European HRC prices inch down as mills lower offers
Domestic prices for European hot-rolled coil fell slightly Sept. 16, as mills lowered offer levels to stimulate demand.
“Mills are in need of orders,” a service center source said. “Prices are under pressure and it’s not looking very well for the market.”
Uncertainty in prices has kept buyers away from the market, as they would prefer to wait until prices bottom out, sources said. At current price levels, nobody is making money, but the mills cannot cut production now, because buyers will start restocking soon for the beginning of next year, sources said.
“Nobody is making profit,” the source said. “I don’t know how long they will keep these prices. It’s not smart to shut furnaces now, because it takes four to five weeks to shut down and another four to five weeks to start it again. If they shut furnace now, mills lose money, because in November-December, service centers will start restocking for the beginning of next year.”
“Mills not making money despite iron ore, scrap softening,” another service-center source said.
Platts assessed Northwest European HRC at Eur555/mt ex-works Ruhr Sept. 16, down Eur4/mt on the day.
Offers were reported at Eur560-570/mt ex-works Ruhr.
Tradable values were reported at Eur540-570/mt ex-works Ruhr.
In southern Europe, the market remains relatively more stable, however, buying interest remains weak, with most market participants assessing the situation, sources said.
“Buyers are really quiet, and are trying to understand the market dynamics,” an Italy-based service-center source said. “It is difficult to understand the situation at the moment.”
Platts assessed domestic HRC prices in Southern Europe at Eur555/mt ex-works Italy, down Eur10/mt on the day.
Offers from local mills were reported at Eur555-560/mt ex-works Italy.
Interest in imported HRC remains weak, due to concerns around longer lead times and risks of safeguard duties. However, Turkish mills are keeping firm on offer levels, since they have sold a lot of volumes in the last couple of months, sources said.
Platts assessed imported HRC in Northwest Europe at Eur550/mt CIF Antwerp, down Eur9/mt on the day. Imported HRC in Southern Europe was assessed stable on the day at Eur549/mt CIF Italy.
Marcegaglia upgrades Sheffield stainless plant in UK
Steelmaker and steel re-roller Marcegaglia Group has awarded a contract to Primetals Technologies to upgrade its 500,000 metric tons per year Sheffield stainless steel meltshop in the UK, the engineering company said on Sept. 16.
Marcegaglia aims to increase the capacity in the mid to long term via an electric arc furnace upgrade, as well as further efficiency and environmental improvements, a company spokesperson told S&P Global Commodity Insights.
In 2023, Marcegaglia acquired Outokumpu’s stainless steel long product division, including the Sheffield meltshop, which focuses on producing stainless steel billets, blooms and slabs.
The upgrade project involves completely rebuilding the existing furnace at the Sheffield plant to facilitate scrap charging, among other changes.
The plant’s dedusting system will also be upgraded with new water-cooled ducts and a drop-out box, improving extraction of increased thermal power from fumes.
Platts, part of Commodity Insights, assessed UK HRC at GBP550/mt basis DDP West Midlands, down GBP10/mt on the week.
Marcegaglia, headquartered in Gazoldo degli Ippoliti, Italy, is a world leader in steel product transformation. With a total production capacity of 6.5 million metric tons of carbon and special steels, the group operates 36 plants spread across four continents.
European HRC market remains quiet; rock bottom yet to be reached
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €566.42 ($627.34) per tonne on Monday, up by just €0.17 per tonne from €566.25 per tonne on September 13.
The index was down by €13.58 per tonne week on week and by €46.08 per tonne month on month.
Prices for HRC in Northern Europe have not been at such low level since December 2020.
On Monday, mills in Northern Europe offered HRC at €570-580 per tonne ex-works, sources told Fastmarkets.
Buyers estimated the workable market level at €550-575 per tonne ex-works.
“The situation with the HRC market in Northern Europe is currently static; trading remains dull,” one buyer source told Fastmarkets.
The source added that there was still pressure on prices related to low demand from all main steel-consuming sectors and oversupply. As a result, the downtrend with the HRC prices would persist, according to the buyer.
“Rock bottom for HRC prices in Northern Europe is not reached yet,” a second buyer source told Fastmarkets, suggesting that prices would stabilize when they hit the level of €550 per tonne ex-works.
In Southern Europe, Fastmarkets calculated its corresponding daily steel HRC index domestic, exw Italy at €568.75 per tonne on Monday, down by €1.25 per tonne from €570.00 per tonne on September 13.
The Italian index was down by €9.58 per tonne week on week and by €43.75 per tonne month on month.
Italian suppliers were heard offering HRC at €580-590 per tonne delivered, which nets back to €570-580 per tonne ex-works.
Some bids were reported at €550-560 per tonne ex-works, but according to Fastmarkets’ sources, Italian suppliers were not accepting these levels.
According to buyers’ estimations, the tradeable market level is at €570 per tonne ex-works.
A third buyer source described the HRC market in Italy as largely quiet.
Interest in imported coil was also low due to the small price difference compared with the local market.
Asia-origin HRC was heard offered to Italy at €550-560 per tonne CFR, but buyers were reluctant to purchase material at this price.
Published by: Darina Kahramanova
Resolving global excess capacity is key to steel market recovery: OECD
At the beginning of the SteelOrbis Fall 2024 Conference & 91st IREPAS meeting held in Paris on September 15-17, Luciano Giua, economist and policy analyst at the Organization for Economic and Cooperation and Development (OECD), explained why steel is so important in the worldwide economic scenario.
Since it is a widely used material in the metal industry and in construction, not to mention national defense and security, it is fundamental in the employment of a very high number of people. Mr. Giua noted, adding that this is why governments place such importance on steel and why the industry is particularly vulnerable to protectionist policies. On the negative side, he said, many steel firms that receive subsidies are inefficient and subject to overproduction and they have a very strong impact on emissions.
The OECD coordinates three bodies dedicated to addressing global market steel issues: the Global Forum on Steel Excess Capacity (GFSEC), the OECD Steel Committee, and the Climate Club. The gap between global steelmaking capacity and global steel demand is growing rapidly, Mr. Giua pointed out, stating that the gap amounted to 551 million mt in 2023 and that the forecast for 2024-26 is about 630 million mt.
Steel demand in Europe, he said, decreased last year, still affected by the ongoing repercussions of the Russian aggression against Ukraine, higher energy costs and trade issues, while on a worldwide level the decrease was 1.1 percent in 2023, but the forecast is that the steel demand will grow by 1.7 percent in 2024 and by 1.2 percent in 2025.
Mr. Giua noted that a significant factor contributing to this phenomenon is the support provided to China’s steelmakers through substantial government subsidies, particularly during periods of profit decline. State-owned enterprises (SOEs), in particular, tend to receive more subsidies per asset compared to private enterprises (POEs).
The main party responsible for this phenomenon, Mr. Guia noted, is China as the country’s steelmakers are receiving a lot of government subsidies, especially during periods of profit decline, while Chinese state-owned enterprises (SOEs) in particular receive more subsidies per asset compared to Chinese private enterprises (POEs).
The question is, Giua said, are we facing a new global steel crisis? Compared to 2014/2015, the global context is changing, he stated, with excess capacity happening in an uncertain economic and geopolitical scenario, where BOF-based capacities are growing faster than EAF-based capacities in some regions. He concluded by stating that the GFSEC and the Steel Committee are working with member countries and stakeholders to implement strategies to reduce excess capacity, which would smooth out trade relations, reduce friction among steel trading partners, and contribute to a more cooperative and prosperous global steel market.
Phasing out of free allocation of EU ETS allowances to push carbon costs up to €249/mt by 2034
During his presentation at the SteelOrbis 2024 Fall Conference & 91st IREPAS Meeting held in Paris on September 15-17, Louis Redshaw, CEO/founder of UK-based Redshaw Advisors Ltd., focused on the financial impacts of the EU Carbon Border Adjustment Mechanism (CBAM) and strategies for cost mitigation.
Mr. Redshaw stated that the CBAM, which will apply to exporters from all non-EU countries (including the UK), aims to tackle carbon leakage and create fair competition for EU industry. Noting that over 4,000 large companies (about 40 percent of EU emissions) have been steadily decarbonizing due to the decreasing free allocation of carbon credits, he indicated that, with the phasing out of the free allocation of EU ETS [Emissions Trading System] allowances from 2030, carbon costs, which are currently at €70/mt, will increase to €98/mt by 2026, to €150/mt by 2030 and to €249/mt by 2034. Regarding the costs in Turkey, he stated that in 2030 the CBAM cost per 100,000 mt of steel will be €18.56 million, while the cost will have risen to €47.23 million per 100,000 mt of steel by 2034.
As for strategies for carbon cost mitigation, Redshaw noted that the EU CBAM certificates are difficult to use to hedge costs, being non-tradable instruments and having a two-year validity, not currently being available for purchase. Meanwhile, he stated that EU allowances can be used to hedge costs as they are tradeable instruments in a liquid, long-established market, having no storage limits or costs, and they can be traded from anywhere in the world, by any person, or company.
High electricity prices in EU causing energy-intensive industries to cut outputs
During the third session on Monday at the SteelOrbis Fall 2024 Conference & 91st IREPAS Meeting held in Paris on September 15-17, Professor Daniel Gros, director at Bocconi University’s Institute for European Policy Making and advisor at the European Parliament, made a presentation giving a macroeconomic overview of the US, the EU and China.
Professor Gros noted that the war between Ukraine and Russia has had a huge effect on oil and gas prices, which consequently impact manufacturing, especially in the EU. Stating that gas prices are normalized but are still above the longer pre-war average due to insufficient export capacity of LNG from the US, he noted that the higher gas prices have led to higher electricity prices. Looking at the EU, he stated that electricity prices are also higher in the region compared to the US and Asia, leading energy-intensive industries in the EU such as steel to cut production, though at the same time no industrial recession is expected.
Meanwhile, noting that throughout 2022 China’s manufacturing skyrocketed compared to the EU, the US and Japan, Gros stated that China accounts for 30 percent of global manufacturing, while the US and the EU account for 15 percent each, meaning China’s manufacturing output is now equal to the outputs of the EU and the US combined.
In addition, comparing R&D spending, Professor Gros stated that, in the EU, R&D spendings are focused on mid-tech, such as automotive, rather than on high-tech, e.g., software as in the US, leading to less economic growth. The reason for the mid-tech trap is that the European companies are investing in incremental innovation in the industries they know best in order to face lower risks.
Celsa rejects bids for Polish plant: sources
Polish steelmaker Celsa Huta Ostrowiec has received acquisition bids from at least two southern European long steel producers, but both were below the valuation of its Spanish parent company, multiple sources tell Kallanish.
Celsa has been looking to divest a number of its European operations, including in Poland and the UK, to raise cash to alleviate financial problems. Sources indicate the group has set a sales price target of €800 million ($890m) for its Polish electric arc furnace-based steelworks that produces around 1 million tonnes/year of rebar, beams and merchant bar.
The operation has good prospects considering Poland is expected to receive and utilise new EU funds from 2025, which will be put towards construction projects that are expected to increase steel demand.
Representatives from one other European steelmaking company are meanwhile visiting Celsa’s 1.2m t/y EAF-based UK plant in Cardiff this week, for which the group is seeking €200m, sources reveal.
Celsa could not be reached for comment.
Celsa’s is not the only Polish plant up for sale. Plate maker Huta Czestochowa, owned by Liberty, is looking for a new owner after being declared insolvent, with at least five potential suitors in the running.
Adam Smith Poland
Green steel demand rising, premium remains challenge: UK Metals Expo
The steel sector is seeing rising customer demand for green steel but achieving a premium for the material remains challenging until market strength returns, Kallanish heard from panellists at the UK Metals Expo in Birmingham last week.
“[Demand] is coming from large end users, but in longs, they aren’t willing to pay the difference yet; it’s tough out there. For the time being, people are just looking to survive. It will come but it’s going to take some time and require a stronger market to fully accept green steel and the cost for it,” said Tom McDougall, commercial director at All Steels Trading.
Customers were keen to know emissions data, but this did not extend to a premium being achieved yet.
“Most people now ask what are the emissions levels of the various mills we are buying from,” said Godfrey Watt, president of the International Steel Trade Association (ISTA). “I don’t think anybody is prepared to pay more for anything at the moment in this market, but maybe it’ll happen – not yet.”
Meanwhile, Christiane Taylor, pricing manager at Tata Steel UK, did see a premium achievable, noting customers asking for the material was one reason the company is switching to an EAF, as part of its £1.25 billion transformation. This would give its customers access to green steel domestically, a move which could make the sector more competitive.
“I think there is definitely a green steel premium, definitely in the first few years until maybe it normalises, and then green steel becomes the norm,” she noted.
The company already offers a reduced CO2 product offering, under the names of Zeremis in the Netherlands and Optemis in the UK.
“Our customers want green steel, particularly in automotive, and construction. In construction, for many customers the low carbon targets are not just nice to have but essential, and a prerequisite for the future. I think there is also appetite in what we’ve seen elsewhere in Europe as well,” she added.
“We’ve definitely seen an increase in inquiries for green steel,” said Mike Nielsen, commercial manager at Salzgitter Mannesmann UK. He noted there was a variety of low-emission brands being offered in the market, with no single definition of green steel. “Many people want to see an environmental product declaration [EPD] when you deliver the order,” he added.
Nielsen also noted that regulation such as CBAM could be the catalyst to making a real step change in the market.
“Regulation is important but we do also see some of that demand coming from companies with corporate social responsibility aims to reduce carbon, also in the finance sector there’s an increase in the amount of ESG investment – some of that is tying people to have lower carbon content in projects,” he said.
“There’s going to be a gradual step over and there’s a tipping point somewhere, where no stockholder wants two piles of steel; one pile of green steel and one pile of non-green steel. At some point there has to be a choice to convert over towards green steel and hold that because that’s what customers demand. Regulation is important but I don’t think it’s the only thing in this mix,” he added.
“We’ve already got strong sustainability controls in construction which are already in place,” said Watt. He noted that when certification authority CARES was first introduced for rebar, there was still a market for non-CARES material which gradually faded away, and now expects to see a similar gradual transition to green steel.
Carrie Bone UK
DB Schenker sale spares steel logistics division to DSV
Kallanish understands the deal is the largest in DB’s history. According to commentators, Schenker has been profitable, but has nevertheless been divested as Deutsche Bahn requires cash for massive investments.
The railway operator has in recent years been heavily criticised for flaws in its operations. Delays and cancellation of trains have become the rule rather than the exception, and the company has become proverbial for its shortcomings. Public annoyance increased when Germany hosted thousands of international visitors during the European Football Championship, who depended on the train service.
Christian Koehl Germany
WTO, steel industry urge interoperable carbon pricing
Panellists at the recent WTO Public Forum focusing on steel sought to explain how interoperable carbon pricing mechanisms could support decarbonisation, Kallanish not
WTO deputy director-general Jean-Marie Paugam said interoperability is crucial in carbon measurement and trade mechanisms, emphasising the shared responsibility between the private sector and government.
Ola Hansen from Stegra, formerly H2 Green Steel, asked panellists how market mechanisms and policy instruments could be developed to support decarbonised steel in new markets, noting “deep green steel comes at a higher cost, making carbon pricing essential”.
Panellist Edwin Basson, director general at worldsteel, emphasised that putting a price on emissions, such as through CBAM, is essential for creating a global market, as many regions are considering similar mechanisms.
“CBAM plays now much more than just a European role. It is setting an expectation in other regions of the world as well. A common arbitrage mechanism for CO2 emissions could compel society to bear the costs of carbon emissions,” he noted.
“The key question is whether global systems can be developed that, while different, are interoperable – meaning they allow the comparison and trading of emission costs across various markets. This would be crucial in moving away from the need to subsidise CO2 reduction efforts globally, as a standardised system would drive the reduction of emissions by making their costs explicit and comparable worldwide,” he added.
Lower costs for green steel could come via trade facilitation and reducing regulatory burdens, according to Adina Renee Adler, executive director at the Global Steel Climate Council. “There’s likely a communications issue; as a trade policy community, we don’t always effectively convey what we’re doing,” she said.
Improving communication on the benefits of trade could generate widespread support, which would help lower product costs, even when initial production costs are high.
Meanwhile, Annie Heaton, chief executive at ResponsibleSteel, warned against using carbon policies for other purposes, like addressing overcapacity, instead of focusing solely on decarbonisation.
“We need to ensure that carbon policies are designed not to deal with that [overcapacity] but to deal with the climate change issue,” she opined.
Anne van Ysendyck, vice president and head of government affairs and environment at ArcelorMittal, highlighted the long-term challenge of higher costs associated with low-carbon steel.
She emphasised the need for uniform carbon pricing, such as through CBAM, but also stressed that incentivising both the production and consumption of low-carbon steel is crucial. Building up scale and addressing energy costs will take time and societies may need to bear higher costs in the short term to drive progress, according to Van Ysendyck.
She also underscored the importance of ensuring that measures are implemented globally and that both production and consumption incentives are effectively supported.
Marc Delobelle, head of fossil-free materials purchasing at Volvo Group, meanwhile, acknowledged there is a premium for green steel but stressed the importance of scaling production to reduce costs in the long term.
Elina Virchenko UAE