Day: 13 December 2024

Most countries have fully utilised their EU tariff rate quota (TRQ) allocations for organic coated sheet (PPGI), with the exception of the United Kingdom and South Korea, which still retain a portion of their quotas, Kallanish notes from the EU customs portal.

The UK leads with 31,806 tonnes available, representing 67% of its total TRQ for the fourth quarter, while South Korea has 7,011t remaining, equivalent to 9% of its quota.

By contrast, Taiwan and Turkey have completely exhausted their EU TRQs, using up their Q4 allocations of 25,526t and 15,889t by 28 November and 1 November, respectively. India, which has the largest TRQ allocation for PPGI of 79,455t, has also nearly fully consumed its quota, with only a negligible balance remaining.

The “other countries” quota has also been depleted.

Organic coated sheet, EU Q4 TRQ allocation (tonnes)

Origin	Quota  01.10.24-31.12.24	Transferred	Total	Balance	Awaiting allocation	Avaliable	Available TRQ %
India	79,455	–	79,455	54	–	54	0
South Korea	71,809	7,811	79,620	7,135	125	7,011	9
United Kingdom	35,256	12,551	47,807	32,262	456	31,806	67
Taiwan	23,014	2,512	25,526	–	–	–	0
Türkiye	15,889	–	15,889	–	–	–	0
Other countries	43,332	–	43,332	26	–	26	0

Source: EU TARIC, as of 10 December. Calculated by Kallanish

Elina Virchenko UAE

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ArcelorMittal Europe – Flat Products is decarbonising its logistics and restructuring transport activities, according to chief marketing officer Laurent Plasman and head of transport & logistics David De Rocker.

In 2023, the division successfully delivered 20 million tonnes of steel to customers through multiple transportation methods. Road transport constituted approximately 38%. The company is currently improving its rail transport capabilities and evaluating the potential for maritime shipping options. Rail cargo accounts for 42% of the steelmaker’s flat steel shipments in Europe, Kallanish notes.

Investment in electric truck trials is progressing, while the steelmaker is evaluating trucks powered by hydro-treated vegetable oil (HVO) across ten countries. This initiative has the potential to reduce carbon emissions by up to 80%, compared to the standard 65g per tonne kilometre associated with diesel-powered trucks.

In 2022, ArcelorMittal initiated a strategic partnership with Geodis at the Florange facility located in eastern France. Florange successfully transported 190,000 tonnes of steel across a distance of 579,833 km utilising HVO trucks, resulting in a reduction of approximately 794 tonnes of CO2 emissions.

The company also initiated a collaboration with DB Cargo in Europe for rail cargo operations in 2021. DB Cargo has introduced a sustainable logistics solution known as DB Eco Plus. It assesses the energy needs for particular transport tasks ahead of time and subsequently acquires the necessary volume of renewable energy. The CO2 reduction realised by each mode of transport is verified by auditor TÜV.

“Customers are increasingly looking for whole lifecycle carbon reductions to satisfy their end users, and we equally are determined to be at the forefront of offering comprehensive low carbon transport solutions, not least to support our growing XCarb® low carbon-emissions product portfolio,” a company note concludes.

ArcelorMittal announced last month it was suspending some decarbonisation investments in Europe, including the direct reduced iron-electric arc furnace transformation at Dunkirk, until it secured policy clarity (see Kallanish passim).

“We remain committed to decarbonising our assets in Europe and continue to fine-tune the engineering studies we have been undertaking this year, but no final investment decisions have yet been taken,” a company spokesperson says. “We are operating in a difficult market, and there are a number of policy uncertainties that are impacting the industry. We need an effective Carbon Border Adjustment Mechanism, as well as more robust trade defence measures, to strengthen the business case.”

However, ArcelorMittal’s investments in Spain are advancing as the country increases its access to clean energy sources like solar, wind, and nuclear power.

Natalia Capra France

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The mechanical and plant engineering industry in Germany is expecting a decline in production in 2025, albeit smaller than this year, Kallanish hears from its association, VDMA.

Production in the mechanical and plant engineering sector fell by 6.8% on-year in the first ten months this year, according to provisional figures. “For 2024 as a whole, we continue to expect production to fall by 8% compared to the previous year,” VtDMA president Bertram Kawlath said at the association’s annual press conference in Frankfurt.

In 2025, falling interest rates should not only benefit consumption, but also global willingness to invest and initiate an economic recovery, VDMA says. However, no significant upturn is expected in the global economy, Kallanish understands.

“Key negative factors such as wars and protectionism as well as structural disruptions will remain with us. We must therefore continue to expect a lot of headwinds and therefore confirm our forecast that the machinery and equipment manufacturing sector will see a production decline of 2% in 2025,” said Kawlath.

In order to strengthen Germany and Europe as a business location, VDMA is therefore calling for a significant turnaround in economic policy. In particular, the VDMA president called on the future German government to stop weakening small and medium-sized industrial companies and to give them urgently needed room to conduct business. “Above all, the federal government must reduce bureaucracy and reduce costs,” he demanded.

That would mean relief from reporting obligations, especially for small and medium-sized enterprises, which are disproportionately affected. Examples include the Supply Chain Act and obligation to submit various sustainability reports, VDMA says.

Christian Koehl Germany

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In the ongoing negotiations for long-term coil supply contracts for 2025, EU automotive suppliers remain in wait-and-see mode until steelmakers have come to terms with the big carmakers. They prefer to have steel volumes negotiated by the carmakers directly.

In principle, the suppliers need to get a clear idea of the pricing struck one level up between the bigger parties. They need to make sure their own steel intake prices are in step with those of the OEMs, so that they can operate profitably. This was not always the case in the past, a buyer at a tier-1 supplier cautions.

“The last two years we had higher [steel] prices than the OEMs, and ended up with losses in our own negotiations with the OEMs,” the buyer tells Kallanish.

In comparison with one year ago, OEMs are currently heard asking for a price reduction exceeding €100/tonne ($105). This is already a big revision on the €200/t reduction demanded in October.

Against that, mills are offering tier suppliers a y-o-y reduction of merely €20-40/t, which the suppliers find unacceptable, the buyer says. “We tell the mills: strike a deal with the OEMs first, and we want the same price,” he states. “We cannot accept a difference of even €1.”

He says he is willing to reduce his tonnage ordered from EU mills directly and shift to pooled deals bargained by the OEMs. Many tiers prefer to have some of their steel volumes negotiated by their bigger customers, the OEMs, in pooling-by-retail. “That means you hand over some of your control,” but it is likely to lead to better steel prices, the buyer notes.

According to him, pooling often means a disadvantage for mills, which prefer to have direct deals with suppliers. Many suppliers have retained a wait-and-see attitude, but once the first deals are struck, the next ones will follow quickly. “We are talking daily, but the gap between figures is still wide,” the buyer concludes.

Christian Koehl Germany

kallanish.com

 

Sources said there had only been limited restocking activity over the past few weeks amid weak consumption and oversupply.

“We are facing 20-30% fewer orders from end users compared with the same period last year,” a steel service center (SSC) source in Germany told Fastmarkets.

“Automotive-focused SSCs are booking less [HRC]. Demand is lower than last year, but it’s not terrible,” a mill source in Northern Europe said.

Offers for HRC with lead times in the first-quarter 2025 were heard at between €570 ($599) per tonne to  €600 per tonne ex-works, with some suppliers even aiming for more than €600 per tonne ex-works.

But Fastmarkets understands that no deals have been done at the higher end of those offer prices.

“No bookings [for HRC] starting with a ‘6’ are unachievable in such a market,” a buyer in the Benelux region of Northern Europe said.

And buyers estimated the tradable level at €550-570 per tonne ex-works on Thursday.

HRC from Italy was on offer to Germany at €580-600 per tonne delivered, sources said, but deals were done at €570-580 per tonne delivered earlier this week.

January delivery HRC, meanwhile, is already mostly sold out at first-tier mills, sources added.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €563.13 per tonne on Thursday, down by €0.87 per tonne from €564.00 per tonne on Wednesday.

The index was up by €3.13 per tonne week on week and by €4.78 per tonne month on month.

Sources said negotiations for long-term contracts with original equipment manufacturers (OEMs) in the automotive sector were ongoing and there were suggestions that the talks might stretch into January.

“Negotiations [with Automotive OEMs] are still under way, [but] there’s no relevant progress at the moment,” a distributor in the region said.

Buyers were looking to negotiate a discount of around €100-150 per tonne for first-half and full-year 2025 contracts, while mills were hoping for a more minor reduction of around €50-70 per tonne, Fastmarkets understands.

“I would hope to settle with €50 per tonne discount. A discount at €100 per tonne and over makes no sense – that would bring long-term prices almost to the same level as spot prices,”  a second mill source said.

In Southern Europe, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Italy at €561.88 per tonne on Thursday, down by €0.12 per tonne from €562.00 per tonne a day before.

The Italian index was also down by €0.62 per tonne week on week, but was up by €9.50 per tonne month on month.

One local integrated mill has been selling January delivery coil at €550 per tonne ex-works at the beginning of December, but sources said that such prices were no longer available. New offers from the mill came in at  €580 per tonne base delivered (€570 per tonne ex-works).

Another local steelmaker in Italy was aiming for €600-640 per tonne delivered (€590-630 per tonne ex-works) for February delivery coil, “depending on the tonnage and the client,” sources said.

No sales at target offer levels have been reported so far this week, with the maximum prices achieved reported at €590 base delivered (€580 per tonne ex-works), Fastmarkets understands and, in general, the tradable value for HRC was estimated at €570-580 per tonne base delivered (€560-570 per tonne ex-works).

Some market participants estimated the workable prices even lower – at €540-550 per tonne ex-works.

Mill sources, however, said such prices were no longer available.

“Energy prices soared by more than 10% month-on-month in Italy. For EAF-based steelmakers it means €20-30 higher costs per tonne of steel,” a producer source in Italy said.

In Italy, electricity prices in November jumped to  around €130.68 per MWh, up from 116.51per MWh in October, according to Italy’s exchange for electricity and natural gas spot trading, Gestore Mercati Energetici (GME).

Interest in steel imports, meanwhile, remained minimal in Europe, mainly due to the long lead times, the volatile market, the effects of safeguard measures and an anti-dumping probe into material from certain origins.

Turkish suppliers were accepting €550 per tonne CFR, duty paid, for tonnages of 10,000 tonnes or more, sources said.

But Asian mill were not very active due to the EU safeguards and pending anti-dumping investigation.

Notably, offers of HRC for February shipment from Southeast Asia to Italy were heard at €580 per tonne CFR, but this price was deemed too high by buyers.

“[At the moment], Turkey is the only safe origin to book [HRC] from,” a buyer in Italy said.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe, was €610-645 ($641-678) per tonne on Wednesday, unchanged from December 4.

A scrap cargo ship crash on Sunday on the Moselle River in Muden, Germany, has caused damage to a lock and a major blockage of 70 ships on their way to the Rhine.

Fastmarkets understands that it would take months to repair, disrupting steel trade flows and potentially raising transport costs for the 8.1 million tonnes of goods that move through the Moselle route.

These goods include ores, steel raw materials, mineral products, iron and steel products, fuels and other commodities.

International scrap prices have already risen as a result of the event, sources said, and it halted a lengthy downturn in prices in Turkey’s bellwether market.

Fastmarkets calculated the index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey, at $339.45 per tonne on Wednesday, up by $14.45 per tonne day on day.

The rise is likely due to the expectation that alternative and costlier transport methods to ship scrap metal and other goods will need to be taken, such as via truck and rail.

While rebar prices in northern Europe increased in the previous pricing session and sources said mills are pushing for higher market levels, one market participant said this could only be achieved for urgently needed material.

Meanwhile, wire rod prices in the region were also stable in the pricing period, with the market remaining flat for over a month since November 13.

Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe, was €600-610 per tonne on Wednesday, stable week on week.