Green Steel: the building block of the future
Julian Verden, a member of the EUROMETAL Presidency Board and Managing Director of Stemcor Europe, participated in the 695th Lord Mayor’s Lecture yesterday, themed “Green Steel – The Building Block of the Future.”
In his presentation, Verden provided an overview of the steel industry, emphasizing its global importance and the challenges posed by carbon emissions. He explained the two main methods of steel production: the blast furnace, which is carbon-intensive, and the electric arc furnace (EAF), a more sustainable option that uses recycled steel scrap and cleaner energy sources.
Verden discussed the potential of green hydrogen as a fuel source in steel production, highlighting its capacity to reduce carbon emissions significantly. However, he acknowledged the challenges of scaling up hydrogen production and ensuring its availability for widespread industry use.
The discussion also addressed the role of government policies in advancing green steel initiatives. Verden emphasized the need for supportive policies and investments to facilitate the transition to low-carbon steel production.
Overall, the lecture offered valuable insights into the steel industry’s current landscape and the transformative potential of green steel in building a sustainable future:
EU HRC prices rise, supported by weak import market
Domestic European hot-rolled coil prices rose slightly Oct. 31, as weak import market demand continued to boost the performance of domestic European mills.
Rumored production cuts by mills due to maintenance works are likely to support prices, an Italy-based trader said. Weak demand forecasts for 2025 are expected to factor into mills’ decisions to reduce capacity, the source added.
“Now, there is no demand and there is no money from government(s) supporting the economy like they did in 2020-2021 in the COVID Crisis,” said a Germany-based trader source of the current market situation.
A Germany-based distributor source said that there was no pressure to reduce prices despite low consumption in the European market.
Platts assessed Northwest European HRC at Eur570/mt ex-works Ruhr Oct. 31, up Eur10 on the day.
Offers were reported at Eur600-640/mt EXW Ruhr. Tradable values were at Eur580-590/mt EXW Ruhr.
Platts assessed domestic HRC in Southern Europe at Eur555/mt EXW Italy, stable on the day.
Many market participants remained unwilling to bear the risk of purchasing imports due to CBAM regulations, quotas, antidumping investigations, and retroactive duties on steel arriving this year, according to a Germany based distributor source.
Platts assessed imported HRC in Northwest Europe at Eur515/mt CIF Antwerp, stable on the day.
Platts assessed imported HRC in Southern Europe at Eur535/mt CIF Italy, stable on the day.
Stellantis Q3 vehicle shipments drop 20% on year, hit by US, Europe markets
Automaker Stellantis registered a 20% year on year decrease in consolidated shipments in Q3 to 1.148 million units due to production gaps in several models and headwinds from a challenging European market environment, it said in its Q3 results released Oct. 31.
In North America, shipments fell 36% year on year to 299,000 units due to a combination of strong Q3 2023 production, including 50,000 units of nameplates on hiatus in 2024 pending successor launches, as well as production constraints to lower US dealer inventories by 50,000 units, the company said.
In Europe, shipments decreased 17% year on year to 496,000 units, driven in particular by delayed launches of new B-segment products, including the Citroen C3, C3 Aircross, and others, as well as 5% lower industry volumes in the region.
In Middle East and Africa consolidated shipments dropped 26% year on year to 78,000 units, primarily from lower shipments to Algeria, where a temporary import restriction was in place, and secondarily in Turkey, where there were delays in ramping up a new light commercial vehicle LCV.
In China, India and the Asia Pacific, consolidated shipments fell 30% to 14,000 units, mainly due to decreases for Peugeot, Jeep and Ram vehicles amid increased competition in domestic and import markets.
Meanwhile, shipments in South America rose 14% to 258,000 units on stronger demand in Brazil and Argentina, production recovery after the Rio Grande do Sul flooding and expansion in the product portfolio, it said.
Overall, Stellantis’ Q3 revenues fell 27% due to the low shipments and sales, although the company said its US market share was improving and it was on track to resolve high inventories in North America by the end of 2024.
“While Q3 2024 performance is below our potential, I’m pleased with our progress addressing operational issues, in particular US inventories, which have been reduced meaningfully and are on track for year-end targets, as well as stabilization of US market share,” Stellantis CFO Doug Ostermann said in the results.
“In Europe, stringent quality requirements delayed the start of certain high-volume products, but with progress resolving challenges we will soon benefit from the significantly expanded reach our generational new product wave brings to 2025 and beyond,” he added.
Platts, part of S&P Global Commodity Insights, assessed domestic HRC prices in Northern Europe at Eur560/mt ex-works Ruhr Oct. 30, down 18.8% since the start of 2024.
EU carbon falls below Eur65/mt due to weaker fundamentals
European carbon values declined in the week ending Nov. 1 due to falling gas prices. Demand remained lackluster amid bearish fundamentals and weak technical signals.
Prices briefly rose sharply on Oct. 29, but EUAs lost technical support as the week progressed.
EU Allowances were trading at Eur64.33/mtCO2e ($69.92/mtCO2e) at 1148 GMT on Nov. 1, compared with a settlement price of Eur66.97/mtCO2e on Oct. 25, Intercontinental Exchange data showed
Platts, part of S&P Global Commodity Insights, assessed the EUA December 2024 contract at Eur64.52/mtCO2e on Oct. 31.
Natural gas markets saw significant losses on Oct. 31, the final day of October trade, as market talk that a transit deal to supply European buyers with Azeri gas through Ukraine circulated.
This had an immediate effect on EUAs, which pushed prices down by almost 2% on the day.
However, on Nov. 1, Slovakian gas importer SPP dismissed a report that Slovakia — together with Hungary — was close to signing a contract with Azerbaijan for continued gas delivery via Ukraine with its participation.
Q4 outlook
Prices faced pressure as investors cut their net short positions.
In contrast, power demand showed signs of rebounding in Northwest Europe, with some analysts expecting this to help prices recover in November.
Analysts at Commodity Insights expect EUAs to be between Eur70-80/mtCO2e in Q4 2024 fourth quarter, anticipating stronger demand boosted by higher thermal power generation.
“This increase comes despite recent declines from easing geopolitical risks in the Middle East, which have stabilized oil and gas supplies and lowered gas prices,” they said in a recent note.
In other news, official data confirmed that EU greenhouse gas emissions plunged 8.3% in 2023, driven by significant reductions from power and industrial installations.
However, the European Commission acknowledged that more action is needed for the EU to meet its ambitious target of reducing emissions by 55% by 2030 from 1990 levels.
UK keeps CPS stable
UK carbon prices dipped marginally, but demand has remained resilient, according to traders.
UKAs were trading at GBP38.09/tCO2e ($49.21/mtCO2e) at 1149 GMT on Nov. 1, compared with a settlement price of GBP39.19/mtCO2e on Oct. 25, ICE data showed.
Platts, part of S&P Global Commodity Insights, assessed the UK Allowance nearest December contract at GBP37.96/mtCO2e, up 52 from the previous settlement.
In policy news, the UK government said on Oct. 20 that it will maintain the freeze of its Carbon Price Support (CPS) at the equivalent of £18/mtCO2e ($23.33/mtCO2e) from 1 April 2026.
UK power generators have to pay the carbon levy, giving the sector a structural premium over EU generators before any gas or power price spreads.
This comes as UK carbon prices continue to be around $20/mt below EUAS.
Meanwhile, the government stated that its carbon border adjustment mechanism (CBAM) on imports of emissions-intensive products such as aluminum, cement, fertilizers, hydrogen, iron and steel will start on Jan. 1, 2027, but will no longer apply to glass and ceramics as previously proposed.
The new government, led by the Labour Party, also decided to raise the minimum threshold for CBAM goods to GBP50,000 to reduce administrative burdens for those importing small quantities, compared to the initial proposal of a GBP10,000 threshold.
EU Steel Distribution faces continued weak demand, with upward shift in price expectations
The EU steel and metals distribution sector remains cautious as we approach the end of 2024.
While current activity levels remain stable, future activity is expected to weaken. Distributors are maintaining a conservative approach to inventory, aligning stock levels with anticipated market softness. However, there’s a notable shift in price expectations, with some respondents foreseeing stabilization or slight increases, suggesting that price pressures might ease as the market recalibrates.
Overall, while the industry braces for subdued demand, there is a glimmer of potential price resilience, which could provide stability as distributors navigate this challenging period.
Assessment of Current Activity
Responses are consistent with previous months, possibly reflecting a stabilization or slight dip in current activity levels. The general trend remains below the neutral line, suggesting that the sector is still operating at a cautious activity level, with no significant improvement.
Future Activity Forecast
Downward trend continues: October responses show a continuation of the pessimistic outlook for future activity. Most responses are positioned below the neutral line, following the downward trend observed in recent months.
Weak expectations for the coming months: The future activity sentiment indicates an expected decrease as we move toward the end of 2024. This sustained downward trend suggests that distributors anticipate a prolonged period of weak demand.
Stock Position Forecast
Steady or slight decrease: Stock positions for October remain stable, with only slight variations from previous months, indicating a conservative approach to stock management.
No aggressive restocking: Respondents show no intentions of significantly increasing stock levels, reflecting a focus on maintaining or slightly reducing inventories in anticipation of lower demand. This pattern underscores a cautious stance, as distributors are reluctant to commit to higher stock levels amid uncertain market conditions.
Price Development Expectations
Shift in price sentiment: October’s responses indicate an upward shift in price expectations, with answers positioned closer to the neutral line and slightly above it.
Potential stabilization or increase: Unlike previous months, where sentiment leaned toward declining prices, October responses show a more balanced or slightly positive outlook on price developments, possibly due to market adjustments or expectations of supply limitations. This change may reflect a belief that prices could stabilize or increase slightly as distributors adapt to market realities and adjust supply strategies accordingly.
This analysis is based on the EUROMETAL Sentiment Survey, reflecting the opinions of 251 participants. Interested in our Sentiment Tool? Contact us.