Over 70 participants in the 1st EUROMETAL Webinar

EUROMETAL organized yesterday its first webinar on the subject of “After Covid-19: survival strategies for Steel Distribution, SSC and Steel Trade”.

This online event got 92 registrations and was attended by 71 participants.

Andreas Schneider, Chief Executive Officer at Stahlmarkt Consult, started by
presenting the COVID-19 impact regarding EU Steel industry and Distribution.

Yuriy Rudyuk, Partner at Van Bael & Bellis, presented the EU measures affecting trade in steel: Second review of the EU safeguards and other notable legal developments.

Colin Richardson, editor at Argus Media highlighted significant headwinds for EU steel markets in coming years.

The event was concluded by a discussion panel about the strategies and challenges for the steel distributors, SSC and steel traders. This panel moderated by Daniel Guinabert, EUROMETAL Director General, had the participation of Fernando Espada from TATA Steel Distribution representing the Steel Service Centres, Robert Kay from Ferona and Fabrice Guazzoni from ArcelorMittal representing the Multi-product Stockholding Distribution and Alexander Julius from Macrometal and Julian Verden from Stemcor representing Steel Trading.

EUROMETAL intends to continue with this format of online conferences until the end of this pandemic. A new webinar will take place in early September.

Third quarter ‘worst’ for longs, markets reopen: Irepas

The third quarter could be the worst in 2020 for long products, but raw materials should perform strongly thanks to markets rebuilding and government stimuli adding a push, says the International Rebar Exporters and Producers Association (Irepas).

Chinese demand is helping the steel industry rebound, with the country importing significant semi-finished steel and hot rolled coil in recent months to support its huge backlog of demand after Covid-19 restrictions loosened. However, there is more competition in the global market at the lowest price.

China typically produces 50% of the world’s steel, but that is now approaching 65% because of the downturn in the rest of the world and increased production in China. Strong domestic demand is preventing Chinese exports. It is now rather “…cheap steel from Europe” that is searching for destinations, Irepas observes.

Global longs demand is not as bad as widely reported, but mills operating at more than 60% of capacity utilisation are nevertheless “…blessed,” Irepas says in its latest short-range outlook seen by Kallanish. “Of course, those operating under 50% are in trouble.”

The Covid-19-driven backlog of building applications and delays in investments will reduce demand for all steel products. But, so far, long products have not been hit as hard as flats.

Stimulus activities are buoying up markets, as the rest of the world gradually reopens from lockdowns. Manufacturing and construction activity that was previously halted in many places is gradually and simultaneously boosting demand.

EU market sentiment is far more negative than pre Covid-19. Private investments may be put on hold but the public sector could use construction to stimulate the economy and inject money into it.

“Reopening means utilisation rates have been picking up from bottom levels,” Irepas says. “Scrap inventories were depleted in May as industry closures meant low scrap availability. June buying surpassed the levels for a normal month as scrap needed to be restocked.”

Antwerp Port’s first-half steel shipments drop steeply

Shipments of steel, one of the main products handled at the port of Antwerp, saw a noticeable drop in the first half of the year, according to statistics issued by the port this week.

In January-June, trans-shipments of iron and steel were -33.1% lower than in the first six months of 2019. The overall group of bulk goods in total saw throughput fall by -29%, with inbound and outbound flows being affected to the same degree, the port says in a note.

Dry bulk shipments fell by -13.1% in the reporting period, largely due to declining loads of coal. This decrease is partly attributed to reduced demand from the steel industry, but also to the rise of green energy, and due to the base effect of a strong second quarter in 2019.

The year-on-year drop is attributed mainly to the overall economic slowdown and global trade issues adversely affecting goods flows in the conventional breakbulk sector. “The coronavirus effect only comes on top of it,” a port spokesman tells Kallanish.

June was the strongest month for steel shipments at the port. This, however, does not necessarily indicate a recent surge in imports or exports. “Figures change quickly, depending on if a big vessel comes in on the last day of one month or on the first of the next,” the spokesman explains.

EU plans two more safeguard reviews

Two more reviews of the safeguard measures in place in Europe for steel imports are expected to take place by July 2021, Yuriy Rudyuk from the law firm Van Bael & Bellis explained during a webinar organized by EUROMETAL attended by Kallanish.

The new review is set to be opened by the end of the current year to find a solution for the exit of the UK from the European Union. As a consequence, safeguard quotas could be revised downward to factor in the volumes used by the UK market. Rudyuk explained there will be a number of problems to solve following Brexit. UK steelmakers are likely to request an exemption from safeguard quotas and the UK government could decide to impose its own measures to control imports, in some cases mirroring the existing European system.

Further in 2021, a sunset review of the measures is expected to be initiated to decide whether to extend the measures beyond their current deadline of July 2021. Rudyuk noted that in the past the European Commission never extended safeguard measures beyond its first timeline. However, in this case, an extension is likely, as the import restrictions in the US that originally triggered the EU safeguards are likely to remain in place.

An extension for a further period of three years will nevertheless present some challenges, in particular for the tariff-free quotas that will be calculated from July 2021.

German mechanical engineering industry sees weak demand continuing

Germany’s mechanical engineering industry continues to suffer from a slump in orders, with only a slight recovery expected in 2021, industry association VDMA said July 9.

According to a VDMA survey, more than half of mechanical engineering companies expect drops in sales of 10%-30% in 2020, with the current order situation assessed as “poor” having been severely affected by the economic downturn caused by the coronavirus pandemic.

Sources in the steel industry said orders from the mechanical engineering sector fell significantly at the height of the pandemic in Europe, but by not as much as from the automotive industry.

Following construction and automotive, the mechanical engineering sector is the third largest customer group for the German steel industry.

The steel sector supplies about one-fifth of the input purchases for machine building and 12% of those for the automotive industry.

Most companies in the steel supply chain remain at reduced capacity throughout summer with short-time working in place.

“On the demand side, there is little reason for an all-clear: 45% of the companies report a noticeable drop in orders, another 34% even severe ones. This confirms the gloomy picture of recent weeks,” VDMA chief economist Ralph Wiechers said.

Particularly engineering businesses with automotive customers were still reporting sharp drops in orders.

The VDMA said that the current situation would not suggest return to 2019 production levels any time soon.

“Although numerous leading indicators are showing the first signs of things brightening up, this optimism is expectation-driven and therefore very fragile,” Wiechers said.

Most companies in the sector still have capacity cuts in place, with 68% using short-time working, meaning reduced shifts and government aid for workers’ pay, 62% have imposed a hiring freeze and 17% have initiated staff reductions.
— Laura Varriale