Growing protectionism, green steel, decarbonization: Key takeaways from EUROMETAL’s Steel Trade Day in Germany
Members of the association for European steel distributors at the event focused on whether a reduction in imports would help drive a recovery in domestic flat steel prices, what the impact of recessionary forces might be on the green steel transition and whether the EU’s Carbon Border Adjustment Mechanism (CBAM) will be beneficial or just create more red tape.
The role of imports
Markets participants said the recent toughening of trade defence measures, including a steel safeguard review and an anti-dumping investigation into hot-rolled coil imports from Japan, Vietnam, India and Egypt are likely to result in a stronger reliance on domestic supplies, and that should support a recovery in domestic flat steel prices in Europe.
The European Commission launched an anti-dumping probe against HRC imports from the four countries in August.
But sources at the event said that any price recovery would not last long unless it is supported by an increase in consumption.
“These trade barriers create additional uncertainty which is not encouraging demand [for imported steel], so we can expect more demand for EU-made steel and it’s safer [to book European steel],” Eusider Trading chief executive Marco Miccichè said during a panel discussion.
And Macrometal managing partner Alexander Julius said: “It’s all about [steel] availability. It’s an issue for import steel buyers in Europe that they don’t know the potential extra costs they might be facing by the time [any steel is imported].
“The first quarter [of 2025] might be a bit early [for flat steel prices to recover], but [later in the year] we will see better prices, in view of the reduced imports and reduced availability,” he added.
European flat steel producers recently started to increase prices for coil with delivery in the first quarter of 2025. Notably, for January-delivery HRC, steelmakers are aiming for €600-620 ($654-676)) per tonne ex-works, or even €640 per tonne ex-works in some cases, sources said – although these prices have yet to be accepted in deals.
“It’s tough to increase [steel] prices against the very low consumption [we are currently seeing],” Primex Steel Trading managing director Maruan El Daghma said. “And I don’t see consumption increasing in the next couple of months, so it will be difficult for the EU mills to increase [steel] prices on a long-term basis.
“We might see a tick up because of availability issues, but will not be long lasting,” he added.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €556.67 per tonne on November 5, down marginally by €0.83 per tonne from €557.50 per tonne on Monday.
Green steel uptake
The European steel sector is going through the transition to green steelmaking, with several multi-billion dollar investment projects already announced and more than 50 million tonnes of new steelmaking capacity expected to come online in 2025-2027, according to Fastmarkets’ estimates.
Major flat steel suppliers are already offering their own green steel brands with lower carbon footprints – including XCarb, Arvzero, SSAB Zero, Bluemint, Greentec, but there is currently no common standard for green steel – although Fastmarkets’ methodology, however, defines European green steel as “steel produced with Scope 1,2 & 3 emissions at a maximum of 0.8 tonne CO2 per tonne of steel.”
Market participants said there was a lack of projects across Europe requiring green steel and that demand from the key consumer – the automotive industry – has recently been slowing, in line with the general downturn in steel sales.
“Our customers say they love green steel but they can’t pay more because they are fighting for their survival,” Julius said.
“We can’t reverse the decarbonization and reduced-CO2 steel is coming – it’s just the matter of time. But in a recession, it just becomes a secondary [issue] for a buyer,” he added.
Fastmarkets’ weekly price assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €100-200 per tonne on October 21, stable week-on-week.
Carbon Border Adjustment Mechanism
The EU’s CBAM regulation is one of the major drivers behind the decarbonization of steelmaking in the EU and globally. It’s a tool intended by the EU to put a fair price on the carbon emitted during the production of carbon-intensive goods that enter the trading bloc.
However, the complexity of CBAM poses certain challenges for steel importers and brings additional costs.
“Small and medium-sized steel importers are less concerned about CBAM certificate costs than about CBAM compliance costs – [such as] supplier communications, software, data verification, and so on,” Lars Hillmann, a lawyer at Graf von Westphalen (GvW) said during a presentation.
Sources told Fastmarkets that another problem related to CBAM is the fact that it does not take into account steel exports, thereby compromising European companies’ competitiveness in global markets.
“Export-oriented companies fear further competitive disadvantages in global markets [in terms of the non-repayment of CBAM costs for exports],” Hillmann said.
These issues might result in “lost added value” for the European manufacturing industry, he added.
And Importers might start avoiding importing goods covered by CBAM and instead buy “items with higher customs classification” instead of semi-finished products.
“Instead of bringing the steel, say, from Asia and processing it in the EU, we [will instead] buy the ready steel structure, free of quotas, free of the anti-dumping [duties] and [free from] CBAM. That means that all the added value for Europe is gone,” a trading source told Fastmarkets on the sidelines of the event.
The European Commission is investigating the potential extension of CBAM to products downstream of the goods subject to the current regulations, such as iron and steel, but a final decision has yet to be made.
Capacity versus actual output
Sources at the Dusseldorf event estimated that the nominal crude steelmaking capacity in Europe is well over 200 million tonnes, but the actual output volumes have been lagging far behind that in rencent years.
In 2022, crude steel production across Europe amounted to 136.30 million tonnes, down from 152.60 million tonnes in 2021, according to data from the World Steel Association (worldsteel). The decline was due to massive output cuts that were implemented by European mills in the third and fourth quarters of 2022, due to deteriorating demand and falling steel prices.
In 2023 steel output fell further still, even considering the low comparative base of the previous year, amounting to 126.30 million tonnes, according to worldsteel.
“Steel production in Europe will be no more than 120 million tonnes [per year] by 2030,” a source told Fastmarkets on the sidelines of the event.
In 2023, steel production in Germany, which is the Europe’s largest steelmaker, fell to its lowest level since 2009 at about 35.40 million tonnes – down 3.9% year on year, amid challenging market fundamentals and high production costs.
And several market participants in Dusseldorf said this tendency was likely to prevail in the years ahead.
“We are heading toward a post-industrial society, with less steel needed in the upcoming years. [But the steel] industry is clever enough not to create overcapacity,” a mill source in Europe said.
“Steelmaking capacity massively [outweighs] actual production [in Europe and] is representative, in a way, of what needs to be done – shutting redundant capacity. EU capacity will be reduced – it’s as simple as that,” another source said,
Other market participants pointed out that the capacity of the new, green steel mills in Europe will be lower that the nominal capacity of existing BF-BOF mills, so will more reflective of the actual market needs.
US elections: EU, UK steel, aluminum industries eye potential tariffs
Former US President Donald Trump’s election to a second term Nov. 6 has brought the issue of tariff-rate quotas into focus for Europe and the UK’s steel and aluminum industries, with both sectors now likely to be keeping a close eye on potential trade flow changes.
In 2018, Trump introduced Section 232 tariffs of 25% and 10% respectively on certain imports of steel and aluminum to the US, although these were replaced with TRQs for the EU in 2021 and UK in 2022.
In December 2023, the US and EU extended the suspensions of their respective steel and aluminum tariffs beyond January 2024 after agreeing to continue work on reaching the Global Arrangement on Sustainable Steel and Aluminum, or GASSA.
The EU exported 2.23 million mt of finished steel products to the US in 2023, according to Eurofer, making it the EU’s second-largest destination after Turkey, while the UK exported 160,000 mt of steel to the US, according to UK Steel.
UK Steel’s director for Trade and Economic Policy, Chrysa Glystra, told S&P Global Commodity Insights that the US already has multiple layers of tariffs on steel, adding that it would be surprising if the existing TRQ arrangements were cancelled. But she also said that GASSA looks less likely now.
Technically, she said, the EU’s TRQ arrangement is temporary and linked to a GASSA outcome, while the UK arrangement is not linked to GASSA.
“Rationally, I would say that it would not be in the US’ interest to remove all TRQ agreements and go back to tariffs against everyone as, last time round, that resulted in really high prices for consumers,” Glystra said.
“The current set-up seems to be a reasonable balancing of interests of the steel industry and its users. That said, if there is a wider wave of tariffs on everything, then steel might not be the exception. A repeal of IRA would also have an impact on some downstream consuming sectors,” she added.
Bumpier relationship
European Aluminium Director General Paul Voss told Commodity Insights that the challenges were easy to see and that it was fair to expect a “bumpier relationship” going forward.
“That said, we should be able to find common ground in some areas, including the need to get much tougher on unfair trade practices, particularly when it comes to China,” he said.
“As part of that process, we will need to explore pragmatic ways to protect and enhance Europe/US trade flow in the interest of consumers and businesses on both sides of the Atlantic,” Voss added.
One aluminum trader said he did not expect an immediate impact from the poll, adding that trade flows had already changed with Section 232 tariffs.
“If he ends the Russia/Ukraine war, it could pull forward the timeline when Russia is accepted in Europe, but it won’t happen overnight and any possible impact right now is speculative,” the trader added.
He said a Trump win was bullish for the Midwest premium, because it would be seen by the market as supportive of the economy and industrial activity.
“It will have knock-on effect on the EU in that the US premium will move higher and will eventually compete with the EU on these precious duty unpaid units. Second order effect would be bullish EU premium but it’s a long way to that,” the trader added.
The Platts spot 99.7% P1020 US Aluminum Transaction Premium was assessed at 21.6 cents/lb plus LME cash, delivered Midwest, net-30-day payment terms, Nov. 5, up from the previous 21.4 cents/lb. Platts is part of S&P Global Commodity Insights.
A Minor Metals Trading Association spokesperson said it would keep abreast of the developments resulting from the incoming Trump administration, such as changes to legislation and tariffs, to keep its members fully informed.
Auto industry response
Society of Motor Manufacturers & Traders CEO Mike Hawes told Commodity Insights the US was the UK automotive sector’s second-biggest trading partner after the EU, with reciprocal trade and investment boosting both economies.
“The UK should work with the new US administration to enhance this cooperation and seek mutual benefits, helping support sector jobs and growth across the Atlantic,” he said.
German auto industry association VDA’s president, Hildegard Muller, said in a statement that the US was an essential partner for Germany and Europe and transatlantic cooperation remained of the utmost importance for both sides.
In 2023, Muller said German manufacturers produced more vehicles in the US than ever before, with half of the more than 900,000 vehicles produced in the US being exported.
She said around 400,000 cars were exported from Germany to the US in 2023 and in H1 2024 the US was the most important buyer of German car exports, with the US being the second-largest export market in the world after China for suppliers in the VDA.
“For the German automotive industry, trade and investment relations with the US are therefore of great importance — any change in the framework conditions can affect the economic situation of the industry and thus also employment in Germany, but also in the US,” Muller said.
“It is crucial that Germany and Europe position themselves in such a way that we are fundamentally safe, more independent and more resilient. We must therefore first and foremost do our own tasks — in all areas,” she said.
Meanwhile, German mechanical engineering association VDMA’s managing director, Thilo Brodtmann, said Trump’s second term would be “a greater challenge for German and European industry than his first.”
“We must take his tariff announcements seriously, in particular. This will once again put a noticeable strain on transatlantic trade and investment relations,” he said in a statement, pointing out that the US was and would remain the most important export market outside the EU for mechanical and plant engineering from Germany.
“Our companies offer the products required to implement the re-industrialization of the US that Donald Trump is striving for. The VDMA’s overall outlook for the American market therefore remains positive,” he said.
Authors: Jacqueline Holman, Annalisa Villa, Khaula Bhatti
Klockner & Co Q3 shipments rise, sales fall on low steel prices FY24 look positive
In Q3 Klockner & Co increased shipments to 1.1 million tons, up 2.8% on the prior-year quarter and up by 3.4% to 3.4 million mt in the first nine months of 2024, the Company announced on Nov 6 in its earnings.
The year-on-year shipments increase is mainly due to the acquisitions in Mexico and the US, but due to the lower steel prices, the company’s sales fell to Eur1.6 billion in Q3 down from the Eur1.8 billion recorded in the same period of 2023 and down by 3.8% to Eur5.1 billion in the first nine months of the year.
Despite the continued weak demand in Europe and the steel price correction during large parts of the reporting period, Klockner & Co expects an overall positive fiscal year 2024.
Klöckner & Co continues to forecast EBITDA between Eur120 million and Eur180 million and expects a strong and significantly positive cash flow from operating activities, although this is likely to be below the prior-year level. From January to September the company’s EBITDA reached Eur179 million, down by Eur86million resect the same period of the year before.
“In a challenging market environment, we have made major progress in implementing our Group strategy,” Guido Kerkhoff, CEO of Klöckner & Co SE said. “Through targeted investment in selected sites in the US and Germany, we have been able to expand the higher value-added processing and metalworking business.. In addition, winning the German Sustainability Award once again is a great confirmation of our success in decarbonizing the steel industry.”
Klockner & Co expanded its higher value-added business, in the US, targeted investments have enabled the Charlotte and Dallas sites to evolve from a pure distribution operation to a higher value-added fabrication and metalworking operation. Further progress was also made in Germany, for example with the investment in a fully automated sawing and drilling system in Landsberg, aiming to increase Klöckner & Co’s profitability and reduce its dependence on volatile commodity markets.
On digitalization and automation the quantity of digital quotes increased by more than 27% in the first nine months of 2024 compared to the same period of the previous years the company continues in its progress towards its vision of “zero-touch” and minimum manual intervention.
Platts, part of S&P Global Commodity Insights, assessed hot-rolled coils, down in Q3 from Eur635/mt registered on July 1 to Eur545/mt recorded on Sept 30.
Since the beginning of the year, HRC prices dropped by Eur135/mt from Eur690/mt registered on Jan 02 to Eur555/mt ex-works Ruhr November 5, down Eur5 on the day.
Klockner & Co SE is one of the largest producer-independent distributors of steel and metal products and one of the world’s leading steel service center companies. With its distribution and service network of around 120 sites, primarily in North America and the “DACH” region (Germany, Austria and Switzerland), Klockner & Co supplies more than 60,000 customers.
Marcegaglia is set to double stainless production at its site in Fagersta, Sweden
Marcegaglia Fagersta Stainless announced a Eur100million investment to double the company’s production volumes in the coming years, the company said on Nov. 6 during its 150th anniversary.
In Sweden, Marcegaglia produces around 60,000 mt of wire rod and aims to double its total production with the bar and stainless wire rod production.
“This strategic investment will expand our product offering to include a full range of stainless steel wire rod, bar, as well as rolled billets,” the company said. “The project, set to roll out over the next few years, positions Fagersta Stainless for continued growth, efficiency and sustainability in the global stainless steel Long Products market.”
At the end of September, Antonio Marcegaglia, chairman and CEO of Italy’s Marcegaglia Group, already anticipated to S&P Global Commodity Insights that the group was considering a “significant” project to expand capacity at its Fagersta site.
Fagersta Stainless generates approximately Eur160 million in turnover and employs about 250 people. Marcegaglia acquired Fagersta in 2023 as part of its purchase of the stainless steel products division of Outokumpu.
Platts, part Commodity Insights, assessed European 18-8 stainless steel scrap solids at Eur1,1170/mt on Nov. 1 on a CIF Rotterdam basis, stable on the day and up Eur10 on the week.
The 18-8 stainless steel scrap clips and solids are a commonly used reference for the grade-304 stainless steel scrap. The scrap contains a minimum of 16% chrome content and minimum of 7% nickel content.
EU HRC prices fall slightly amid uncertainty over US presidential election results
Domestic European hot-rolled coil prices fell slightly Nov. 6, as the announcement of Donald Trump’s victory in the US presidential election created uncertainty for market participants, over the prospect of higher protectionism in the US market under a Trump administration.
Market activity remained subdued as demand was unchanged.
“The market is half dead,” a Germany-based trader source said. “Announced price increases from mills are not working, as there is no demand.”
The source described price increases by European mills as “wishful thinking,” while calling the situation “a fight for the lowest price.”
The source said there was no damage to mill orderbooks because of the election’s result, as most orderbooks were full until the end of the year.
According to the same source, there was “no real strengthening of the market,” due to poor construction and automotive demand domestically.
Platts assessed Northwest European HRC at Eur555/mt ex-works Ruhr Nov. 6, stable on the day.
Offers were reported at Eur560-640/mt ex-works Ruhr.
Platts assessed domestic HRC in Southern Europe at Eur550/mt ex-works Italy, down Eur5 on the day.
Platts assessed imported HRC in Northwest Europe at Eur520/mt CIF Antwerp, down Eur10 on the day.
Platts assessed imported HRC in Southern Europe at Eur525/mt CIF Italy, down Eur10 on the day.