Ulrich Leuchtmann at IREPAS: Inflation rates after pandemic fail to fall as much as expected
Speaking at the SteelOrbis Spring 2024 Conference & 90th IREPAS Meeting held in Berlin on April 28-30, Ulrich Leuchtmann from Commerzbank AG talked about global inflation rates and compared the current rates with the levels recorded in 2019 before the pandemic.
He also advised global steelmakers to be cautious regarding capacity investments in the face of ongoing low demand and high inflation rates.
“Looking at the inflation rates in 2019, the economists thought it will not increase ever again”, Mr. Leuchtmann, said and added that the pandemic affected inflation rates as the lockdowns resulted in supply chain disruptions. Stating that, while in general central banks had been seeking to keep inflation rates at around two percent, the pandemic period led to a global inflation shock. He noted that, even though the market has slightly recovered from the lockdowns, the inflation rates have not fallen as much as expected, with the central banks having had to assume the burden to bring inflation down and prevent it from increasing further.
Looking at the GDP growths in the US, the euro zone, the UK and Japan, the only one to recover quickly was the US, Leuchtmann stated, and the reason for this quick recovery was assumed to be the aggressive monetary policy in the US, leading inflation to go down to the targeted levels and the economy to grow faster than the other three economies.
Regarding China, Leuchtmann said that the economic growth in China is due to its integration into the global market, while any decline in growth would be evaluated as a normal process.
IREPAS: China’s exports rising, EU demand will not recover before H2
Murat Cebecioğlu, chairman of IREPAS, the global association for longs exporters and producers, has given the welcome speech at the SteelOrbis Spring 2024 Conference & 90th IREPAS Meeting taking place in Berlin on April 28-30.
The conference has attracted approximately 450 participants, including 105 representatives from 41 steel producers and 95 delegates from 52 raw material suppliers.
In his speech, the IREPAS chairman stated that the global long steel market is still facing unfair trade conditions, with aggressive exports coming from China. Apart from the unfair trade conditions, he said that the market is deteriorating due to ongoing geopolitical issues, huge uncertainties, and economic problems.
Regarding China’s exports, he stated that China’s aggressive exports have driven other Asian exporters such as Vietnam, Taiwan and South Korea to adapt a similar stance on prices this year in order to remain competitive, resulting in a further worsening of global steel market conditions.
Mr. Cebecioğlu also noted that the positive expectations for the period after the Chinese New Year holiday did not materialize, disappointing market participants.
Meanwhile, he noted that demand in the global long steel market continues to lag behind supply.
Stating that steel demand in the EU will not recover before the second half of 2024, the IREPAS chairman noted that prices in the US market are fluctuating with some product prices up and some down, while the market players in the US, the EU and Canada are waiting for interest rates to ease.
Alexander Gordienko: Chinese exports may hit record levels of 2015
During his presentation at the SteelOrbis 2024 Spring Conference & 90th IREPAS Meeting held in Berlin on April 28-30, Alexander Gordienko, export director of Spain’s CELSA Group, said that, despite gloomy projections, the global economy still sees steady growth, with 3.2 percent GDP growth expected both in 2024 and 2025.
In particular, growth in the EU will rebound from very low levels, with strong EU economies underperforming, while countries such as Greece and Spain are doing much better than expected. Mr. Gordienko pointed out that the US economy is overheated, while the Chinese economy has been struggling with the downturn in its property sector. As domestic demand remains weak in China, its exports will become the main source of growth which will bring risks of trade tensions. On the other hand, the emerging markets are performing strongly, benefiting from the trade tensions between China and the US.
Regarding steel production, the CELSA official noted that, according to the worldsteel figures, global steel production in the first quarter of the current year decreased. In the given period, while China, Japan, US, South Korea and the EU registered declines, steel production increased by six percent in Brazil, by 9.7 percent in India, by 16.3 percent in Iran and by as high as 28.4 percent in Turkey, a fact to which he drew attention.
In 2023, global long product consumption decreased by 5.3 percent, down from the peak of 2021 and in 2024 it is expected to see a 0.5 percent decline, which would be another 12 million mt loss of consumption compared to the previous year. Looking at the products individually, wire rod was the one which saw the biggest decline, while in 2024 wire rod consumption is expected to decrease by 8 million mt.
Mr. Gordienko pointed out that, since the last conference, prices have remained stable, reacting very slowly to changing demand and raw material prices. He mentioned that capacity utilization rates have been very low and small regional niches have appeared in the market and these are being defended by tariffs and quotas. Looking at the evolution of the rebar price spread, CELSA’s export director said that 2023 was tough on steel producers and that 2024 will be even tougher, with demand not expected to recover until 2025. He added, “It will take some extraordinarily good news to revive demand, but no good news yet unfortunately”.
Remarking that the Chinese government has started investigating possible fraud in the non-VAT export trade, Gordienko said that it is his personal view that, although the investigation may cause a temporary slowdown in exports for a couple of months, the Chinese market will find a way to continue to export as it is the major source of growth for the country given its weak domestic market. In March this year, China exported 9.9 million mt, which would project 103 million mt of exports for the whole year. Based on the export volumes in the first quarter of the current year, Chinese exports are expected to reach the record levels of 2015.
Has Celik to reduce carbon footprint with new EAF, reshape supply chain
Large Turkish special steel bar producer Has Celik aims to reduce carbon footprint with a new electric arc furnace steel mill, currently under construction in Bilecik province, it said in an April 28 statement.
It is aiming to produce low-carbon steel grades at the new mill, with full production scheduled to start in Q4 2024.
The company introduced its new industrial product brand “Crombar” at the Wire and Tube Fair in Germany, with CEO Adnan Naci Faydasicok saying it aimed to expand export destinations by focusing on low-carbon steel production.
“To build a sustainable future, we will also reshape our supply chain,” he said, adding the company would invest to raise the energy productivity of its facilities by 30% by 2030 and to become carbon neutral by 2050.
The new EAF mill will be equipped with an electro-magnetic liquid steel stirring system, a ladle furnace and a twin vacuum degasser.
Has Celik will produce steel billets between 160 x 160 mm and 240 x 240 mm in a wide range of steel grades that include low, medium, high and micro alloyed grades for the automotive, mechanical engineering, and aerospace industries.
The company currently has 300,000 mt/year special steel bar production capacity.
Platts assessed Turkish exported rebar at $585/mt FOB April 26, flat on the day, according to S&P Global Commodity Insights data.
Cenk Can
European HRC prices rise as restocking activity picks up
Domestic prices for European hot-rolled coil rose on April 29, as buyers accepted higher offers from mills amid a pickup in restocking demand in the market, according to sources.
“Demand is better as distributors have started to restock, but the volumes remain limited as end-user demand is still low,” a service center source said. “Prices will rise, but I do not expect any major movement.”
Market participants said mills need to be consistent with their offers, and too much of a price rise would not be accepted because of limited end-user demand.
“As long as mills stand firm on the target prices, they would be successful,” a trader source said. “Unless they try to ask for a high price rise of Eur50/mt. That would slowdown restocking.”
Platts assessed hot-rolled coil in Northwest Europe at Eur635/mt ex-works Ruhr April 29, up Eur10 on the day.
Deals have been heard at Eur630-650/mt EXW Ruhr, but the higher end of the range was only achieved in deals for small tonnages.
Tradable values were reported at Eur630-640/mt EXW Ruhr and offers have been reported at Eur640-645/mt EXW Ruhr.
Interest in imports remained low due to uncompetitive offers resulting from a higher Euro to US dollar exchange rate and longer lead times.
Platts assessed prices for imported hot-rolled coil in Northwest Europe at Eur610/mt CIF Antwerp April 29, stable on the day.
Meanwhile, Platts assessed domestic prices for hot-rolled coil in South Europe at Eur629/mt EXW Italy April 29, up Eur4 on the day.
Offers and tradable values were reported at Eur630/mt EXW Italy.
Platts assessed prices for imported hot-rolled coil in South Europe at Eur600/mt EXW Italy, stable on the day.
Devbrat Saha | Maria Tanatar
Eurofer lowers demand forecast as recovery loses steam
The European steel demand outlook for 2024 continues to lose momentum amid worsening geopolitical tensions, growing economic uncertainty, energy prices, inflation and high interest rates. Eurofer has therefore lowered its forecast for 2024 apparent steel consumption growth to 3.2% from the previous 5.6%.
EU steel-using sector output, despite showing more resilience than expected last year, is now set to decline 1% in 2024, while imports are once again on the rise.
“These figures underscore the urgent need for action if we want to ensure a resilient future for the European steel industry and the interconnected clean tech manufacturing value chains, from wind to electric vehicles,” Eurofer director general Axel Eggert says in a note seen by Kallanish. He reiterates his call for a cohesive EU industrial policy.
Although rising 2.8% on-year in the fourth quarter of 2023 due to a low base, EU apparent steel consumption – at 29.9 million tonnes – was the fourth-lowest quarterly volume recorded since the pandemic. Moderate quarterly improvements are expected throughout 2024 but consumption will remain below pre-pandemic levels.
EU domestic steel deliveries meanwhile grew 1.3% in Q4 but fell in full-year 2023 by 7.9% on-year. Imports also increased again in Q4, by 11%, while their share of apparent consumption remained considerably high, at 27%, in 2023.
The projected steel-using sectors’ output decline this year will be due to the persisting recessionary trend in the construction sector, which accounts for 35% of steel consumption in the EU. Also contributing are ongoing geopolitical tensions, and the lagged impact of high interest rates on the manufacturing sector. Growth is expected to moderately pick up, by 2%, only in 2025.
Adam Smith Poland
Danieli chairman Gianpietro Benedetti passes away
Danieli chairman Gianpietro Benedetti has passed away at the age of 81.
He started at Danieli in 1961 as a designer in the technical office for long product rolling mills. He advanced progressively to managing director in 1986 and become president and chief executive four years later. He had been chairman of the board since 2003 and chairman of the executive board since 2017, Kallanish notes.
The endless casting-rolling process conceived and developed by Benedetti is revolutionising long and flat production worldwide, in the most effective, competitive, green way, the Italian technology supplier says.
“While mourning this loss, the Danieli team is more determined than ever to pursue its leader’s vision, drawing inspiration from his teachings and guidance,” it concludes.
Adam Smith Poland
Celsa foresees deterioration, record Chinese exports in 2024
2023 was tough on steel producers, but 2024 will be even tougher, Celsa Group export director Alexander Gordienko said at the Irepas conference in Berlin on Monday, attended by Kallanish.
Noting that he does not expect demand to recover until 2025, Gordienko sees Chinese steel exports in 2024 reaching the record levels of 2015.
The Chinese government has started investigating possible fraud in non-VAT exports, Gordienko says, which he expects to slow exports only temporarily. He thinks China will find a way to continue shipping abroad, as exports are the major source of Chinese growth given its weak domestic market and struggling real estate sector.
Prices have trended mostly stable recently despite volatile raw material values and demand, Gordienko pointed out, as capacity utilisation rates are low. European GDP growth is expected to rebound from very low levels. Large European economies are underperforming while Greece and Spain are performing better than expected, Gordienko said.
Emerging markets are performing better, benefiting from the tensions between the US and China, Gordienko observed.
Global long steel consumption recorded a 5.3% decline in 2023, while Gordienko expects 2024 consumption to see a further 0.5% decline, which would mean another 12 million tonnes lost on-year. Wire rod consumption, which saw the steepest decline in 2023, is expected to fall by 8mt in 2024.
Meanwhile, Ulrich Leuchtmann from Commerzbank advised steel producers to be cautious with their investments amid low demand and a high inflation rate environment.
Burcak Alpman Turkey
Buyers reluctant to accept higher HRC offers in Europe; trading limited
A steel producer in Northern Europe was said to be offering HRC at €650 ($695) per tonne ex-works on Monday, in contrast to the beginning of last week, when offer prices were mostly around €630-640 per tonne ex-works, sources told Fastmarkets.
And most market participants now expect the mills raise their offer prices again.
Last Friday, sources told Fastmarkets that one leading European steelmaker was planning to raise its offer prices by €30 per tonne for June-delivery material., with the news offers expected to be around €660-680 per tonne ex-works.
But there was no official confirmation about the price hike on Monday.
Northern European buyers, however, refrained from buying HRC, and no major deals were heard in the market.
Market participants estimated the tradable level for HRC in Northern Europe at €620-630 per tonne ex-works.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €629.58 on Monday, edging down by €0.84 per tonne from €630.42 per tonne on Friday.
The index was up by €4.16 per tonne week on week but down by €34.17 per tonne month on month.
In Southern Europe, Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €625.00 per tonne on Monday, increasing by €4.37 per tonne from €620.63 per tonne on Friday.
The index was up by €5.83 per tonne week on week but down by €20 per tonne month on month.
Suppliers in Italy were offering HRC at €650-660 per tonne ex-works on Monday, sources told Fastmarkets. In contrast, in early April, the same material was offered at €630-640 per tonne ex-works.
But buyers remained reluctant to accept Monday’s level, and trading was limited.
And market participants estimated the tradable level at €620-630 per tonne ex-works.
Activity in the Italian market was slow at the end of last week due to public holidays in the country and a buyer source told Fastmarkets that this week and next would give a better indication of whether the new, higher prices would be accepted.
Two other buyer sources expressed skepticism, however, and pointed to the fact that real steel demand remains weak.
Among the reasons for the current attempt by mills to raise HRC prices was the increase in the price of Asian HRC being offered to Europe.
On Monday, HRC from Taiwan, Japan and India was on offer at €600-620 per tonne CFR Italy – slightly higher than last week’s €590-600 per tonne CFR, sources said.
