Thyssenkrupp Steel Europe completes deal for EP Corporate Group to become minority shareholder
Prague-headquartered energy company EP Corporate Group (EPCG) completed its acquisition of a 20% stake in the steel business of German industrial conglomerate Thyssenkrupp, which the two companies agreed in April.
Thyssenkrupp CEO Miguel Lopez said in a July 31 statement the deal with EPCG is “an important step towards the independence of the steel business and a resilient, cost-efficient and climate-friendly steel production.”
The parties did not disclose financial details of the transaction, but are already discussing the acquisition of a further 30% stake in Thyssenkrupp Steel Europe by EPCG with a view of forming a 50/50 joint venture.
Controlled by Czech billionaire Daniel Kretinsky, EPCG is a private industrial group focused on energy, infrastructure, logistics, media and e-commerce among other sectors with its European assets including gas pipelines and gas storage facilities, power plants and electricity networks. It has been seeking investment opportunities in industries that are exposed to higher energy costs and to potentially contribute to their decarbonization.
Thyssenkrupp is building its first direct iron reduction plant in Duisburg, where it plans to start using hydrogen in 2028-29, with Eur2 billion ($2.16 billion) funding from the German government covering two-thirds of the project’s cos. Thyssenkrupp Steel Europe would not be obliged to offtake energy from EPCG, which would instead act as a backup or fallback option.
The EU HRC market remains stable even as mills operate at break-even margins
Domestic European hot-rolled coil prices remained largely unchanged Aug. 1 as weak market fundamentals persisted, with market sources remaining uncertain about the future price outlook.
Some sources noted that prices cannot go down any further, as mills are operating at break-even or tight margins, depending on the type of furnace used.
“I don’t think prices can go below [Eur600[/mt,” a service center source said.
According to market sources, the strain and volatility experienced in the HRC sector is not a surprise, particularly as sluggish demand in the European automotive industry and competitive Chinese automotive exports weigh on the market.
Sources said European mills may see some more stability and certainty in specialized coils, such as hot-dipped galvanized, where product quality remains higher than alternatives available in Asia.
Furthermore, the future of the automotive industry will depend on the level of support and legislation implemented from the European Commission, which could take the form of tax cuts or subsidies, sources said.
“You need incentives,” a service center source said.
Platts assessed Northwest European HRC at Eur620/mt ex-works Ruhr Aug. 1, stable with July 31.
Tradable values were reported at Eur620-640/mt EXW Ruhr.
Meanwhile, Platts assessed domestic HRC prices in Southern Europe at Eur620/mt EXW Italy Aug. 1, stable with July 31.
Germany’s Klöckner increases metal product shipments 8% on year in H1 2024
Steel and metal product shipments by Germany’s Klöckner & Co. increased 8.1% year on year to 2.3 million mt in the first half of 2024, the company said Aug. 1.
Acquisitions in H2 2023, particularly of New Jersey-based Amerinox Processing, helped boost its shipments in the US and Mexico, the steel and metals processor and distributor said in second-quarter earnings.
Second-quarter metals shipments rose to 1.2 million mt, up 11.5% from the first quarter and up 3.7% year on year.
However, sales slipped 2.6% year on year to Eur3.5 billion ($3.78 billion) in the first half of 2024 due to lower prices. This contributed to EBITDA falling 37% to Eur83 million. The company expects its full year EBITDA to be Eur120 million, down from Eur180 million in 2023, saying earnings in the prior-year comparative periods benefited from a more favorable market environment.
Demand has been weaker than expected in 2024, especially in Europe, the company said. Klöckner expects the Amerinox acquisition to drive a slight increase in shipments for full-year 2024 but sees sales falling year on year due to lower steel prices.
“Despite a challenging environment, we achieved a solid result and made further progress in implementing our strategy,” CEO Guido Kerkhoff said in a statement. “With the acquisition of Amerinox Processing in North America, we further expanded our range of higher value-added products and services.”
Amerinox processes stainless steel, aluminum and special carbon steel. Klöckner said it aims to use Amerinox’s favorable location at the major port of Camden to build competitive, global supply chains. In March 2024, the company disposed of parts of its European distribution business.
German marketplace Vanilla Steel receives funding from EU
Vanilla Steel has been awarded with a seven-figure subsidy from the Pro FIT programme of the Investitionsbank Berlin for an AI project, Kallanish learns from the online trading company.
The subsidy is supported by co-financing from the European Union, and aimed at the development of the company’s “Smart Forecaster” project.
According to Vanilla Steel, the Smart Forecaster project leverages artificial intelligence to predict future prices and demand for both prime and excess steel. The tool is set to revolutionise decision-making processes within the steel industry by offering precise demand forecasts and pricing trends for a wide array of steel types, Vanilla Steel claims.
Vanilla Steel, which was founded in 2021 but still refers to itself as a start-up, aggregates spot steel supply from over 500 suppliers and spot steel demand from more than 3,000 buyers across Europe. The Berlin-based company says its platform facilitates efficient and transparent trading, and believes that the Smart Forecaster project will be a significant leap towards streamlining and modernising the steel trading process.
Christian Koehl Germany
Klöckner continues America acquisitions, eyes defence in Europe
Following acquisitions in North America, Klöckner & Co increased shipments in the second quarter by 11.5% on-year to 1.2 million tonnes. In the first half year of 2024, shipments by the German-based distribution group increased 8.1% on-year to 2.3mt.
The increase is primarily attributable to the acquisitions in Mexico and the US completed in H2 2023, Klöckner chief executive Guido Kerkhoff said during a conference call monitored by Kallanish.
At €3.5 billion ($3.7 billion), sales dropped 2.6% in H1 due to lower prices. Operating income (Ebitda) before material special effects was €83 million, versus €130m a year earlier.
Klöckner underlines that business with service centres (SSCs), especially in high-value added products, is less dependent on the steel price development because of contractual relationships with the customers. SSCs accounted for nearly half of the company’s operating profit in H1.
Kerkhoff emphasised the efforts related to expanding the range of value-added offers, with processing steps taking place in different locations, and the logistical challenges this involves. He noted that many of the firm’s customers in the USA have been partners for more than ten years, and keep asking for more of these services.
In North America, the group will continue to target “opportunistic, highly selective, performance-and-growth-oriented mergers and acquisitions”. In its European markets – mainly Germany, Austria and Switzerland – it aims to actively position itself to benefit from growing demand in the defence sector.
Klöckner expects a slight decline in demand for most of its customer segments. Segments seen remaining stable on both continents are household appliances and energy, mostly renewables.
Christian Koehl Germany
Italian rebar prices weaken
Italian rebar prices have decreased in contracts by €10-15/tonne ($10.7-16.1), due to low consumption downstream, Kallanish notes. Values have fallen below the threshold of €600/t ex-works.
Activity is now quiet as the August break has started. Sources indicate some restocking happened in July.
Transaction values in the domestic market fall within the range of €300-320/t base ex-works, or €560-580/t ex-works effective. This includes an average of €260/t for additional size extras.
Domestic mesh is also hovering at around €400-430/t base ex-works. When considering their purchases, buyers should take into account costs for transport and an extra €300/t for size extras.
Meanwhile, mills’ price increase attempts for other long products do not seem to have been successful, while scrap prices in Italy recorded an average decrease of €25/t in July (see Kallanish passim).
Natalia Capra France
Iberian HRC market maintains price stability
The Spanish coil market has remained stable for more than one month. Most buyers had ordered what they needed by the end of July. Demand from the major consuming sectors is slowing but the market looks set for a possible recovery in September, Kallanish understands from local service centre sources.
Mills’ S235JR grade hot rolled coil quotes are stable at some €610-620/tonne ($661-672) ex-works base. Some mills are trying to offer material at the higher end of the range, but large service centres are not accepting to pay above €610/t ex-works.
“Demand is low. But not only because of the holiday season. The truth is that some sectors have been underperforming for almost a quarter, such as the automotive sector,” a market participant comments. “Purchasing activity in Spain remains weak. The slow progress of the electrification of the car fleet in Spain has had an impact on the activity of manufacturers, who have also seen their export volumes decrease.”
Another source confirms that the wind energy sector, where consumption of flat steel has been on an upward trend in recent years, is now in a very significant downturn. “We expect a recovery of the [wind energy] sector in September, although we have to be very cautious about how much HRC prices can recover. Consumption is very low and most traders have already reduced their profit margins by some €20/t,” he observes.
According to market analysts, monthly flat steel consumption in Spain now ranges from 250,000-300,000 tonnes.
Todor Kirkov Bulgaria
Europe’s apparent demand for flat steel to grow only marginally in H2, ArcelorMittal says
Although ArcelorMittal confirmed that destocking would not continue this year, after having a negative effect on apparent demand in 2023, the company downgraded its previous forecast. Apparent demand was now expected to increase by 2-4% in 2024.
“Because absolute inventory levels remain low, particularly in Europe, the company remains optimistic that restocking activity will occur once real demand begins to recover,” ArcelorMittal said.
But it expected a decline in real demand from both the automotive and the machinery industries in Europe by the end of the year.
ArcelorMittal added that current market conditions were still unsustainable, with European prices being below the marginal cost.
According to the company’s data, the average steel selling price in Europe dropped by 1.7% to $929 per tonne in the second quarter, compared with $945 per tonne in the first quarter of the year.
Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, also showed that, after the short-lived rebound of apparent steel demand in January-February 2024 related to restocking, market activity deteriorated, with prices for such material under pressure.
For example, in March, the price for HRC in Northern Europe averaged €691.99 ($748.99) per tonne, compared with €731.73 per tonne in January.
The average price for the material in June was even lower. at €632.65 per tonne. The negative trend seemed to be continuing in the third quarter, with the average monthly price of HRC in July at €629.12 per tonne.
But according to Fastmarkets’ sources, a degree of price rebound, mainly driven by restocking, could be seen in the fourth quarter of the year.
ArcelorMittal Europe’s key indicators
ArcelorMittal’s crude steel production from its European operations reached 8.04 million tonnes in the second quarter of 2024, compared with 7.60 million tonnes in the previous quarter.
The company’s steel shipments increased in the second quarter to 7.41 million tonnes, from 7.24 million tonnes in the first quarter.
Sales in the second quarter were largely stable at $7.82 billion, compared with $7.85 billion in the previous quarter.
“[This was] primarily due to improved steel shipment volumes, particularly for long steel products, which increased by 13.7%, offset by the 1.7% decline in average steel selling prices,” the company said.
The operating income of the European division of the company reached $194 million in the second quarter of the year, compared with $69 million in the previous quarter.
ArcelorMittal said that the improved financial result was due to the positive price-cost effect. The company added that it had managed to achieve a significant reduction in costs, enough to compensate for the lower steel selling prices.
Another factor was the higher steel shipments.
Consequently, ArcelorMittal Europe’s earnings before interest, taxes, depreciation and amortization (Ebitda) reached $462 million in the second quarter, up by 34.8% compared with the previous quarter.
Sustainable development
ArcelorMittal was expanding its interest in sustainable development, with the company now focusing on the production of hydrogen transport pipelines and solutions for low-carbon emissions buildings, the financial report said.
The company has launched a new steel brand for hydrogen transport pipelines, HyMatch®, which was intended to support the implementation of hydrogen infrastructure globally. The HRC used to make these pipes was being produced at Fos-sur-Mer, France, and Bremen, Germany, a company spokesperson told Fastmarkets.
Asked whether the pipes under the new brand would be green steel products, the spokesperson explained that HRC supplied by ArcelorMittal Europe Flat Products had an embodied carbon footprint of 2.23 tonnes of CO2e per tonne of steel, calculated according to the ISO 14025 and EN 15804 standards. XCarb® steel certificates reduce this CO2 effect by 2.1 tonnes of CO2e per tonne of steel.
“The EU has high ambitions for the production of green hydrogen [10 million tonnes by 2030], so it is reasonable to expect that there will be significant and growing demand in the coming years,” the spokesperson added.
According to the spokesperson, there was significant interest among customers for HyMatch steel because there were more tenders for pipeline projects requesting compatibility with the transport of hydrogen.
Hydrogen was expected to be the fuel of the future, and would help steel producers to decrease their carbon emissions significantly. But investments in hydrogen transportation infrastructure have yet to be made.
ArcelorMittal has also acquired Italian and Spanish businesses called Italpannelli, the company announced. The move was expected to build on ArcelorMittal’s exposure to insulation panels for low-carbon emissions buildings. The acquisition would also help the company to expand its current offerings in that field under its Steligence brand.
Expansion in the field of low-carbon emission buildings was expected to boost the demand for green long steel products, which currently lags compared with the demand for green flat steel, trade sources told Fastmarkets.
ArcelorMittal added that the construction of its 1.1 million tonnes per year electric-arc furnace (EAF) in Gijón, Spain, has started. The project was part of the company’s decarbonization program, with the new EAF expected to become operational in 2026.
Published by: Darina Kahramanova
