventories within the German steel distribution network to under 2.5 months’ worth of sales, from four months previously, according to BDS.
Steel sales in January were, however, 3.4% lower year on year. It exceeded 2023’s per-month average by 2.8% but remained 10% below the 900,300 mt/month sales made during 2014-2021.
Flat-rolled steel comprised 535,192 mt or two-third of the January total sales. Being broadly stable compared with January 2023, the sales in this category recovered by 85% month on month.
German distributors sold 203,901 mt of long-rolled products in January, 42% more than in December, although 11% lower year on year.
The 1.9 million mt stocks held in January reflected roughly 70 days’ worth of sales, which reveals destocking, given that in 2023 and over 2014-2022 average per month inventories would cover 75- and 77-days’ worth of sales, respectively, according to BDS.
Destocking is particularly noticeable against the inventories accumulated within the country’s distribution network in December 2023, when they were as high as four-month worth of sales.
European steel coil buyers are currently limiting their procurements and avoiding restocking due to a bearish sentiment amid weaker appetite from construction and agricultural sectors, all of which make some expect weaker demand in the second quarter of 2024 compared with significant improvement in January-March.
Platts, part of S&P Global Commodity Insights, assessed European domestic hot-rolled coil prices at Eur720/mt ex-works Italy and Eur725/mt ex-works Ruhr Feb. 20, unchanged on the day, but down by Eur20/mt each on the month.
Author: Katya Bouckley, katya.bouckley@spglobal.com
European steel HRC buyers wait for further price drops
In Northern Europe, integrated mills could still offer HRC on quite short lead times – including April.
Offers of such material were heard at €740-760 ($797-819) per tonne ex-works. This compared with €780-820 per tonne ex-works announced in January for coil to be delivered in the second quarter.
Rare deals for limited volumes were heard at €720-730 per tonne ex-works in Germany and €740-750 per tonne ex-works in the Benelux area.
“Mills have started to grant discounts on HRC to secure bigger volumes, but traded volumes in fact remained low – there is no restocking,” a buyer source in Germany said.
“It is not a question of price [for HRC] these days, it is a question of demand [from end-users], which remains quite poor,” a source at a steel service center in the Benelux area said.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €725.25 per tonne on Tuesday, up by €0.25 per tonne from €725.00 the previous day.
The index was down by €22.25 per tonne week on week and down by €18.75 per tonne month on month.
Buyers were said to be pushing prices toward €700 per tonne ex-works, with most sources agreeing that this level would be “rock bottom” for mills.
“I don’t think mills would accept bids below €700 per tonne ex-works, they [steel mills] would rather trim output,” a second buyer in Germany said.
In Southern Europe, Fastmarkets calculated its daily steel HRC index, domestic, exw Italy, at €723.33 per tonne on Tuesday, unchanged from a day earlier.
The index was down by €20.42 per tonne week on week and down by €12.09 per tonne month on month.
Offers from local suppliers for April-delivery HRC were heard at €740-750 per tonne delivered (€725-735 per tonne ex-works), with buyers’ estimates of tradeable values reported at €720-730 per tonne ex-works, and some bids reported even lower – €700 per tonne ex-works.
Transactions were heard at €720-730 per tonne ex-works, but for small lots of less than 500 tonnes, market sources said.
But some sources suggested that limited domestic supply, as well as difficulties in procuring overseas coil, would cushion local HRC prices from a sharp decline, despite chronically low demand.
“Acciaierie d’Italia [one of two local suppliers] has been running with only one blast furnace [BF] since end-January. So that leaves Arvedi as the single big supplier, with a couple of re-rollers which can supply small volumes,” a buyer in Italy said.
Meanwhile, new import offers from Asia were available for April shipment and July arrival, market sources said.
The current steel import safeguards, shielding the European market from excessive imports, will expire on June 30, 2024. Market sources suggested that these measures were likely to be extended, but it was not clear what changes would be made, so importing was considered risky.
The European Commission started an investigation into a possible extension of the measures in February, it announced earlier this month.
“Some Asian countries might get individual quotas after June 30 [and] we might have different allowances. So, imports are not viable for most buyers,” a trading source in Italy said.
HRC from Vietnam was offered to Italy at €620 per tonne CFR.
At the same time, offers from Egypt, Japan and Taiwan were reported at €650 per tonne CFR.
Published by: Julia Bolotova
Cogne acquires Mannesmann Stainless Tubes, eyes increased sales
Walsin Lihwa, the leading stainless steelmaker in Taiwan, has purchased 100% equity of Mannesmann Stainless Tubes GmbH (MST) from German steelmaker Salzgitter Group. The deal was done through Walsin Lihwa’s Italian subsidiary, Cogne Acciai Speciali (CAS), for €135 million ($146m).
The transaction is subject to regulatory approvals by authorities, Kallanish notes.
Walsin Lihua says: “The recent series of acquisitions not only build CAS’s unique position as a one-stop stainless steel and nickel-based alloy manufacturer in Europe, but also accelerate Walsin Lihua’s strategic layout of penetrating high-end and high-growth potential markets.”
“We are pursuing active portfolio management with strategic acquisitions and growth steps, as well as sales of companies that are not part of our defined development areas,” says Salzgitter chief financial officer Burkhard Becker. “This approach is an integral part of our Salzgitter 2023 strategy. Cogne provides MST and its employees further reaching entrepreneurial opportunities within the new network, and ranks as a renowned industrial partner.”
MST is a global seamless pipe manufacturer, specialising in high-end pipe that can withstand extreme pressures and temperatures. Its customers include companies in the oil and gas, aerospace, chemicals, new energy and other industries. It is not integrated into the Salzgitter Group’s supply of primary materials.
Cogne manufactures long products in stainless steel and nickel-based alloys for aerospace, automotive, energy – and in particular the oil and gas industry.
After the acquisition, Walsin Lihwa expects MST to expand market share, supported by stable raw material supplies from CAS, and thus expects CAS to fully utilise its melting capacity.
Italy takes control of Acciaierie d’Italia, names commissioner
The Italian government has placed Acciaierie d’Italia (ADI) into extraordinary administration, thereby passing control of the company to government appointed commissioners, headed by Giancarlo Quaranta.
“This ends ArcelorMittal’s involvement in ADI, which started in 2018,” ArcelorMittal says in a note sent to Kallanish. Since that time, ArcelorMittal has funded an €800 million ($865m) environmental programme that ensured ADI’s compliance with the Integrated Environmental Authorisation set out by the Italian government, as well as €1.2 billion in upgrading equipment.
ArcelorMittal says it put forward “pragmatic” proposals to address the discrepancy in capital investment between itself and fellow ADI shareholder, state-owned Invitalia, and then offered to sell its shareholding in ADI to Invitalia. However, neither was successful.
“Had ADI been able after April 2021 to access traditional debt financing and been able to raise the working capital required to fund its ongoing needs, rather than relying on equity injections from its shareholders as its sole source of capital, this situation could have been avoided,” ArcleorMittal notes.
“Unfortunately, the conditions precedent to allow ADI to convert its lease of the assets into a formal purchase – conditions that ADI has no control over, were originally set to be completed before May 2022, and subsequently extended to May 2024 – remain unmet today,” it continues.
“ADI’s financial situation has been further impacted by the Italian Government delivering less than one-third of the €2 billion of support measures it offered to at the time the public-private partnership with Invitalia was established,” it adds.
The situation was complicated by the temporary removal of criminal immunity applicable during the implementation period of the environmental investment programme, the demand environment during the Covid crisis and the energy crisis in Europe last year, the group concludes.
New ADI commissioner Quaranta has long experience with Ilva group, as the company was known prior to ArcelorMittal’s takeover. Since 2022, he has also headed the consortium of Italian steelmakers created to study and develop new opportunities related to the production and supply of direct reduced iron. Local trade unions have welcomed his appointment as ADI commissioner.
Adam Smith Poland