Klöckner completes the sale of four European country organizations
Klöckner & Co has completed the sale of parts of its European commodity distribution business, which comprises the country organizations in France, the United Kingdom, the Netherlands and Belgium, to the Spanish company Hierros Añon S.A. today.
On December 22, 2023, Klöckner & Co announced the intention to sell parts of its European distribution business. At the same time, the company declared that, going forward, it intends to focus on higher value-added products and services (such as processing and fabrication services) within its customer value chain. These offerings, characterized by long-term contracts and strong customization, ensure steady demand and enhanced profitability. As a result, the closed sale significantly reduces the company’s exposure to volatile low-margin commodity markets.
Guido Kerkhoff, CEO of Klöckner & Co: “With the completion of this transaction, we have reached a major milestone in optimizing our portfolio. Going forward, we will set a clear focus on growing our attractive and profitable European businesses in Germany, Austria and Switzerland as well as in the North American market.”
The most recently sold European units accounted for around 20% of Klöckner & Co Group’s workforce and 10% of its sales. As a result, Klöckner & Co will from now on generate well over 50% of Group sales in North America.
Source: kloeckner.com
Swiss Steel orders emissions-tracking software
Swiss Steel has placed an order with SMS for Viridis Carbon Software for its Steeltec production plant in Emmenbrücke, Switzerland.
The Viridis Carbon Software, a module of SMS group’s Viridis Energy and Sustainability Suite, enables near real-time tracking of the emissions generated in a plant, SMS explains. It uses a methodology based on robust computational models, which can compute and report the amount of CO2 equivalent being generated in the company at any time.
The software calculates the product carbon footprint, i.e. the amount of CO2 equivalent emitted in the production of every unit of finished products that leaves the industrial plant, Kallanish learns from the technology supplier.
The software marks a significant step forward in enhancing Swiss Steel’s sustainability initiatives, it adds. In a first step, the melt shop, rolling mill, and bright bar plant will be equipped. In addition to the licence and software implementation, the agreement includes cloud services, and support and maintenance services, encompassing user support, fixing defects and bugs, and the rights to use new releases.
Christian Koehl Germany
Rhenus builds ‘Green Steel Logistics Hub’ in Dortmund
German logistics group Rhenus is setting up what it calls a “Green Steel Logistics Hub” at its business site in Dortmund, Kallanish learns from the company.
The warehouse is likely to start operating in autumn 2024, with the aim of transporting steel in a manner that is as eco-friendly as possible, Rhenus says. It will use the facility to appeal mainly to companies that produce, handle and further process steel.
The company is currently making changes to make its logistics processes more sustainable. For the transhipment hub, it is modernising one of its existing warehouses.
The measures include a new roof and the installation of a solar panel unit, which covers an area of about 4,000 square metres. The electricity that is generated will supply the energy for the crane equipment, the building itself as well as the charging infrastructure for electric trucks.
Rhenus says it will primarily cater for the rolled and flat steel market in the Dortmund region and the eastern Ruhr valley. The trimodal terminal at the Mathieshafen port facility in Dortmund provides good connections to motorways and waterways at important intersections in the heart of the Ruhr valley, it says.
Rhenus notes it is also seeking to introduce an inland waterway fleet that reduces emissions even further.
Christian Koehl Germany
Duferco to produce green hydrogen at Sicilian plant
Italian sections producer Duferco is investing in hydrogen to decarbonise the steelmaking process at its plant near Messina, Sicily.
Funded by the national post-Covid recovery plan, PNRR, through the Region of Sicily, Duferco, in partnership with Caronte and Nippon Gases Italia, will build a green hydrogen production facility with an annual output of 100 tonnes. The plant will be powered by a 4 megawatts photovoltaic plant and will have a 1MW electrolyser.
The overall investment will be €10 million ($10.8m), including €7.5m injected by the regional authority thanks to the PNRR. The hydrogen produced will feed not only the steel mill but also other companies in the area.
“The Hydrogen Valley in Sicily will contribute to achieving one of the main European objectives in the energy transition as envisaged by RePowerEU … The energy transition will only be a concrete challenge if it leads to employment and economic development. Otherwise, the risk is that it remains an overly ambitious mission,” Duferco chief executive Antonio Gozzi comments in a note sent to Kallanish.
Other steel producers are investing in hydrogen technology for clean energy. Steel equipment maker Tenova, in partnership with Italian energy companies De Nora, Snam and other European steelmakers, is working on the “hybrid technologies for sustainable steel reheating” (HyTecHeat) project. Funded by the European Commission for a budget of about €3.3m, HyTecHeat will test hybrid heating technologies based on natural gas, with a progressive increase of hydrogen up to 100%, for downstream processing (see Kallanish 4 March).
Natalia Capra France
Downtrend persists in European HRC market; production cuts said necessary to balance supply/demand
“When we talk about [HRC] trading these days, it is mainly 100 tons here and there. But basically, nobody is buying,” a buyer in Germany said.
Most buyers’ estimates of tradeable prices were reported at €700-720 ($760-781) per tonne ex-works on Wednesday, while offers were heard in the range of €720-730 per tonne ex-works from integrated mills and €690-700 per tonne ex-works from a re-roller in the Benelux area.
“Any price we mention is very theoretical because there is no trading. The main point is not the price; the main point is demand, which is nonexistent at the moment,” a second buyer in Germany said.
Most suppliers in the region were heard offering April-May delivery for HRC.
As a result, Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €712.65 per tonne on Wednesday, down by €1.60 per tonne from €714.25 per tonne on Tuesday March 5.
The index was down by €3.39 per tonne week on week and by €46.93 per tonne month on month.
Market sources described reducing output as the only viable option for European mills to stop the price downtrend.
“Output cuts are inevitable. The sooner mills do it, the better, because the effect on markets and prices will be delayed anyway,” a steel service center source in the Benelux area said.
“Mills should accept the situation and reduce capacity,” a trading source in the region said.
Meanwhile, in Southern Europe, Fastmarkets’ steel HRC index, domestic, exw Italy was calculated at €689.38 per tonne on Wednesday, down by €3.59 per tonne day on day from €692.97 per tonne.
The index was down by €22.50 per tonne week on week and by €63.12 per tonne month on month.
HRC offers in Italy were mainly heard at €700 per tonne delivered (equivalent to €685-690 per tonne ex-works), while some industry sources said that €690 per tonne delivered (€675-680 per tonne ex-works) was also achievable on bigger volumes.
A domestic supplier was said to be offering April-delivery HRC.
Tradable prices for HRC in Italy were mainly reported in the range of €680-690 per tonne ex-works.
Trading remained thin despite significant price decreases in the domestic market over the past few weeks, and most buyers were still postponing restocking, sources said.
“We do not need to buy [HRC], we have enough stock to wait for a few more weeks,” a steel service center source said.
And there is still room for the price to decline in the domestic market, most industry sources said. Some buyers claimed they expect HRC to hit €650 per tonne ex-works, indicating they would consider restocking at this price.
In the secondary market, 4mm HR sheet was heard traded no higher than €760-780 per tonne CPT, compared with €780-800 per tonne CPT heard in late February.
Trading in the secondary market recovered slightly in early March because some buyers needed to restock, but it was not enough to support a price rebound, some industry sources said.
Import HRC offers from Asia were consolidating around €600-620 per tonne CFR, but buying interest has remained low, Fastmarkets understands.
Most overseas suppliers were heard offering May-shipment HRC, which would mean June-July arrival.
Weak demand, cheap imports push down European CRC, HDG prices
In the CRC market, offers from European producers were few, sources said.
“The gap between local and import CRC prices is over €100 ($109) per tonne; European mills cannot compete with overseas suppliers,” a buyer in Italy said.
European mills in the south were trying to “protect” the level of €800-810 per tonne delivered (€790-800 ex-works), claiming it was near the cost line for them, according to sources.
Buyers estimated tradable prices for CRC in Southern Europe at €780-790 per tonne ex-works.
As a result, Fastmarkets’ price assessment for steel cold-rolled coil domestic, ex-works Southern Europe was €790-800 per tonne on Wednesday, down by €10-20 per tonne from €800-820 per tonne on February 28.
Activity, however, was close to nil, sources said.
“The CRC market has been chronically depressed lately. Firstly, there is no demand [from end-users] and no rebound of demand in sight. Secondly, there are much cheaper import options with little [safeguard] quota risks,” a buyer in Spain said.
Sources agreed that competitive offers from overseas suppliers were also dragging European prices downward.
Offers for South Korea- and Taiwan-origin CRC with May shipment were reported at €720 per tonne CFR to Southern Europe during the assessment week. Three sources, however, reported that one Korean supplier had reduced its offers to €705 per tonne CFR in the week commencing March 4.
CRC offers from Japan and India were heard at €700-725 per tonne CFR to Southern Europe.
Fastmarkets’ weekly assessment for steel cold-rolled coil import, cfr main port Southern Europe was €705-725 per tonne on Wednesday, down by €10-15 per tonne from €720-735 per tonne seven days earlier.
HDG
Fastmarkets’ price assessment for steel hot-dipped galvanized coil domestic, ex-works Southern Europe was €810-820 per tonne on Wednesday, down by €10-20 per tonne from €820-840 per tonne seven days earlier.
Offers from suppliers in Southern Europe were reported at €820-825 per tonne ex-works during the week, while buyers’ estimations of achievable prices were heard at €800-810 per tonne ex-works.
Demand for HDG was also thin, however, the impact of cheaper imports was not as significant as that for CRC, Fastmarkets heard.
“Import HDG suppliers cannot supply the full range of grades and dimensions required by European buyers, so HDG is largely being procured in Europe,” a second buyer in Spain said.
“[A] lack of demand remains the key issue. Prices are sinking lower, but nobody’s buying because there is a perception that rock bottom has yet to be reached,” a buyer in Italy said.
“There are a lot of concerns regarding the end-user demand. Nobody wants to procure [HDG] now. On the contrary, there is destocking,” he added.
Offers from Vietnamese and Indian suppliers of 0.5mm HDG with Z100-120 coating were reported at around €800-805 per tonne CFR to Southern Europe during the assessment week.
Overseas suppliers were said to be offering May shipment.
Turkish Tatcelik to start new galvanized line in June
Turkish flat steel producer Tatcelik will increase its galvanized steel capacity with the commissioning of the a new 650,000 mt line from June, Ayhan Ucar said at the EUROMETAL conference in Istanbul.
Tatcelik has a galvanized line that can produce, annually, 800,000 mt galvanized steel coils, a 200,000 mt pre-painted line and a 200,000 mt cold rolled line. The company has in total a rolling capacity of 1.5 million mt/year.
Ucar said that in the short-term for the Turkish companies there were expectations for new and postponed projects to restart, in particular after local elections in March with green energy investment set to continue to increase strongly.
Together with the expectation of interest rate cuts and the summer seasonal effect, Ucar expected there to be a positive effect on demand for and the price of steel after the third quarter.
Longer term. Ucar said the green energy transition meant “scrap will be more valuable” as companies are shifting their productions routes by using electric arc furnaces. That meant that Turkish mills that produce steel via EAF could face a period of some supply issues.
Global capacity growth set to ‘flood’ market with higher emissions steel: OECD
Current trends will increase the gap between global steelmaking capacity and demand further, pushing a “flood” of relatively high-carbon steel on to international markets and having a very detrimental impact on the steel industry, according to Anthony de Carvalho, head of the steel unit and senior economist at the OECD.
Excess steel capacity is getting worse as demand for steel is overall slow while capacity growth is accelerating, with most of the expansion using technologies that have higher CO2 emissions, de Carvalho told the EUROMETAL conference in Istanbul on March 5.
According to de Carvalho, capacity could increase by 158 million mt/year over the next two years, while demand is expected to increase by about 36 million mt based on the latest worldsteel forecast of a 1.8%-1.9% growth rate. The gap between capacity and demand was already more than 500 million mt in 2023.
“We see that the gap between capacity and demand is increasing further and what we notice is that the excess capacity is now very targeted on CO2 intensive production routes,” he said.
He noted that the last five years of capacity growth has seen significant expansion in developing Asian countries such as Vietnam, Iran and Indonesia as well as Iraq and other Middle Eastern countries.
“Countries that were considered relatively small steel players are getting bigger,” de Carvalho said, with the majority of the capacity growth into the blast furnace based route. “I think that accounts for about 70% or so of the Asian capacity increases.”
Most of the capacity growth is driven by foreign investments, he added. “So it’s the Chinese steel companies that are investing heavily in Southeast Asia,” he said explaining that this new capacity would be not absorbed by the countries’ domestic demand.
In contrast, capacity growth in other regions is more moderate and also more focused on the lower-emissions electric arc furnace production route.
He said that the resultant “flood” of relatively high-carbon steel on the international steel market in the next few years would have a very detrimental impact on the steel industry.
“We’re at the same low [profitability] levels that we saw when this excess capacity emerged in 2015 and 2016. It’s just not sustainable because the steel industry needs to have much higher operating profit ratios — 5% maybe higher — if it wants to reinvest in process innovations [and] product improvements, especially if it wants to shift to low-carbon steel production. So at the moment, this is just completely unsustainable,” he said.
The OECD is set to release a study on March 8 detailing how excess capacity hurts the profitability of the steel industry.
Turkey 2024 steel production seen similar to 2021 levels
Turkish steelmakers are targeting 2024 production in line with levels last seen in 2021 on strong domestic demand and the normalization of energy prices, according to Veysel Yayan, general secretary of the Turkish Steel Producers’ Association.
Speaking to S&P Global Commodity Insights on the sidelines of the EUROMETAL event in Istanbul, Yayan was also bullish on demand growth.
In 2021 Turkish crude steel production totaled 40.4 million mt and domestic consumption 33.4 million mt. Two years later consumption had grown to 38.1 million mt, whereas production had dropped to 33.7 million mt despite an installed capacity of 59.3 million mt.
“Imports, especially flat steel imports, are too high in Turkey,” Yayan said. “In particular, the share of imports in flat steel consumption exceeded the level of 47.7% [in 2023].
“While it will take time to have safeguard practices similar to those in the EU or the US, we hope to achieve the same approach as soon as possible, in order to be in a position to utilize the demand opportunities in our domestic steel market,” he said.
Turkey’s ministry of commerce on Oct. 31 opened an antidumping investigation against imports of hot-rolled coil from China, India, Japan and Russia.
“During the second half of the year, it will be clear whether the antidumping duties will be applied or not,” Yayan said. “If applied, the antidumping duties will support steel production.”
In 2023 flat steel consumption in Turkey amounted to 19.5 million mt. Of that figure, 9.3 million mt was imported, with 3 million mt coming from China, according to the association.
Talking about the energy transition, Yayan said the EU had put Turkey on the same level as developing countries, but that since most of Turkey’s steel production is electric arc furnace-based, this should not be the case, since the EAF route produces fewer emissions. Additionally, Yayan called on the government to support companies in their energy transition goals.
“The World Bank has allocated a $560 million financing package for the green transition but this covers all sectors — this amount will not be enough,” Yayan said, adding that according to the World Bank, Turkey needs around $65 billion in resources to achieve its net-zero goals by 2050, mainly to help companies in their Scope 2-related energy use for EAFs.
During the conference, Yayan also stressed that Europe should not subject Turkey to the same safeguard systems as China, Vietnam, Taiwan and South Korea, considering its low emissions and the free trade agreement with the EU.
Author: Annalisa Villa, annalisa.villa@spglobal.com
Scrap supply falls short for green steel
While using scrap is a key route to decarbonise the steel sector, there will not be enough of the material to produce the required amount of “green” steel in the future, industry experts have warned.
They were speaking at the Kallanish Green Steel Forum held in London this week.
“There’s just not going to be enough scrap to produce the amount of green steel that we want,” said Julian Verden, managing director Europe at Stemcor Group and EUROMETAL board member.
While the UK, for instance, produces 12 million tonnes of scrap, around 8mt of it is exported, he said. If, as planned, Tata Steel’s Port Talbot steelworks shifts from blast furnace-basic oxygen furnace steelmaking to scrap-EAF steelmaking, less scrap will be available for export. Similar changes are being seen elsewhere.
“There isn’t going to be enough scrap to move around the world,” Verden added.
Luciana Filizzola, director of sustainability and communications at GMH Gruppe, stressed the need to secure long-term scrap supply in Europe.
“We export a lot of very good scrap to Turkey, India, and to many other countries,” she said. “Why can’t we secure our scrap here in Europe? By 2030-2050 there will not be enough scrap – what are we doing exporting it? We need to keep it here.”
Germany-based GMH claims to produce green steel from almost 100% scrap melted in its electric furnace, with an ambitious target to produce CO2-neutral steel by 2039.
However, Åsa Ekdahl, head of environment and climate change at the World Steel Association, argued it is essential to use the scrap where it would be most beneficial to cut carbon emissions.
“We see the tendency that countries are wanting to restrict their exports of scrap,” Ekdahl said. “I want to make it very clear to everyone that there is no steel scrap available today that is not being used.”
“So, we have a very high collection of recycled waste, which is estimated to be about 85% – which is most of what you can find. It’s important that what we’re talking about really is moving this scrap around and we need to make sure it is used where it has the most benefit,” she concluded.
Reethu Ravi UK