German steel distributors’ March sales fall on year, while stocks remain steady: BDS
Steel product sales in the German distribution and stockholding system in March totaled 817,467 mt, down 17.8% year on year and down 3.1% month on month, according to data from steel stockholders’ association BDS released April 22.
Monthly sales of long products totaled 254,763 mt, down 7.6% year on year, but up 5.8% month on month, marking increased demand in the construction sectors on seasonal effect.
March sales of flats products stood at 496,756 mt, down by 23.1% year on year and 6.8% month on month confirming the weak economy data.
Other steel product sales totaled 65,948 mt, down 8.8% compared with the same period a year ago and 6.4% lower on the month.
Stocks steady on year
Total steel stocks in Germany in March were mostly stable compared with a year ago at 1.979 million mt, up 0.2% year on year, but down 1.3% month on month, according to the BDS data.
Stocks for the flat steel products were at 1.29 million mt in March, up 8.9% year on year and down by 0.7% month on month.
Stocks of steel long products in March fell 14.1% year on year and 2.6% month on month to 646,239 mt.
Others stocks stood at 44,353 mt in March, down 0.4% from February, but up 7.9% compared with March 2023.
German economic sentiment
Germany’s manufacturing sector ended the year’s opening quarter still mired in contraction territory, the latest HCOB PMI survey conducted by S&P Global showed.
HCOB Germany Manufacturing PMI was at 41.9 point in March compared with February’s 42.5, marking a five-month low.
March’s survey showed evidence of spare capacity at factories as goods producers reported a rapid decline in backlogs of work and further job losses. Although the rate of decline in buying levels eased since February, it remained quicker than that of output as companies looked to reduce stocks of purchases. The latest decline in pre-production inventories, which was the 14th in as many months, was in fact the sharpest seen since October last year.
Germany’s service sector ended the first quarter on more stable footing, with companies growing increasingly optimistic about the outlook, according to the latest HCOB PMI survey compiled by S&P Global.
The HCOB Germany Services PMI Business Activity Index came in at 50.1 in March, up from 48.3 in February and registering broadly in line with — but crucially just above the 50.0 point threshold. The result served to end a five-month sequence of contraction in activity, registering the six-month high level.
During the month of March, N.EU HRC prices moved from Eur715/mt March 1 to Eur665/mt March 28, according to Platts assessment. Platts assessed hot-rolled coil in Northwest Europe stable on the day at Eur625/mt ($666.56/mt) ex-works Ruhr April 19.
Complexity in carbon markets set to reshape geopolitics: IETA
Carbon markets are growing even more complex and becoming closely intertwined with geopolitics, especially with policies such as the EU’s Emissions Trading System 2 and its Carbon Border Adjustment Mechanism, the president of the International Emissions Trading Association said.
Speaking to S&P Global Commodity Insights, Dirk Forrister said many countries are looking to form new alliances in the quest for carbon neutrality, which is reshaping the politics of energy and climate.
“Getting to net zero can be really expensive unless you work with others, and it is not a smooth easy journey it is going to be one where you need strong reliable partners and that’s what the market architecture can enable, but it takes political agreement to make that happen,” he said in an interview.
Forrister said the introduction of EU’s CBAM, which imposes a tax on imports of carbon-intensive products like iron and steel and fertilizers, was already pushing many industries, companies and countries to innovate and adapt.
While ETS 2, which will cover the building and road transport sectors, and builds on EU’s current cap-and-trade compliance program, is also set to be a “massive undertaking,” he added.
On the sidelines of the European Climate Summit in Florence, Forrister discussed some of the key developments that global carbon markets are currently facing. Below is a transcript of his comments, edited for length and clarity.
S&P GLOBAL: What were some of your key takeaways from the European Climate Summit that took place April 16-18?
FORRISTER: I think there’s a general sense of enthusiasm from market participants that major changes are in the works and that the need for carbon markets is rising with the interest in meeting the goals of the Paris Agreement. With the European focus on it, it is so much more complex now than it was 10 years ago.
All of a sudden, you’re not just thinking about how tight the cap is getting and the linear reduction factor that’s driving emissions down in Europe. But you’re also looking at a whole second ETS covering billings and transport that’s as big as the first ETS, that’s a massive undertaking.
Then you’re talking about CBAM because the reality is with trade exposed industries there aren’t going to be enough allowances to solve the trade exposure problems so you’re going to have to innovate and come up with something.
The impact [from CBAM] is going to be felt long into the future but I think for the market, it is adding complexity, with many more dynamics to consider.
S&P GLOBAL: You have previously said it was inevitable that geopolitics would shape the carbon markets, have there been any developments in your outlook?
FORRISTER: Europe’s acceleration of its energy transition due to the war in Ukraine and the changes in fuel supply to Europe — the imports of LNG and efforts to drive efficiency that are probably the most dramatic examples of where geopolitics has affected the market.
But as we go forward there is a potential for new alliances to form. When I think about who gets serious about getting to net zero, I think about who are going to be your traveling partners on that journey. And that is how geopolitics is starting to come into more focus.
[For example], who will Japan actually team up with, through its Joint Crediting Mechanism to broaden its reach?
Right now, there is tremendous interest in Africa being a supplier [of carbon credits] into the global market — they have lots of mitigation potential, but some areas do not have a lot of money.
China’s Belt and Road Initiative touches a number of those countries and right now there’s not an offer coming from the EU or the UK or Canada on how to get market access to their programs if you’re a developing country, but China might be an interesting partner. I don’t know if that materializes or not, but it is an example of how at some point things are going to start to click.
Getting to net zero can be really expensive unless you work with others, and it is not a smooth easy journey it is going to be one where you need strong reliable partners and that’s what the market architecture can enable, but it takes political agreement to make that happen.
S&P GLOBAL: The IETA guidelines clearly define aligning carbon markets with the Paris Agreement. What was the rationale for this?
FORRISTER: The Paris Agreement is fundamental to how countries are going to deal with climate change. You can’t just take the piece you like. You have to take the agreement as a whole. It is not about getting to the zero alone it is about getting to net zero together. The word ‘net’ is incredibly important because that’s how we work together across borders and sectors.
There are a few jurisdictions that will be able to get to net zero, but most countries are going to need cooperation to get there because they don’t have the financial resources to deliver. In a way it’s a match made in heaven, the opportunities side and the challenge side should come together.
Maria sultana Choudhury | Eklavya Gupte
China, EU drag down March global output
Global crude steel production fell 4.3% on-year in March to 161.19 million tonnes, although this was up over 10mt on February. Weaker Chinese and EU output were the main drivers of the on-year drop, Kallanish notes from worldsteel data.
Chinese production slid 7.8% on-year in March to 88.27mt, while Japanese and Korean production were down 4% and 9.5% respectively to 7.2mt and 5.28mt. Indian output however surged 7.8% to 12.7mt.
Japanese and Korean output nevertheless rose slightly versus February, while China’s output was up 7mt, although the February tonnage remains an estimate.
EU27 crude steel production fell 4.3% on-year in March to 11.6mt, despite German production rising 8.4% to 3.5mt and French output by 2% to 812,000t. However, Italian and Spanish production dropped 12.6% and 14.4% respectively to 1.9mt and 1.02mt.
EU output nevertheless rose by almost 900,000t versus February.
Turkish production soared 18% on-year in March to 3.2mt, coming from a low, post-earthquake base last year.
US production was flat on-year at 6.91mt and Brazilian output rose 5.6% to 2.79mt.
Russian volumes are estimated to have risen 0.8% to 6.64mt.
Crude steel output in the 71 countries monitored by worldsteel inched up 0.5% on-year in the first quarter to 469.06mt.
Adam Smith Poland
Thyssenkrupp Materials advocates alternative drivetrains for US logistics
Thyssenkrupp Materials Services is evaluating alternative drivetrains for its road transport vehicles in North America, where it has numerous subsidiaries, in order to reduce emissions, says chief executive Martin Stillger.
Speaking on the occasion of the International Logistics Day last week, Stillger said more than 72% of US freight is transported by road each year. Trucks travel more than 300 billion miles annually, and generate emissions that need to be reduced drastically.
“As one of the world’s leading mill-independent materials distribution and service providers, we are aware of our great responsibility to reduce greenhouse gas emissions,” Kallanish heard from Stillgers. “In California, a large proportion of our truck fleet already runs on renewable diesel R99. The engines do not need to be specially converted, but the CO2 savings are still enormous.”
Also in the USA, some units are currently testing the use of RNG trucks that run on renewable natural gas. In Germany, the first hydrogen-powered trucks started this year, while the UK subsidiary uses trucks that run on hydrotreated vegetable oil (HVO). The sustainability strategy of thyssenkrupp Materials Services is called “BEYOND” and is based on internationally recognised ESG standards, the company notes.
On the occasion of another recurring international date last week, the UN World Day of Creativity and Innovation, tk Materials Services presented its new solution entitled “Forward Sensing”. It describes the tool as a cross-industry digital platform that gives users a complete view of their entire end-to-end supply network and its dependencies in real time.
“This is done by sharing transactional data, such as orders and their confirmations. Of course, this involves a lot of effort in terms of data provision, but it more than pays off in the end,” explained Sebastian Smerat, head of subunit Smart Services.
Christian Koehl Germany
GCC-Iraq-Turkey-Europe land link could facilitate commodities trade
Turkey and Iraq have signed a memorandum of understanding on the Development Road project to connect the Gulf Cooperation Council and Iraq to Europe via Turkey, according to Turkish media reports.
The project aims to establish a 1,200km highway and railway from the Grand Faw Port in Basra, Iraq, through the Iraqi cities of Diwaniyah, Najaf, Karbala, Baghdad, and Mosul to the Turkish border. It aims to provide access from the Turkish border to Mersin Port in Turkey and onward to Europe via Istanbul by road.
The agreement, involving Turkey, Iraq, Qatar, and the United Arab Emirates, aims to significantly reduce transportation time to 25 days and set a $20 billion target for Turkey-Iraq trade.
The deal was made during Turkish President Recep Tayyip Erdogan’s visit to Iraq, the first in 13 years, during which a total of 26 agreements were signed to enhance bilateral cooperation in various sectors, including energy, trade, education, tourism, sports, health, and defence.
Given the Red Sea shipping crisis, the alternative of road transportation is gaining importance for ensuring safe transportation of, among other things, commodities such as steel, Kallanish notes.
Elina Virchenko UAE
Mills welcome German federation’s ‘LESS’ low-emission standard
Two steelmaker groups, GMH (Georgsmarienhütte) Gruppe and Swiss Steel, have issued notes of approval for the proposal from German steel federation for a standard for low-emission steel.
Both mills happen to be makers of special bar qualities, and the word of Swiss Steel may have some international weight, given it has melt shops in Germany, Switzerland and France.
WV Stahl announced on Monday that it has set a cornerstone for prime markets for climate-friendly streel with a standard its members developed together with the German economy and climate protection ministry.
The Low Emission Steel Standard (LESS), as it is called, is the first standard that makes the main customary production routes, blast furnace and EAF, comparable in terms of their efforts to decarbonise. Its centrepiece is a labelling system for the classification of low-CO2 steels, Kallanish learns from WV Stahl.
Companies certified by LESS will have to reveal their product carbon footprint (PCF) according to the environmental product declaration (EPD). The LESS book of rules provides a basis from which steel users can obtain all information they need to be able to document their climate targets, the federation explains.
“The quest for a definition of green steel has long been discussed internationally,” says Bernhard Osburg, president of WV Stahl and chief executive of thyssenkrupp Steel. “I am happy that we joined our efforts to work out a solution that is based on international rules and which finds a broad consensus.”
GMH Gruppe managing partner Anne-Marie Grossmann has already pointed to a next step, the establishment of the standard in public investment. Once public institutions take LESS as a mandatory basis for their materials procurement, the acceptance of LESS will gain momentum, Grossmann says.
Christian Koehl Germany
Salzgitter, Uniper sign green hydrogen supply pre-contract for German steel plant
German steel producer Salzgitter has signed a pre-contract with Uniper for the supply and purchase of green hydrogen for its Salcos low-carbon steelmaking program, the companies said April 23.
Uniper will supply up to 20,000 mt/year from its 200-MW Wilhelmshaven electrolyzer from 2028 to the direct reduction iron plant Salzgitter is constructing.
The electrolyzer is due to be commissioned in 2028 on the site of a former coal plant, with volumes dependent on availability of the German core hydrogen network and a specific pipeline to the steel plant, Uniper said in a statement.
“A pipeline connection from Wilhelmshaven to Salzgitter is absolutely essential and must be established as quickly as possible,” Uniper said.
Uniper plans to expand Wilhelmshaven electrolysis capacity to 1 GW, producing 100,000 mt/year.
The company is also developing a green ammonia import terminal at the site with capacity of 2.6 million mt/year of ammonia, which can be cracked into at least 300,000 mt/year of hydrogen, to be fed into the planned German hydrogen pipeline network.
A final investment decision on the terminal is expected in the second half of the decade, a Uniper spokesperson told S&P Global Commodity Insights by email.
The preliminary agreement between Uniper and Salzgitter includes a technical and commercial framework for hydrogen supply.
The agreement is the first step in securing hydrogen supply for Salzgitter’s Salcos project, which will require up to 150,000 mt/year of hydrogen in its first stage.
In a first phase from 2026, Salzgitter will commission a direct reduction plant, an electric arc furnace, and the 100-MW electrolysis plant.
The DRI unit will have a production capacity of over 2 million mt/year of direct reduced iron, while the EAF will produce 1.9 million mt/year of steel, according to Salzgitter Flachstahl and engineering company Primetal, which will build the EAF.
It aims to convert its operations to “virtually CO2-free steel production” by the end of 2033.
The first stage of Salcos is backed by subsidies from Germany’s federal government and the state of Lower Saxony, as well as by the company’s own funds.
The agreement follows hydrogen supply agreements from other German steel producers.
German steel producer Stahl-Holding-Saar launched a tender in March to buy up to 50,000 mt of locally produced renewable hydrogen for its Dillinger and Saarstahl plants in Saarland.
And in February, Thyssenkrupp issued a tender seeking up to 151,000 mt/year of renewable and low-carbon hydrogen under 10-year contracts from 2028, for pipeline delivery to its Duisburg steelworks.
Platts, part of S&P Global Commodity Insights, assessed the cost of green hydrogen production via alkaline electrolysis, backed by renewable power purchase agreements, at Eur7.10/kg ($7.6/kg) on April 22, up from Eur6.11/kg at the start of the month.
The assessment reflects one possible pathway for producing EU Renewable Energy Directive-compliant green hydrogen.
Platts assessed Northwest European hot-rolled carbon-accounted coil stable on the day at Eur745/mt ($793/mt) ex-works Ruhr on April 22, a Eur120/mt premium to conventional supplies. The assessment was calculated in line with the sum of Platts daily carbon-accounted steel premium (CASP) assessment and Platts daily hot-rolled coil price assessment in Northwest Europe.
James Burgess
Global steel production down 4.3% on year in March: worldsteel
Global crude steel production totaled 161.2 million mt in March, down 4.3% year on year, according to World Steel Association data published April 23.
However, March global production was 7.9% higher than the previous month and at the highest monthly level since May 2023.
The March total brought output for the first quarter to 469.1 million mt, edging up 0.5% year on year, the data showed.
China, the largest steelmaker, produced 88.3 million mt in March, down 7.8% from a year ago but up 8.7% month on month, making up 55% of total global crude steel output.
China’s Q1 volume was also 1.9% lower year on year to 256.6 million mt.
Platts, part of S&P Global Commodity Insights, assessed the SS400 HRC 3 mm thick grade of coil at $525/mt FOB China April 23, down 7.6% since the start of 2024.
Production in India climbs
The world’s second-largest steel producer, India, saw steel output rise 7.8% on the year and up 6.9% on the month in March to 12.7 million mt. This brought Q1 volumes to 37.3 million mt, up 9.7% on the year.
Japan’s March production totaled 7.2 million mt, down 3.9% on the year, but up 2.9% from February, with Q1 output down 0.8% on the year to 21.5 million mt, the data showed.
May output from the US was steady year on year at 6.9 million mt but climbed 6.5% on the month. The US’ Q1 output was down 1.6% to 19.9 million mt.
Russia was estimated to have produced 6.6 million mt in March, up 0.8% year on year and 10.6% higher than February’s level. The estimated Q1 total was 18.7 million mt, down 0.2% on the year.
South Korea produced 5.3 million mt of crude steel in March, down 9.5% year on year, but up 0.8% month on month, with the Q1 volume down 2.5% on the year to 16.2 million mt.
EU production down 4.3% on year
The European Union produced 11.6 million mt of crude steel in March, down by 4.3% year on year but up 8.25% on the month.
Germany, Europe’s largest steel producer, saw its crude steel production jump 8.4% year on year in March to 3.5 million mt, which was also 12.3% higher on the month. This brought Q1 volumes to 9.7 million mt, up 6% from Q1 2023. Inventory cyclical effects may also have contributed to this positive development.
In Germany, steel production by blast furnace rose 5.1% on the year to 2.42 million mt, while steal made via electric arc furnaces increased 16.4% to 1.09 million mt, according to data from German steel federation WV Stahl.
During the month of March, N.EU HRC prices moved from Eur715/mt March 1 to Eur665/mt March 28, according to Platts’ assessment.
Europe’s second-largest steel producer, Italy, saw steel production fall 12.6% year on year to 1.91 million mt, although volume rose 5% on the month. The Q1 total was 5.4 million mt, down 4.4% on the year.
In March, flat steel products in Italy dropped 14.2% on the year to 794,000 mt, as the country’s second-largest flat steelmaker, Acciaierie d’Italia, was working at its lowest-ever historical level. Italian long steel production also fell 11% to 1.25 million mt year on year, according to Italian steel association Federacciai’s latest report.
Turkey produced 3.2 million mt in March, rising 18% on the year and 3.8% higher than February’s volume, according to worldsteel. Q1 production was also up 28.4% on the year to 9.5 million mt.
Brazil produced 2.8 million mt of steel in March, up 5.6% year on year and 0.3% higher on the month.
Iran’s output rose 2% on the year and 23.9% on the month to 2.8 million mt.
Overall pig iron production from 38 countries was 108.3 million mt in March, down 4.8% year on year but increasing 6.7% from February, the data showed.
Direct reduced iron produced worldwide in March amounted to 9.6 million mt, falling 4.8% year on year and up 9.5% from February, according to worldsteel.
Jacqueline Holman | Annalisa Villa
