Orders at German construction companies in the first quarter were 18% lower than in the corresponding 2022 period, according to their association, Hauptverband der Deutschen Bauindustrie (Bauindustrie).
The year-on-year dip was especially pronounced for residential construction, at nearly 40%, which could not be balanced by commercial or public projects, says Bauindustrie managing director Tim-Oliver Müller. The drop in orders foreshadows a drop in revenue, which in the first quarter was already 8% down year-on-year.
Although the high order backlogs built up in previous years had a stabilising effect, these are melting down rapidly. “The traditional spring revival in construction has failed to materialise this year,” Müller says.
Companies were correspondingly pessimistic about the coming 12 months: 35% of the construction companies surveyed in a recent poll expected their business situation to deteriorate. House construction companies were especially pessimistic, at 43%. Only 8% of companies polled expected an improvement.
The lull in construction was an issue debated at Kallanish’s recent European Steel Markets conference in Amsterdam. “Our German customers in the construction market are very worried, and the Netherlands as well,” said Friso de Vries, managing director of Vogel Stahl, a distributor on the German-Dutch border.
A buyer at a rebar bending shop puts it more drastically: “I am not getting ‘few’ orders, I am getting none.” Consequently, he has suspended purchases of rebar for many weeks.
Christian Koehl Germany
Steel industry technology and engineering supplier Sarralle Group tells Kallanish it has won a new order from Acerinox for the upgrade of its Palmones unit in Spain.
After having successfully built and commissioned a crushing slag plant in June 2022, Sarralle will now execute the second phase of the project by supplying new treatment and recovery equipment.
The investment includes design, engineering, automation and control technology.
“The treatment and recovery of slag is still one of the most challenging operational processes since stainless steel contains chromium and iron and consequently these valuable components have potential environmental and economical profit,” Sarralle says.
With the new metal recovery plant, Acerinox will be able to treat 70 tonnes/hour of stainless steel slag, according to the company.
Todor Kirkov Bulgaria
Stahl-Holding-Saar, the German parent of steel mills Dillinger and Saarstahl, was expecting the “toughest time” in the company’s history, driven by rising scrap shortages and expected higher production costs, CEO-elect Stefan Rauber said May 26. Rauber will take over as CEO from Karl-Ulrich Kohler on July 7.
On a call to announce the change in leadership of the supervisory board, the company said the energy transition and move towards lower carbon intensive steel will be an unprecedented 10-year challenge.
Asked by S&P Global Commodity Insights whether the company was expecting a shortage in scrap to come as increasingly more European steel mills are moving toward the more-scrap-intensive electric arc furnace production route, Rauber said it was already facing a material tightness and the scrap shortage will be even more intense in the future.
Asked whether he would also expect a shortage of green, or lower carbon emission steel, he said the market was very small in terms of tonnage.
The company is still waiting to receive funds from the government to start implementing the technical changes they have planned to receive lower carbon emissions in steel production with an estimated cost of Eur3.5 billion ($3.8 billion).
The plans include the commissioning of a direct-reduced iron plant, closure of one blast furnace and two new electric arc furnaces by 2030 and the commissioning of a third EAF by 2045.
Salzgitter, another German steelmaker, received government of Eur1 billion in April for lower CO2 steelmaking.
Rauber was optimistic Dillinger and Saarstahl will receive funding despite an open letter issued this week by trade union IG Metall that Germany’s biggest steelmaker Thyssenkrupp could face cuts to its funding for a DRI plant.
Current market for green steel small amid ramp-up
While the spot market for carbon-accounted steel remains small, European mills are in the market and testing offers currently asking for a premium of certified hot-rolled coil up to Eur300-350/mt but buy-side sources reporting workable levels at Eur100/mt.
Platts, part of S&P Global Commodity Insights, assessed carbon-accounted hot-rolled coil at Eur100/mt on May 25 for material with CO2 content at max 2.1 mt and below.
Outgoing CEO Kohler said the long steel mill Saarstahl and platemaker Dillinger combined will be offering 3.5 million mt of green steel from 2027 with a target to achieve the tonnages by 2030.
Around 1.6 million-1.7 million mt/year of long steel was expected to be produced while the plate arm at Dillinger was expected to produce 1.8 million-1.9 million mt/year of plate.
Author, Laura Varriale
May has been a month of poor orders for French rebar. Quiet activity persists, with material only being bought back-to-back, while export sales to other European markets have reduced considerably.
Distribution sources say last week was slightly livelier in terms of rebar orders but new construction projects in France are being postponed. Buyers’ stocks are said to be relatively low as is the market’s appetite for material. Demand in May has been for one or two truckloads each week. Local mills are implementing production cuts but, given the deadlock in the European construction industry, this does not seem to be having a positive effect on consumption.
After falling in the first half of the month, domestic rebar prices are now keeping mostly stable. Values are at between €650-680/tonne ($697-729) delivered, depending on volume and customer, Kallanish notes.
French private residential construction permits have been falling this year together with the number of new building sites. French construction federation Fédération Française du Bâtiment (FFB) reported earlier this month that in the first quarter construction permits fell by 31% year-on-year.
Natalia Capra France
Southeast Europe (SEE) crude steel production increased in April, according to the latest worldsteel data monitored by Kallanish. Regional output amounted to 317,861 tonnes, compared to 296,394t in March.
In the first four months of the year, regional production decreased to 1.07 million tonnes from 1.44mt in January-April 2022.
However, worldsteel did not provide data for April steel production in Bosnia or Moldova.
Serbia was again the largest steel producer among the seven countries of SEE, which also include Bulgaria, Croatia, Slovenia, Bosnia, North Macedonia and Moldova.
Serbia’s production of crude steel totalled 515,800t in January-April, down by 12.3%.
Second-largest producer in the region Slovenia saw production in the first four months of the year at 206,213t, down by 5.4%.
However, third-largest steel producer Bulgaria saw its crude steel output up by 2.8% to 198,100t.
Fourth-largest steel producer North Macedonia produced 91,181t, up 13.2% on-year.
Fifth-largest Croatia produced 63,375t, down 7.8%.
HBIS Group Serbia Iron & Steel restarted blast furnace No.1 in March at its Smederevo works. The enterprise will operate both blast furnaces, but will suspend one BF in summer for maintenance (see Kallanish passim).
Special steelmaker Slovenian Steel Group (SIJ) reported a 35.3% on-year increase in revenue in 2022 to €1.303 billion ($1.44 billion), of which 84.6% was generated by exports. According to the company, even though production volumes were lower compared to 2021, the group was still able to generate higher sales revenue and improve other financial indicators.
The Bulgarian Association of Metallurgical Industries (BAMI) meanwhile warned earlier this year of increased imports into the EU of rebar and light sections of non-alloy and other alloy steels from Egypt and Algeria.
Svetoslav Abrossimov Bulgaria
Europe’s spend on oil, gas and coal increased from 4% to 10% of GDP last year and this expenditure will remain elevated for the foreseeable future, guest speaker Ole Rolser from McKinsey & Co. said at last week’s Bureau of International Recycling (BIR) Ferrous Division meeting in Amsterdam.
Attributing “record-high” global gas prices last year directly to the conflict in Ukraine, Rolser noted that for energy-intensive industries, many of which form part of the recycling industry’s customer base, these huge energy costs had led to production cuts or even shutdowns. Aided by a notable shift in householder behaviour, Europe’s power demand declined by 3-4% last year when compared to 2021 and by 6-8% in the period from September.
Crude oil prices had now returned to levels seen before the Ukraine conflict, Rolser said, predicting a continuing decline before settling at around $50-60 per barrel, Kallanish notes.
Following a question from outgoing BIR president Tom Bird about the extent of energy company profit-taking now that prices had returned to lower levels, Rolser explained that these businesses were in a high-investment industry that had to contend with substantial volatility. He also noted a greater reluctance to invest owing to the push towards decarbonisation.
In response to a question from George Adams of SA Recycling in the USA, Rolser expressed the view that, with the necessary investment, the EU could become energy-independent of Russia within just a few years. In his presentation, Rolser indicated that the EU has historically relied on Russia to meet around a third of its gas supply, with Germany, Italy and Poland the most exposed.
Burcak Alpman Turkey
Italian steelmaker Acciaierie d’Italia (ADI), the joint venture between state company Invitalia and ArcelorMittal, has restarted blast furnace No. 2 which has been idled since July at its Taranto steelworks, informed sources confirm to Kallanish.
At the moment the equipment is casting pig iron. Some temporarily laid off workers are also resuming work. Production is expected to increase at the plant but the company has not revealed any figures and did not offer comment when contacted by Kallanish. The official number of laid off workers remains at 1,800 for the moment.
The group produced 3.5 million tonnes of crude steel in 2022 and 3.3mt of pig iron generating revenue of €3.9 billion ($4.2 billion) and a positive Ebitda of €327 million. In 2021, it posted a turnover of €3.3 billion, up from €1.6 billion in 2020. In 2021, it produced 4.1mt of crude steel, an increase from 3.4mt in 2020.
This year, the steelmaker has vowed to produce about 11,000 tonnes/day of pig iron, or 4 million tonnes/year, using two to three blast furnaces. This compares to an average of 20,000 t/d that could be produced without layoffs.
Acciaierie d’Italia employs over 10,000 workers. It is currently operating with BFs Nos.1, 2 and 4. In the second half of 2023, it will start the refurbishment of blast furnace no.5, which has been idle for several years, and begin construction of an electric arc furnace.
Natalia Capra France
European apparent steel demand is set to continue remaining below real consumption this year, exacerbating challenges for the European domestic industry, Heather Wijdekop, director commercial Ijmuiden at Tata Steel Europe, said at Tuesday’s Kallanish Europe Steel Markets conference in Amsterdam.
Wijdekop noted that until the Covid outbreak in 2020, apparent and real demand patterns for steel were following strictly seasonal movement, giving the opportunity for the industry to plan and strategise accordingly. Since 2020, the seasonality has been lost and volatility in demand patterns has increased.
During the second half of last year, strong destocking activity started in the European steel sector. This has pushed apparent demand below real steel consumption. This trend is ongoing and expected to continue further this year and the next, forcing suppliers to change their attitude towards the market, Wijdekop added.
According to Eurofer, apparent steel consumption in Europe this year is set to move down 1% year-on-year after a 7.2% y-o-y contraction in 2022. Real consumption, on the other hand, will rise 0.3% y-o-y after 0.2% y-o-y growth last year.
Other speakers at the conference concurred, pointing out there are some bright spots for steel demand, such as automotive, but low stocks in the supply chain and slow recovery of apparent demand are creating issues.
Francois-David Martino, chief executive of Becker Stahl-Service, confirmed that automotive demand has recovered faster than expected since the end of last year, creating disruptions in the supply chain. “Last year, the service centres and distributors reduced stock levels, but now we find ourselves in a difficult spot due to the recovery of demand in the automotive sector,” he explained.
Further challenges could come from European domestic supply of steel products, currently facing delays due to ongoing issues at blast furnaces as well as finishing lines on the continent. “From our side, we have turned the corner on the supply constraints and our situation is improving,” Wjidekop noted, referring to the cold rolled coil supply disruption that triggered a force majeure declaration at Ijmuiden in February. “There will nevertheless continue to be some supply constraints for sure in Europe.”
On the conference sidelines, an executive from another European steelmaker noted that if a sudden improvement in sentiment in Europe would trigger better-than-expected demand, this could push the continent back into a scenario similar to the one seen during the 2021 recovery following Covid production disruption.
Emanuele Norsa Italy
Voestalpine Tubulars says it will take over section tubes production facilities from Vallourec Germany, to be able to cover an enlarged portfolio.
In the future, the product range of welded hollow sections at voestalpine Krems, Austria, will be supplemented by seamless hollow sections from voestalpine Tubulars at the site in Kindberg, also Austria. To that purpose, voestalpine Tubulars has purchased the related equipment, including all rights, from Vallourec Germany, Kallanish learns from the Austrian company.
Voestalpine Tubulars is active in the production of seamless round tubes and, in future, will thus be able to produce square and rectangular hollow sections up to large formats and wall thicknesses seamlessly hot-rolled. The firm adds it will give further information at a later stage.
Christian Koehl Germany
EUROMETAL Regional Meeting of SSC from the region Austria + BENELUX + Germany was convened in Mudersbach (DE) on 4 May 2023. This event took place at the facilities of Knauf Interfer Stahl Service Center “Werk Walter Patz”.
The meeting started with a presentation of Knauf Interfer delivered by chairman Matthias Kessel-Knauf and plant manager Heiko Klös.
Kessel-Knauf explained the production and distribution network for steel and aluminum oriented and focused on the European market specialized in processing and storage of coils, stamping of blanks for the automotive, cold rolling electrolytically galvanized and tinned and profiles and assemblies made of aluminum.
The working group proceeded with a presentation on short and medium term perspectives of the German flat steel market by Andreas Schneider from Stahlmarkt Consult and another on CBAM and its impact on the German steel market by Deloitte partner, Michael Schäfer.
Both presentations provoked a lot of interaction between the participants who highlighted a lot of doubts regarding the CBAM application process.
Following discussions on reducing emissions and energy consumption, Kim Henrich presented KÜBLER energy-saving hall heating system.
Thomas Niederhofer, Head of Business Unit Steel at Knauf Interfer and EUROMETAL Chairman for the German-speaking SSCs presented the Survey results on absenteeism and accidents in the SSC industry prepared by EUROMETAL. He also advocated the creation of a working group for load securing of vertically loaded slit strips and ideas for possible solutions.
Those present showed interest in continuing both actions highlighting the interest in having more participants to increase the representativeness of the branch.
The event concluded with a visit to the Knauf Intefer Steel Service Center. The working group meeting in Mudersbach was attended by 23 participants including a lawyer in charge of monitoring and enforcing EUROMETAL’s compliance rules.
It was also announced the intention to organize the next SSC Arbeitskreis in mid-May 2024 at the Stahlo Stahlservice premises in Gera.