Traders voice concerns at proposed EU extension to steel import safeguards
The EU’s proposal to extend its safeguards on 26 product categories of steel imports until June 30, 2026, has been greeted warily by attendees at the EUROMETAL Nordics event being held in Oslo this week, with many noting in particular that the planned 15% restriction on above-quota imports from any individual country would likely be a concern.
The planned cap for any individual exporter on hot-rolled sheets and strips would result in those countries that have traditionally shipped higher volumes into the EU needing to cut deliveries or incur higher duty costs for the importers taking their volumes.
One Finnish market participant told S&P Global Commodity Insights on the sidelines of the Oslo event that the industry was holding talks with the Finnish government about concerns on the safeguard extension, with the 15% restriction the main issue.
“The fact that a 15% restriction on imports of hot-rolled coils under the remaining quarterly quota is proposed now at such short notice without taking into consideration what material is on the port is bad,” another source from a large distributor company based in Spain told Commodity Insights. “I think the European Commission knowing that the current rules were expiring at the end of the year…should have communicated this six months before to allow players in the market to analyze the situation.”
“I think this new restriction overall will help the prices to go up, but a spike in prices is not good and will not be healthy for small traders,” a source from a large trading company based in the UK said, adding that the move would impact smaller companies in the market in particular.
However, one German trader told Commodity Insights that the European steel industry needed protections in order to stabilize the negative market situation, adding that the proposal had already failed to lift prices and boost sentiment. The price of HRC has been stable for a month, the source said.
Platts, part of Commodity Insights, assessed HRC at Eur630/mt ex-works Ruhr June 4, stable on the day but down Eur135/mt from the highest point so far this year on Jan. 30, when it reached Eur765/mt.
Key takeaways from EUROMETAL’s Nordics Steel Meeting: Green steel is a game-changer
Decarbonization of the European steel industry and the emerging green steel market were at the core of discussions during the event.
Customer willingness to pay for green steel is a game-changer
The steel industry is responsible for around 5% of CO2 emissions in the EU and 7% globally, according to the EU science hub.
The EU intends to be climate-neutral by 2050. This ambitious objective is at the heart of the European Green Deal, and is a legally binding target thanks to the European Climate Law.
To meet this goal, original-equipment manufacturers (OEMs) in the bloc have also set decarbonization goals to comply with the EU requirements, and therefore now show more interest in procuring steel with reduced carbon content.
For example, automaker BMW intends to be climate-neutral no later than 2050, with the share of recycled content in its products set at a minimum of 95%.
For competitor Volvo, the goal is to have 25% recycled and bio-based content in new car models by 2025, and 35% by 2030.
“Customers are signing up for climate targets. Big demand for green steel is coming from OEMs, and customers ask for carbon content [information],” Fernando Pessanha, chief strategy officer with Hydnum Steel, said.
“Demand from end-users is going to go higher and higher in the years ahead,” Matts Nilsson, head of sales at SSAB, said.
A future green steel supplier, H2 Green Steel of Boden in Sweden, has already pre-sold more than 50% of its initial output volumes in binding 5-7 year contracts under so called take-or-pay terms, Sarah Milne, the company’s commercial development manager, said.
“Our initial production volume in Boden is 2.5 million tonnes per year,” a separate spokesperson for H2 Green Steel said. “We have pre-sold more than 50% of that, so well over 1 million tonnes… We will start customer deliveries in 2026, but some customers’ deliveries will start later.”
Industry sources expected to see a “snowball effect” in terms of green steel demand in the EU, with automotive OEMs being the first.
“Automotive was first, and we now see the next wave of construction companies coming through. Interest [in green steel] is coming from [various sectors such as] service centers. Conversations are starting, because they all saw OEMs come in first,” Milne said.
Green steel definition needed for transparency
So far, there is no agreed legal definition in Europe to say what ‘green steel’ is.
“[We need to specify] how many tonnes of CO2 [emissions] you have embedded in 1 tonne of steel [production],” Pessanha said.
“We absolutely need an industry definition of what is green. It doesn’t exist today. We are all talking about same thing, but slightly differently,” Milne said.
“How we measure [the carbon content] is very important. Transparency is the key. We will see different shades of green within that. You would expect to pay more for 90-95% reduced carbon content, but not all sectors need 95% or can afford it. We need that transparency,” she added.
“We need to start with the supply chain,” Jaap-Jan Aardenburg, distribution marketing manager at Tata Steel in Europe, said. “[We need to see] how much CO2 is [acceptable for a specific project], and to develop standards suitable for the market.”
Fastmarkets defines green steel as a steel produced with emissions under Scope 1, 2 and 3 of no more than 1 tonne of CO2 per tonne of steel.
Fastmarkets’ latest weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €180-250 ($196-272) per tonne on May 30, narrowing upward from €150-250 per tonne seven days earlier.
Demand for such material is mainly driven by OEMs in the automotive industry, with construction companies also starting to come through, especially in the Nordic countries and the Benelux area.
Demand for green flat steel was expected to increase to around 49 million tonnes in 2030.
In mid-May, Fastmarkets launched a consultation on a proposal to change the maximum carbon emission content in its green steel assessments to 800kg of CO2 per tonne of steel, down from 1 tonne per tonne of steel previously.
CBAM – saviour or problem?
The European Carbon Border Adjustment Mechanism (CBAM) is a tool which is intended to avoid carbon leakage by applying a carbon-related cost to certain products imported into the EU, including steel.
The transitional phase of CBAM, wherein EU authorities will test the mechanism without imposing any duties, began on October 1, 2023, and will run until the end of 2025.
European steelmakers agreed that CBAM was necessary to ensure a fair and level playing field for all steel suppliers to the EU.
“We aim to reindustrialize Europe into a green economy, so we need to measure the emissions for steel that comes in from abroad, and make sure we are all competing in the same conditions,” Aardenburg said.
“CBAM is about transparency and traceability,” Milne said.
Steelmakers in general were supportive of the idea of CBAM. But at the same time, distributors – while recognizing the importance of the system for the European steel industry – had some criticisms about its implementation.
For steel products, the EU already has a number of trade restrictions, including anti-dumping measures for certain products, and safeguard measures.
And while steel imported into the EU to produce finished goods is subject to CBAM regulations, those same products – such as cars and white goods – can be imported directly without falling under the scope of CBAM.
Steel market participants were therefore worried about the leakage of high-value added production outside the highly regulated European market.
“Instead of bringing steel coil from Asia and processing it in the EU, we buy the ready-made steel structure without any import quota being applied, without anti-dumping [measures] and without CBAM. This means that all this added value for Europe is gone,” a distributor told Fastmarkets on the sidelines of the Oslo event.
“EU manufacturing is suffering because of carbon leakage and finished products being imported,” another distributor said. “This will become visible from 2026 onward.”
Another weak point of CBAM, it was claimed, was that the system itself was not yet well-managed and the portal for submitting declarations was not working properly.
“About 80% of [users] have not been able to report data [for the first quarter of 2024],” another distributor said.
Other sources, however, expressed their hopes that these issues will be addressed before the end of the testing period.
European HRC prices inch up on expectations for limited imports
Sentiment among market participants has turned positive, however, on expectations that limited exports from Asian suppliers would support European HRC prices.
On May 30, the European Commission notified the World Trade Organization that safeguard measures would be extended for two more years. The Commission also suggested a 15% cap per single country over the residual HRC quota volume.
This is expected to affect imports from destinations like Japan, Taiwan, and Vietnam, which currently offer the most competitive prices, Fastmarkets understands.
On Tuesday, Northern European suppliers continued offering HRC in the range of €630-650 ($685-706) per tonne ex-works, sources told Fastmarkets.
Buyers estimated tradeable market levels to be in the range of €620-640 per tonne ex-works.
But a producer source based in Northern Europe was skeptical that deals could be signed at these prices and estimated the workable market level at €650 per tonne ex-works.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €634.42 per tonne on Tuesday, up by €1.09 per tonne from €633.33 the previous day.
The index was down by €2.08 per tonne week on week and by €6.83 per tonne month on month.
In Northern Europe, buyers expected that the new safeguard adjustments would have a moderately positive effect on the market.
“Demand has improved insignificantly compared to the previous months,” a buyer source told Fastmarkets. But, according to them, the new safeguard adjustments could bring only a slight improvement in terms of prices because there was not enough consumption.
“Some positive effect in terms of prices can be expected,” a second buyer source told Fastmarkets. The source explained that due to the new safeguard measures, the availability of cheap import material offered in the past will decrease. Thus, consumers will have to buy HRC at higher prices, either from imports or from European mills.
The second buyer source added that it was difficult to predict what the potential increase of European HRC prices would be, but they were convinced that the new measures would stabilize the local market.
Meanwhile, in Southern Europe, Fastmarkets’ daily steel HRC index, domestic, exw Italy, was calculated at €632.00 per tonne on Tuesday, up by €2.62 per tonne from €629.38 per tonne the previous day.
The index was up by €2.00 per tonne week on week and down by €1.75 per tonne month on month.
In Italy, HRC suppliers were heard offering the material at €650 per tonne delivered, which nets back to about €635-640 per tonne ex-works.
According to Fastmarkets’ sources, activity in the spot market has picked up with some deals heard to have been signed at €635 per tonne ex-works.
Buyers estimated the tradeable market level in the range of €630-635 per tonne ex-works.
They also expressed the opinion that local mills might try higher prices due to the new safeguard adjustments.
Regarding imports, a third buyer source told Fastmarkets that offers from Vietnam, Taiwan, and Japan had almost disappeared from the market. The source added that it was impossible to even start negotiations for material from these destinations currently.
The third buyer source also noted that most of the import offers were coming from Turkey now and were in the range of €580-585 per tonne CFR Italy, including the anti-dumping duty.
A fourth buyer source reported higher offers from the same destination at €610-620 per tonne CFR Italy, including the anti-dumping duty.
Published by: Darina Kahramanova
Nippon vice chairman resumes USS takeover promotion tour
Nippon Steel vice chairman Takahiro Mori has returned to the US to progress the company’s acquisition of US Steel.
Following Mori’s weeklong stateside trip in May, the vice chairman is back in the US to meet with business leaders, politicians and Pennsylvania community leaders, Kallanish learns from a Reuters report.
Nippon Steel is examining compliance measures that will allow the company to close the deal with US Steel.
“If the US authorities tell me: ‘You have to do this, otherwise this deal cannot be admitted,’ in that case we should study this seriously,” Mori says.
In March, Politico reported that there is potentially an antitrust issue facing the Calvert, Alabama, facility Nippon co-owns with ArcelorMittal. Mori expressed his disbelief that this would be an obstacle for the deal with US Steel to go through, according to the report from Reuters.
Politicians, including President Joe Biden, have been outspoken about US Steel remaining domestically owned (see Kallanish passim). The president promised the United Steelworkers (USW) that he would do his best to support them (see Kallanish passim). The USW is soon to be in arbitration with US Steel regarding what the union contends were violations of its basic labour agreements (see Kallanish passim).
Despite Mori’s meetings with the union, the USW is not aligned with a Nippon Steel acquisition of their Pittsburgh, Pennsylvania-based employer. Mori responds to the union pushback: “The USW says our offers are not good enough, but it is not clear what is not good enough. We are always open to talk.”
Mori emphasises that the “the process would likely run more smoothly after the US presidential election as the deal will be no longer a political issue.”
Kristen DiLandro USA
LNG to reduce iron ore shipping emissions
A recent joint study reveals that well-to-wake emissions in the Pilbara-to-Asia iron ore export trade route can be reduced by over 90% by 2050 through the use of Liquefied Methane (LNG), Kallanish notes.
Pilbara Clean Fuels (PCF), Oceania Marine Energy (Oceania) and RINA say in a statement that the reduction of GHG emissions is achieved by progressively decreasing the LNG fuel share to the engines while proportionately increasing hydrogen usage. This allows for staged upgrades over the vessel’s lifetime to comply with the International Maritime Organization (IMO) requirements for continuously reducing GHG emissions.
The trio have recently completed a joint study. In November 2023, the trio sealed an memorandum of understanding (MoU) to collaborate on studies to define the commercial and emissions reduction benefits their combined concepts could deliver to ship owners and charterers for the Pilbara to Asia dry-bulk minerals export trade route.
The findings demonstrate an accessible and achievable pathway to net-zero emissions for LNG, on a well-to-wake basis, for international shipping on this trade.
The study presents a flexible and commercially attractive IMO compliant marine fuel strategy to ship owners, operators and charterers amidst competing alternative fuel. It proposes a ‘Green Corridor’ marine fuels solution for the Western Australia to China bulk minerals export trade route.
Western Australia is the largest producer of iron ore in the world, with current production of over 850 million tonnes/year, the majority of which is exported from the Pilbara region of Western Australia.
According to the statement, PCF is pursuing the development of an electrified LNG plant in Port Hedland, Western Australia aimed at producing low-carbon LNG marine bunker fuel.
Meanwhile, Oceania is developing a marine fuel bunkering business using purpose-designed LNG re-fuelling vessels to be chartered from Kanfer Shipping, Norway.
RINA, on the other hand, has developed an innovative concept for an LNG-fuelled 209,000 deadweight tonnage (DWT) Newcastlemax dry bulk carrier design incorporating pre-combustion carbon removal and hydrogen production to meet IMO 2050 Carbon Intensity Index (CII) requirements over the ship’s operating life.
The combination of systems and technologies allows LNG-fuelled dry-bulk carriers to significantly reduce emissions today and to comply with the IMO 2023 GHG Reduction Strategy through to 2050.
Siew Mung Tan Malaysia
Cargill Metals closes physical steel business in China
Cargill has decided to close its physical steel trading business in China’s domestic market. As the market has been impacted more by financial forces since last year, the physical trading arm of the company can no longer bring as much value as before, Kallanishunderstands.
The physical steel team of the Cargill Metals Business Unit (BU) will all be disbanded by this July and eight traders and merchants, including those working for this company for over ten years, will leave. One of them may join a strategic customer team in the company, Kallanish learns.
The corresponding back room staff will be transferred to other teams or be laid off as well. The BU also recently closed its Vietnam office. The iron ore and price risk management sector of this BU will not be impacted.
More financial players, including macro funds and quantitative trend-following funds, have allocated their money to China’s steel futures markets to hedge their positions in other assets beyond commodities. The fundamentals of the spot steel market thus have less power to determine the price except in the delivery month of the most traded contract. This structural change of the market is leading trading houses to invest more to build connections with funds or hire talents from them. As a sophisticated and experienced trading company, Cargill is heard to be moving in this direction in the future.
German mechanical engineering sees some light
After 1.5 years of continuous decline, orders for mechanical and plant engineering in Germany rebounded year-on-year for the first time in April. Compared to April 2023, orders rose by 10%, Kallanish learns from industry federation VDMA.
Domestic orders were up 3%, while orders from abroad rose by 13%. Growth from non-euro countries was particularly strong, at 19% while orders from the eurozone inched up only 1%.
VDMA chief economist Ralph Wiechers notes that some factors helped the good performance in April, which had three more working days than April 2023. Also, “a comparably weak April 2023 ensured a low basis for comparison,” he says. Furthermore, large-scale plant business, which often involves large orders, contributed to the result. This could likely include investments in steel plants, although VDMA does not give details here.
One month earlier, the picture was still quite different, when orders in March fell significantly short of the previous year’s figure, declining 17% on-year. However, March 2023 was the strongest month of the entire past year, VDMA explains.
Looking at the less volatile three-month period from February to April 2024, orders fell by 9% in real terms compared to the previous year. Domestic orders were down 12% and orders from abroad were down 6%.
According to VDMA’s economists, the mood of many industrial customers has improved, especially outside Europe, but it will be some time before this is reflected in a sustained increase in orders. “However, we are encouraged in our assumption that order intake has bottomed out,” Wiechers concludes.
Christian Koehl Germany
Low EU consumption discourages coil price increases
While some European steelmakers have considered hot rolled coil price increases, others are discouraged by the low consumption seen across end-use sectors and service centres, Kallanish hears.
The European Commission’s decision last week to introduce a 15% cap per origin over the “other country” tariff-rate quota (TRQ) for HRC sparked some excitement in the market, as suppliers believed prices would rise amid limited imports. Several European mill sources and buyers are however doubtful that increases will stick in such a weak market. They fear that a hike may result in a standoff, as already happened in February when excessive increases froze activity.
The white goods and automotive sectors are ordering limited volumes. New passenger car registrations are declining in several European countries, as well as production figures in the first quarter. According to a seller of HRC, carmakers are postponing their coil purchasing programmes.
The market for coil derivatives downstream continues to be weak. Service centres have been losing money this year, unable to raise their selling prices. “Prices are not falling further but they are not increasing either. Buyers will ask for a rollover for material from Asia but will buy less and less from countries such as Japan and Vietnam because of the lower quotas. It would be a success if we managed to keep import prices stable in this market,” a trader comments.
However, lower availability from third countries will soon become an issue. “I do not think companies are realising how serious the safeguard quota situation is. If some demand restarts, even for a technical restocking phase before August, there will not be enough procurement sources,” a large buyer comments.
“It will take some time before producers feel the impact of the EU’s 15% quota cap decision. [Certain] third countries will stop offering within the quota. Those with some quota left will raise their prices and then we will be able to increase our prices in Europe,” another mill source comments. Producers are presently grappling with high production costs and non-existent demand, he adds.
The HRC market remains stagnant in Europe. Before the Commission announcement and considering the very weak consumption for coil and its derivatives downstream, EU steelmakers were bracing for a circa €20/tonne ($22) price decline in June.
The Commission imposed the cap due to a surge in imports from certain new origins related to growing overcapacity in certain regions, as well as to the significant pressure exerted by a strong increase in Chinese exports. The TRQ amendment was made after the HRC other country quota was exhausted on the first day of the quarter for several consecutive quarters (see Kallanish 3 June).
HRC prices are stable compared to May, with trade limited and confidence on the side of buyers lacking. Transactions range from €630-640/t base ex-works in Europe, or €650/t base delivered.
Natalia Capra France
Kloeckner Metals Germany nimmt neues Lasersystem in Betrieb
Kloeckner Metals Germany hat in Velten, Brandenburg eines der hierzulande modernsten Lasersysteme für Stahlbearbeitung in Betrieb genommen. Damit wird der Standort als High-Tech Kompetenzzentrum für mechanische Bearbeitung und Rohrlasertechnik etabliert.
Das neu in den Regelbetrieb überführte, automatisierte Lasersystem „Tube 5000“ des Herstellers Trumpf komplettiert den in Velten seit 2014 aufgebauten Groß-Lasermaschinenpark mit jetzt insgesamt fünf Systemen zum Schneiden und Gravieren von Stahl. Die Stahlendprodukte kommen im Landmaschinen-, Kran- sowie im Fahrzeugbau bei Herstellern in ganz Deutschland zum Einsatz.
„Diese Inbetriebnahme ist ein weiteres, industrieweit herausragendes technologisches Beispiel für unsere Innovationsführerschaft in der Stahlindustrie und ein zentraler Baustein auf unserem Weg zum Technologiepartner unserer Kundinnen und Kunden für höherwertige Stahlanarbeitung“, sagt Felix Schmitz, CEO Kloeckner Metals Germany. Darüber hinaus seien die Investitionen in den Standort Velten ein „deutliches Bekenntnis zum Industriestandort Deutschland“ und zum Land Brandenburg. „Hier können unsere Mitarbeiterinnen und Mitarbeiter an einer der fortschrittlichsten Anlagen auf dem Markt ihre ganze Expertise zum Tragen bringen“, so Schmitz.
Kloeckner Metals Germany: „eine der modernsten laserbasierten Anlagen“
Das neue Lasersystem ist Kloeckner Metals Germany zufolge die schnellste Laser-Rohrschneidmaschine der Welt und mit Ausmaßen von circa 16 x 7 Meter eine der größten und modernsten laserbasierten Anlagen für die Metall- und Stahlbearbeitung. Das System erweitere die Bearbeitungsmöglichkeiten mit Technologien wie unter anderem Fließ- und Spiralbohren, Gewindeschneiden sowie -formen und erlaubt Schrägschnitte von bis zu 45 Grad. Kunden und Partner von Kloeckner Metals Germany profitierten durch den Einsatz der Lasersysteme in Velten von besserer Leistung und mehr Effizienz, weil unnötige, bislang manuell erfolgte Arbeitsschritte vermieden würden. Darüber hinaus erlaubten die Systeme eine Just-in-Time Produktion und eine flexiblere und kosteneffizientere Logistik.
Der seit 1995 bestehende Standort Velten ist mit knapp 70 Mitarbeitenden neben Landsberg bei Leipzig und Zwickau einer von drei Standorten des Unternehmens im Osten Deutschlands. Über die Lasersysteme hinaus bietet der Standort mit seinen Hochleistungsmaschinen für den ersten und zweiten Produktionsschritt alle für die moderne Stahl- und Metallbearbeitung wichtigen Dienstleistungen an. Hierzu zählt beispielsweise ein kombiniertes Drehfräszentrum inklusive Lagerung, Sägen und CNC-Drehen. Das Leistungsportfolio reicht dabei vom Abspulen und Schlitzen über das Biegen von Flachstahl sowie dem Plasma- und Autogenschneiden bis hin zum Fräsen, Bohren sowie Kugelstrahlen und Beschichten.
Die Inbetriebnahme des neuen Lasersystems ist der jüngste Meilenstein von Kloeckner Metals Germany bei der Fokussierung auf höherwertige und hochqualitative Anarbeitungsservices, -lösungen und -dienstleistungen. Das Unternehmen hat darüber hinaus in den vergangenen Monaten bereits verschiedene zukunftsweisende Projekte umgesetzt. Hierzu zählen die Inbetriebnahme einer europaweit einzigartigen, roboterbasierten Entgratungsanlage am Standort Bremen, der Einsatz des deutschlandweit ersten eActros E-LKW von Daimler Truck im unternehmenseigenen Fuhrpark am Standort Würzburg sowie die Ersteinführung eines VR-basierten Schulungssystems für Kranführer in der Stahlindustrie am Standort Nürnberg.
