SSCs: New safeguards are not good for us
Domestic prices for European hot-rolled coil continued to be largely stable June 12 as demand and market activity remained limited.
“Market activity is very low,” a service center source said. “Demand is very low for all products. We’re receiving low [inquiries] from customers.”
Sources also agreed that the proposed changes to existing safeguard measures in Europe are unhelpful for the market.
“New safeguards are not good for us,” the same service center source said. “It creates a lot of problems.”
On May 30, the European Commission said it was considering a 15% cap for a single country over the Tariff Rate Quota volume for HRC initially available in each quarter. European authorities are scheduled to announce definitive measures by June 30.
As HRC imports from Japan, Taiwan, Vietnam and Egypt will likely be reduced as a result, Europe-based buyers will have to substitute the material with either European coil or alternative non-EU suppliers without country-specific quotas.
Some mills have used these changes to push higher offers. Sources said that, although buyers are avoiding booking at higher prices, they will eventually have to accept them since inventory levels in the market are low.
“Stock level is low, so at some point people will have to order from the European mills,” another service center source said. “Mills are trying to cut production, so it is possible to see [an] increase in prices.”
Platts assessed domestic prices for HRC in Northwest Europe at Eur625/mt ex-works Ruhr, down Eur5 on the day.
Deals were reported at Eur620-630/mt EXW Ruhr. Offers were reported at Eur620-630/mt EXW Ruhr. Tradable values were heard at Eur620-640/mt EXW Northwest Europe.
Platts assessed domestic prices for HRC in South Europe at Eur625/mt EXW Italy June 12, down Eur10 on the day.
Offers were reported at Eur640-650/mt EXW Italy. Tradable values were heard at Eur600-620/mt EXW Italy.
Strong rebound seen as unlikely for European HRC prices due to slow demand
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €635.21 ($682.69) per tonne on Wednesday, inching down by €0.21 per tonne from €635.42 per tonne the previous day.
The index was up by €2.46 per tonne week on week but down by €4.79 per tonne month on month.
The trading standstill continued in the region, with mainly small volumes traded and buyers largely preferring to stay on the sidelines to monitor the situation.
Overall, European steelmakers had short order books, with July- and August-production tonnages yet to be sold.
Offers in Germany continued to be reported at €640-650 per tonne delivered (€630-640 per tonne ex-works) for August-delivery HRC. Some suppliers could reportedly still offer end-July delivery.
Italy-origin coil was offered to Germany at €650 per tonne delivered, with bids reported at a maximum of €630-640 per tonne delivered. Lead times for Italian coil were around five weeks.
Despite some mills’ attempts to increase prices by €10-20 per tonne, most buyers agreed that a rollover of prices was the most likely scenario due to a lack of real demand.
Earlier this month, the European Commission notified the World Trade Organization that EU import safeguards would be extended for two years and a 15% cap on residual quotas for HRC imposed, which should limit supply of Asian material, which was being offered at competitive prices.
Sources believe this news was the major driver behind European mills’ recent bullish mood.
“The safeguards announcement alone is not enough to drive a [domestic] HRC-price rebound. Real demand is stable at low levels and raw material prices are declining, so the situation for an [HRC] price rise is not the most favorable,” one trader in Germany told Fastmarkets.
A supplier in the Benelux region increased offers by €20 per tonne to €650-660 per tonne ex-works earlier this week, with lead times reportedly in August.
A major European steelmaker remained out of the market on Wednesday and sources said they expect them to come back later this week with higher offers.
Fastmarkets calculated its corresponding daily steel hot-rolled coil index domestic, exw Italy at €631.88 per tonne on Wednesday, up by €0.63 per tonne from €631.25 per tonne the previous day.
The index was up by €1.25 per tonne week on week but down by €5.20 per tonne month on month.
The Italian market was also quiet, with suppliers reportedly accepting rollover prices for August-delivery coil.
An integrated mill in the country was heard offering July/August-delivery HRC at €650 per tonne delivered, which nets back to €635-640 per tonne ex-works.
Buyer estimates of achievable prices were mainly reported at €620-630 per tonne ex-works on Wednesday.
In the secondary market, 3-6mm HR sheet was still heard traded within the range of €710-730 per tonne CPT, remaining fairly stable over the past seven days.
The market for overseas coil remained quiet, with most suppliers holding back while they wait for the official confirmation of the new safeguards.
In the past week, offers of Turkish HRC for end-July shipment were reported at €610-630 per tonne CFR, including the anti-dumping duty.
From Saudi Arabia, two sources reported an offer around $635 per tonne CFR to Antwerp.
Published by: Julia Bolotova
Volkswagen, Vulcan Green Steel sign MOU for low-carbon steel supply
Vulcan Green Steel has signed a memorandum of understanding with carmaker Volkswagen to supply low-carbon steel, the automotive company said June 12.
This partnership announcement is one of a series of initiatives by Volkswagen Group to increase the use of low carbon-steel in its production process. Volkswagen has been in partnership with Salzgitter since 2022. It also has a stake in Swedish green steel manufacturer H2 Green Steel via its Scania subsidiary.
“The volumes of low-carbon steel that Volkswagen AG expects to order will cover a significant proportion of total steel requirements and will be used by the Group’s production facilities from 2027 onwards,” Volgswagen said in a statement on its website.
Vulcan Green Steel is part of Jindal Steel Group, an industrial conglomerate with steel, iron ore mining and energy operations as well as activities in India, Oman, Africa and Australia.
The Vulcan Green Steel facility in Duqm, Oman, is currently in the construction phase and is slated to come on stream in 2026. Starting in 2027, Vulcan Green Steel will produce automotive grades and other high-strength steels at its Duqm site. Natural gas will be used at the site during the initial years and later operations will be switched over to hydrogen, cutting carbon emissions by 70% once the transition is complete, Volkswagwn said.
Jindal Steel Group is investing more than $3 billion (Eur2.76 billion) to develop the steel project at Duqm. It aims to produce 5 million mt/year of green steel on an annual basis.
Companies in various industries across the steel value chain are buying increasing volumes of low-carbon and low-stainless “green” steel to reduce their Scope 2 and 3 emissions, closing supply agreements to secure low-emission steel for their products.
Platts, part of S&P Global Commodity Insights, launched its carbon-accounted price assessments in May 2023.
Platts assessed Northwest European hot-rolled carbon-accounted coil at Eur755/mt ($809.964/mt) ex-works Ruhr June 11, down Eur10/mt on the day.
EU announces up to 38% import tariffs on China-made battery electric cars
The EU will slap import tariffs of up to 38.1% on battery electric cars made in China, after the European Commission’s anti-probe investigation confirms “unfair subsidisation.”
In a statement on Wednesday, the EC announced provisional countervailing duties that will be introduced from 4 July, if discussions with Chinese authorities don’t lead to an “effective solution.” The duties would be collected if and when definitive duties are imposed.
For now, carmakers and EU countries have been informed of different tariffs based on the EC’s calculations. These will be available for review, but member states can’t interfere with amounts. They will eventually be required to vote on the proposal. However, “measures can be imposed even if the qualified majority is not reached, provided the votes against do not reach a simple majority.”
The average weighted tariff for BEV producers in China cooperating with the probe is 21%. Those that didn’t cooperate, like China state-owned carmaker SAIC, would be subject to a 38.1% duty, the EC says.
Other disclosed individual sample duties include 17.4% for BYD and 20% for Geely, the latter is the parent company for a number of European brands including Volvo Cars, Polestar and Lotus.
“Following a substantiated request, one BEV producer in China – Tesla – may receive an individually calculated duty rate at the definitive stage,” the EC says, without elaborating.
Definitive measures are to be imposed by 12 October.
Reacting to the long-awaited announcement, European automotive trade body ACEA says that “free and fair trade is essential in creating a globally competitive European automotive industry.” It adds that healthy competition drives innovation and choice for consumers, while emphasising that what the European auto sector needs “above all else is a robust industrial strategy for electromobility.”
“The tariffs are welcome but Europe needs a strong industrial policy to speed up electrification and localise manufacturing.” adds Julia Poliscanova, senior director for vehicles and emobility supply chains at T&E. “Just introducing tariffs while scrapping the 2035 deadline for polluting cars would slow down the transition and be self-defeating.”
The campaign group said in March that one in four BEVs sold in Europe this year could be imported from China, led by European carmakers with production in Asia. The trend is set to reverse in the period up to 2027.
On 11 June, China’s foreign ministry spokesman Jian Lin said Beijing urges the EU to terminate the investigation as soon as possible to avoid damaging China-EU economic and trade cooperation, as well as the stability of supply chains. “If the EU insists on its own way, China will never sit idly by and will take all necessary measures to resolutely safeguard its legitimate rights and interests,” Lin added.
Currently, BEVs imported from China are subject to a 10% duty in the EU. European BEVs face a 15% import tariff in China.
China, India to support raw materials prices: Stanislav Zinchenko
Raw materials prices will be supported by demand from China and India in the second half of this year, GMK chief executive Stanislav Zinchenko said at the Kallanish Europe Steel Markets 2024 conference in Milan on Wednesday.
Chinese steel-using sector activity is unchanged from last year, which will help support steel output. Although the country’s real estate sector is experiencing a crisis, other sectors such as manufacturing are helping to offset this.
Apparent steel consumption in China in January-April fell by 7.1% on-year, while average daily trading volume contracted by 5.6% in May. This indicates China could increase its output and apparent steel consumption in the second half of the year. China’s average blast furnace capacity utilisation was 89.5% in May, compared to 86.7% in April.
India’s infrastructure projects will also help support raw materials prices in H2. The country’s apparent steel consumption rose by 9.4% year-on-year in April, while Indian hot rolled coil fob prices increased by $35/tonne in May.
Indian steel demand weakened during the general election, but infrastructure funding is expected to boost demand now the election has been completed. Seasonality will also play a role. Indian demand slows during the monsoon but is typically strong during H2.
GMK estimates rising energy prices have added €8/tonne to Europe’s steelmaking costs. The company predicts business sentiment will improve and steel demand will strengthen in H2. It estimates EU HRC prices will increase by €30-40/t to reach €670-680/t at the end of the second quarter, and prices should reach €700-720/t in Q4, Zinchenko observed.
The price rise will be driven by several factors, including easing import pressure due to import prices not being attractive between April-May, non-competitive India prices and the EU’s safeguard quota revision. Imports should also decline significantly from India, which was the largest supplier of HRC to the EU in H1, Zinchenko concluded.
Suhita Poddar India
Italian longs consumption continues to drag
The Italian longs market continues to drag on the backdrop of slow consumption and a negative outlook, Kallanish understands. Producers implemented a €20/tonne ($21) increase last month but did not manage to increase transactions which remain mostly flat compared with May.
Sellers and buyers in the distribution sector report low sales and back-to-back purchases for merchant bar.
“I have been quite happy until April as I sell several longs and the average for January-April was OK,” an agent comments. “Demand in May across all products was extremely low and I do not see much improvement in June. The month started also very slow.”
Merchant bar prices are flat at €280-290/t base ex-works while Spanish offers are at €260/t delivered. Including size extras, domestic material remains at €700-710/t ex-works. Some producers are beginning to adapt to the new market conditions where clients buy small tonnages every week but require swift delivery. Clients are being offered truckloads of mixed material at competitive prices.
In this market steelmakers offering relatively long lead-times tend to lose orders and volumes. Clients ask to be delivered within a few days and refuse to commit to larger volumes.
“Buyers are scared by the demand weakness of May and expect June and July not to be much better,” another seller comments.
Section prices also struggle to increase. The first category of beams is at about €760-770/t delivered on average, flat on-month, with cheaper European material available. A purchasing group warns of the low margins throughout the value chain and low selling prices downstream as the slow sales volumes are forcing some companies to chase volume discounting material.
ArcelorMittal is announcing higher prices for long products across Europe. The move is driven by the high cost of production and the need to recover margins. The steelmaker is reported to be offering €30/t above its May quotes for all commodity grade longs.
Natalia Capra France
Europe loses production power, retains engineering excellence
Europe remains at the vanguard of steel technology, even though it has to cope with decreasing production, said major industry players at the Kallanish Europe Steel Markets 2024 conference in Milan on Wednesday.
Henrik Adam, vice president European Corporate Affairs at Tata Steel, and president of European steel federation Eurofer, pointed out Europe is currently caught in a dilemma between decarbonisation and de-industrialisation. On one hand, it is the region most ambitious – along with Japan – in transforming to low-emission steelmaking. But it has also lost much of its traditional strength in manufacturing industries to emerging countries.
With an eye on his own company, he noted that Tata’s plant in Ijmuiden, in the Netherlands, is the second-lowest CO2 emitting integrated mill worldwide.
However, Europe has lost much of his production power, not only in the volumes of steel, but also in customer sectors like solar panels, Adam said. “We have offshored production. Are we also offshoring innovation? That would be a disaster.”
Jindal Shadeed chief executive Harssha Shetty concurred. The company is managing the establishment of Oman-based green steelmaker Vulcan Green Steel. “Europe’s strength is in engineering – Europe can still play on that,” he stated. He believes that Europe can focus on engineering and depend on other regions to get its raw materials, possibly including iron. “Still, Europe is the biggest inspiration for the whole world,” he emphasised.
On the Vulcan Green steel venture, he highlighted Oman’s richness in wind and sun resources, and that the combination of both will be the key to hydrogen-based steelmaking. “Only solar or only wind may not be the optimal answer to make green steel,” he said. “True green steel is when there are fresh investments into fresh capacities to make green steel,” he added.
Meanwhile, Adam pointed to the changes in mindset brought on by the war in Europe. “The war cut Germany off from cheap Russian gas. This has shown us the danger of being too dependent on one source.” He reiterated how the country coped with that challenge pragmatically, by setting up LNG terminals in a matter of 12 months. “In the end, the one thing that matters is speed,” he concluded.
Christian Koehl Germany