German recovery depends on US, Mid-East disruption: analyst
The upcoming presidential elections in the USA will likely bring a slowdown in investment decisions in the country. This and the uncertainty surrounding further war escalation in the Middle East will be critical for global economic growth, but especially so in Germany, says Jürgen Büchner.
As he does every year, the retired former analyst of IKB bank gave a presentation on Germany’s steel consuming industries at the MBI Infosource Stahltag conference in Frankfurt. On the Middle East, he said the potential entry of Iran would immediately boost oil prices by $10 per barrel. European buyers of liquid natural gas (LNG) would also face the danger of a blockade of the waterways, or at least detours that lead to extra costs.
On the US elections, Büchner recounted the turmoil caused by the replacement of Donald Trump four years ago. “If the transition this time turns out as unpleasant as last time from Trump to Biden, we will face massive cuts to investment decisions,” he said at the event last month attended by Kallanish. For Germany, this would be another blow, as the USA is the only major market that has thus far remained healthy for export-driven German mechanical engineering industry firms and plantbuilders.
“At last year’s conference, my forecast was still a bit more optimistic,” he noted. “We already had the Ukraine war and high national electricity prices, but we did not have a war in the Middle East yet.” On the electricity prices, he said they came down from their 2023 peaks in spring, but have since resurged, and are inching back up to €100/MWh ($109), from a recent low of close to €50/MWh.
On the positive side, he mentioned he was surprised by how quickly Germany had started building infrastructure for LNG imports. This has defied Germany’s notorious slowness in public permitting.
Christian Koehl Germany
Ukraine’s steelmakers will suffer from CBAM: GMK Center
Ukraine’s production of pig iron and rolled products will suffer great losses from the Carbon Border Adjustment Mechanism (CBAM) in Europe from 2026, according to the recent study by Ukraine-based GMK Center.
According to the study, almost 93% of Ukrainian exports subject to CBAM regulation are in the metallurgy sector.
“In Ukraine, 89% of steel is produced by the open-hearth or oxygen converter method, which means a fairly high average carbon intensity — 2.3 tonnes of CO2 per tonne of steel. This indicator applies to both billets and rolled products like rebar, wire rod and other types of rolled products,” it adds.
GMK Center suggests that Ukraine may lose all of its exports of billets and rolled products as a result of the implementation of CBAM. The reason is that Ukrainian billets and rolled products will not be competitive with goods produced by the electric steelmaking process in the EU, where the average carbon intensity of the electric steelmaking process is 0.3-0.4t of CO2 per tonne of steel, it claims.
“Iron sales may also come to a standstill as CBAM iron supply payments could reach $160 per tonne in 2030 and this would mean that the iron segment could be largely replaced by imported HBI, which is booming in the Middle East and North Africa,” the study notes. “Every year, Ukrainian companies export 55,000-60,000 tonnes of steel products to the EU and not all have initial production of pig iron or steel. Since metal products are subject to CBAM regulation, they must also provide data to EU importers for CBAM reports.”
Collecting such data can be difficult, especially if the company does not directly produce iron or steel and CBAM may become a new technical barrier to trade and increase administrative costs for small, medium exporters and importers, the study concludes.
Difficulties in providing data will negatively affect the prices of exported products, it adds. In addition, it is emphasised that CBAM will be distributed worldwide, so access to export markets for Ukrainian goods is under threat.
In the first year of full implementation of CBAM, in 2026, Ukraine will lose $202 million in exports and in 2030 this indicator will increase to $1.44 billion per year, GMK Center calculates.
Earlier, Ukrainian steel association Ukrmetallurgprom urged the Ukrainian government to start negotiations with the EU regarding the postponement of CBAM for Ukraine, taking the war as a force majeure circumstance (see Kallanish passim).
Svetoslav Abrossimov Bulgaria
ADI to abandon blast furnace route
The planned construction of electric arc furnaces at Acciaierie d’Italia (ADI) will lead to the definitive shutdown of the blast furnace route at the Taranto steelworks, ADI special commissioner Giancarlo Quaranta said during the blast furnace no.1 restart ceremony. The event was attended by Italy’s Minister of Enterprises and Made in Italy (MIMT) Adolfo Urso.
The restart of BF no.1 at Taranto will enable adequate output to ensure the financial resources necessary for the survival of the plant. The move is part of the government’s relaunch plan for Taranto, which involves substantial capital allocation aimed at realising sustainable and advanced steel manufacturing through the construction of direct reduction plants and EAFs.
“The first essential step towards decarbonisation and the implementation of electric arc furnaces is the restart of BF no. 1, which has been made possible by substantial investments … This production progress, combined with the implementation of environmental improvement interventions, contributes to strengthening the competitiveness of the site at a national and international level,” the company says in a note seen by Kallanish.
ADI aims to register 1.9-2.2 million tonnes of steel output in 2024. Sources, however, believe the steelmaker’s production will fall short of that. In the first quarter of 2025, BF No.2 is scheduled to be restarted. By Q1 2026, the firm plans to run BFs 1, 2 and 4. The plant is eyeing production of 4.5-5mt in 2025. Until this week, Taranto was operating only BF No.4, while BF No.5 has been inactive for a number of years. BFs 1 and 2 idled production a few months ago.
ADI’s special administration is currently evaluating letters of interest received to acquire the steelmaker. Vulcan Green Steel, based in Oman, along with Canada’s Stelco and Baku Steel Company have submitted letters of interest for the acquisition of all assets belonging to ADI.
Several other firms are evaluating the possibility of acquiring specific assets from the former Ilva in the north of Italy. Among them, Marcegaglia has expressed interest in the tube mills and the Novi Ligure facility, a re-rolling plant situated between Genoa and Alessandria.
According to numerous sources familiar with the dossier, there is no genuine interest in purchasing the entirety of ADI’s assets, and the company will ultimately be divided. The most pessimistic sources are convinced that the Taranto steelworks will eventually close down, as the local authorities intend, or convert into a cold rolling facility.
Natalia Capra France
MP calls for government stake in British Steel
A member of the UK parliament (MP), Richard Tice, has called for the government to take a ‘strategic stake’ in British Steel to ensure the future of steelmaking in the country, Kallanish hears.
He made the comment as part of a five-point plan presented during a Commons debate on the steel industry.
“We need to take a strategic stake in British Steel to guarantee that the blast furnaces in Scunthorpe will not close,” Tice argues. “We cannot run that risk, because otherwise if the EAFs are not built, we’ve got nothing.”
He warns that the country is potentially within six to 12 months of having “zero general steelmaking capacity,” fearing the blast furnaces at Scunthorpe are very likely to close. The MP says that would be “an absolute disaster.”
Tice additionally notes the risks of high industrial electricity prices, which could mean that planned EAFs may not be viable and therefore will not be built. He says National Grid “[informed] us in Scunthorpe we can’t get you a grid connection for the electricity you need to run the EAF.”
His second recommendation is to avoid carbon taxes and the potential carbon border adjustment mechanism. A third suggestion is implementing tariffs or protectionism, if necessary, to “stop the dumping of cheap imports from nations like China.”
“America is doing it to protect their own steel industry. We should do the same,” the MP added.
His fourth recommendation is to buy more British material, citing the increased appetite for wind turbines by the secretary of state.
“If you want more turbines…make it a condition that we use British steel to grow our own economy,” Tice urges.
He claims these four recommendations are all deliverable by the current government, whilst admitting that his final recommendation of it scrapping its commitment to net zero is not going to happen. But he insists that it would be the fastest way to achieve cheaper electricity and increase competitiveness.
The debate comes just days after the government launched its new industrial strategy, and National Wealth Fund, with the Steel Strategy currently in progress. However, Tice says this should be published urgently and urges the government to have it out before Christmas.
In response to the parliamentary debate, industry association UK Steel tells Kallanish that it welcomes the commitments of support for the steel sector.
“We agree that UK-made steel is of critical importance to the future of a strong, resilient national economy, growth and jobs. The Steel Strategy is the best mechanism to take forward a bold, long-term plan to drive growth and investment for British steelmaking,” an association spokesperson states.
“We look forward to engaging with the government and supportive members of parliament to develop an approach that transforms our sector into an innovative and competitive industry, that underpins the strategic expansion of steelmaking, and supports well-paid jobs across the country,” the spokesperson adds.
Carrie Bone UK
European HRC prices remain largely unchanged despite limited demand
Demand turned out to be too limited to support a significant price rebound, Fastmarkets understands.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €555.00 ($604.81) per tonne on Wednesday, up by just €0.62 per tonne from €554.38 per tonne on Tuesday.
The index was up by €9.00 per tonne week on week, but down by €11.42 per tonne month on month.
Mills in Northern Europe were heard offering HRC at €580-600 per tonne ex-works, but were also willing to grant a discount of €15 per tonne for firm bids, sources said.
Some producers in the region were not satisfied by the current demand and offered HRC at levels from about two weeks ago at around €540 per tonne ex-works, a buyer source told Fastmarkets.
Most buyers estimated the tradable market level at €540-550 per tonne ex-works.
“I do not think that anyone will book at €580-590 per tonne ex-works. There are currently not enough negotiations and deals to gain a clearer perspective on the real market price,” a second buyer source told Fastmarkets. “Besides, consumers do not usually book much for the year’s end.”
The buyer added that most final consumers would probably wait for the beginning of 2025 to see how HRC prices develop.
But some Northern European market participants said price increases were imminent.
“Soon we will see prices at around €590 per tonne ex-works. Apparent demand is currently stable, but end users are buying more domestic [HRC] because of the anti-dumping investigations against imported HRC from some origins and the [generally] higher import prices,” a third buyer source told Fastmarkets.
In Southern Europe, meanwhile, Fastmarkets’ daily steel hot-rolled coil index domestic, exw Italy was calculated at €551.67 per tonne on Wednesday, up by €2.92 per tonne from €548.75 per tonne a day earlier.
The Italian index was up by €11.34 per tonne week on week, but down by €17.08 per tonne month on month.
Sources reported an offer from one local supplier at €580 per tonne ex-works, but added that discounts of €15-20 per tonne were possible for big volumes.
Buyer sources estimated the workable market level at €540-560 per tonne ex-works.
A fourth buyer source told Fastmarkets that deals for HRC in the Italian market had been few and far between recently, adding that the bullish sentiment will gradually start to fade because real demand remains insufficient.
“Buyers are not willing to pay significant price increases,” the buyer source said.
Imported HRC was on offer at high levels that buyers described as “unworkable.”
Offers from Taiwan, Japan, and South Korea were heard at €580-590 per tonne CFR Italy, while Vietnamese HRC was on offer at €555-560 per tonne CFR Italy, sources said.
And Turkish HRC was on offer to Italy at €580-590 per tonne CFR, they added.
But the workable level for imports was estimated at just €520 per tonne CFR, with some bids heard at that level, but no deals confirmed.
Published by: Darina Kahramanova
Beneva develops auto sheet scrap reuse technology
Czech steel sheet processor Beneva has developed a system to reprocess prompt/industrial scrap arising from automotive blanking into steel sheet for use by automotive companies, without the need for remelting. The “SATURNIN” system enables steel reuse, thereby reducing carbon footprint and cost, Beneva tells Kallanish.
The system collects scrap data about arising post-industrial steel scrap and material needs across steel processing companies. It then searches for the best matches according to geometry, steel grades, volumes, location and other information. The system ensures the purchase, collection, inspection and reprocessing of steel scrap into low carbon footprint input material and its shipment to the end customer, Beneva notes.
Beneva cooperates with regional steel service centres, as well as OEMs, such as Škoda Auto. “The system has great scaling potential, so the production site is still expanding and other SATURNIN hubs are going to be launched soon,” the firm observes.
The scrap is collected from the blanking/stamping line and placed in a separate box, before being transported to the firm’s warehouse for tensile and OES tests in an accredited material lab. The pieces are then placed in regular stacks on pallets, with any flaws eliminated on an autonomous robotics line.
The pieces are then processed on the autonomous robotic blanking line and transformed into regular shapes, such as rectangular or trapezoid, required by the customer – stampers or OEMs. Those blanks are stacked on a pallet, wrapped up and delivered to the customer. The material is identical to the automotive sheet delivered by a service centre or mill, Beneva claims.
The firm estimates around 400kg of scrap sheet metal are produced per car manufactured, meaning tens of millions of scrap globally per year. The firm’s technology currently focuses on scrap generated from the blanking process, where the material is not influenced by stamping, meaning it can save around 2-3% of the total scrap.
It is working on developing new technologies to be able to process the portion of scrap that arises after stamping operation – stamping influenced scrap. This could result in 5-10% of total scrap being reused.
Benva will be present at EuroBLECH 2024 in Hannover from 22 -25 October – Stand 17-E156, Hall 17.
Adam Smith Poland