Slow demand pushes European HRC prices down further; outlook mixed
In Northern Europe, buyer estimates of the tradable level came in between €620 ($660) and €640 per tonne ex-works.
A German mill reportedly sold HRC at €620 per tonne ex-works on Tuesday, but only for a limited tonnage, sources said.
May deliveries were still available from European mills, which is another indication of weak order books.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €630.00 ($670) per tonne on April 16, down by €8.96 per tonne from €638.96 per tonne on Monday.
The index was also down by €15.83 per tonne week on week and by €62.50 per tonne month on month.
Near-term expectations for prices were largely pessimistic among buyers, mainly due to a lack of real demand.
“Orders from the automotive sector are around 20% down year on year and there are no signs of a rebound, maybe even until the end of 2024,” a distributor in Germany said.
“Producers need to fill order books for the second quarter, they are chosing volumes over prices,” a source at a steel-service center said.
Despite numerous talks about production cuts being the only way to stop the downtrend, European mills were not announcing any immediate equipment stoppages.
Several sources, however, said that one Central European supplier stopped one blast-furnace in the first half of April.
In Southern Europe, Fastmarkets’ daily steel HRC index, domestic, exw Italy, was calculated at €622.08 per tonne on Tuesday, down by €0.42 per tonne from €622.50 per tonne on Monday.
The Italian index was down by €9.17 per tonne week on week and by €49.59 per tonne month on month.
Activity in the Italian market has also been subdued, sources said, with slow demand continuing to put pressure on prices.
Official offers for May delivery HRC from a local supplier were reported at €640 per tonne delivered on Tuesday, which nets back to 630 per tonne ex-works.
Buyers, however, estimated achievable prices at no higher than €615-620 per tonne ex-works.
No fresh import offers were reported on a Tuesday, sources told Fastmarkets, with Asian mills maintaining their HRC offers at €580-590 per tonne cfr for July-August arrivals.
US Steel Kosice extends blast furnace stoppage on weak steel demand
The company confirmed the extended downtime to Fastmarkets.
“We have adjusted our production capacity to market demand. We decided to extend a March 2024 planned outage of Blast Furnace No2 into the second quarter of 2024,” the company said.
USSK has three blast furnaces with a combined capacity of 5 million tpy of pig iron. The steelmaker produces hot-rolled, cold-rolled and hot-dipped galvanized coil.
Prices for flat steel in Europe have been falling non-stop since early February 2024, following a short-term rebound in January that was driven by restocking.
In March 2024, Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe averaged €691.99 ($742.78) per tonne, down by €46.29 per tonne from €738.28 per tonne in February.
On April 15, the index was calculated at €638.96 per tonne, down by €0.21 per tonne from €639.17 per tonne on April 12.
Market participants told Fastmarkets they were not ruling out a further downward correction in April, given the weak demand and plentiful supplies.
Costlier energy impacts Spain’s steel industry: Unesid
The forecast for 2024 is moderate optimism, delegates tell Kallanish on the sidelines of the EUROMETAL Steel Net Forum Iberia in Santiago de Compostela.
“The Spanish steel industry faced persistent challenges due to the high energy price,” Unesid general director, Andrés Barceló, explains. The average of the electricity pool was 87.1 KWh, almost double that in 2019, affecting the sector’s competitiveness. Likewise, Unesid assures that high CO2 costs and the slowdown in European steel demand continue to hamper activity.
“Despite the turbulence of the last two years, the initial data for 2024 invites optimism,” adds Barceló.
Barceló confirms that the industry is committed to decarbonisation but needs the support of the Spanish authorities to guarantee the competitiveness of steel companies.
In 2023 the country produced 11.4 million tonnes of steel, 1.2% less than the previous year. Ferrous scrap recycling was up 3.2% year-on-year to 9.3mt.
Domestic consumption reached 12.6mt, a growth of 1.2% compared with 2022. From these, imports by third countries represented more than 30% of total demand.
Spain remained a net importer in 2023. The country had a negative trade balance, with entries exceeding exports by 2.5mt. Imports rose by 3.3% y-o-y to 10.1mt, while shipments abroad totalled 7.6mt, or 5.8% less than 2022, Unesid data shows.
Todor Kirkov Bulgaria
Iberian steel distributors remain cautious about market recovery
Spanish and Portuguese steel distributor representatives foresee market conditions “without major changes” in the following months in a complex global scenario. Steel prices are seen stable with fluctuations not exceeding €5-10/tonne ($5.3-10.6/t), Kallanish hears during Friday’s EUROMETAL Iberia Steel Net Forum in Santiago de Compostela.
The new economic reality is seen requiring new solutions from both producers and the distribution chain. The sector says some old concerns remain, while it faces a challenging scenario.
“There is no big change in demand in the Iberian Peninsula since mid-2023,” comments Andrés Barceló, general director of the steelmakers association Unesid. “This is attributable to the EU economic crisis, and the conflicts in Ukraine and the Middle East. Inflation is also concerning.”
The executive confirms that the region has enough capacity to supply the market although steel production fell in 2023. The Spanish steel industry faced persistent challenges due to high energy prices and growing imports from non-EU countries, Barcelo observed.
According to the Spanish distributors association Unión de Almacenistas de Hierros de España (UAHE) president Roberto González, stocking in Iberia remains at a stable and healthy level, despite weak demand. He considers that by having undertaken an innovation process, companies in the sector are improving their services.
“Value is being added to the distribution chain because the market demands it. Digitalisation improves the sustainability and profitability of services,” he says. “Good management by companies in the face of the challenging economic panorama does not consist only of selling steel, but also of supplying better and innovative services to customers.”
Sustainability and a good image of the distribution chain must be an additional argument to grow the relationship with customers, points out Manuel Nobre, president of the Portuguese steel distributor association Açomefer.
“Our chain is an essential and fundamental link that completes the steel industry. We have problems with the image. Society should not take us as mercantilists or speculators, dismissing the efforts of our companies. We have to communicate and value customers. It may sound somewhat theoretical, but to clean up the image we need to better promote what we do within the industrial chain, with added value, so that the client understands it better,” Nobre comments.
A representative from a service centre expresses concern that if distributors do not uniformly maintain sales margins, investments and technology improvement will be in vain.
“Efforts in maintaining margins should be a priority for all distributors, as they are for steelmakers,” he comments. “The end user must understand that our service has a cost, which has been constantly increasing in recent years. The diversification of services together with a good pricing policy can guarantee our margins.”
The participants agree that attracting young specialists to the steel industry should be a priority since the sector does not seem as attractive to work in as others.
“We hope that technological innovations and the development of renewable energy sources for steel manufacturing will bring more and better-qualified workforce in next years, but to happen this the industrial chain must improve the business environment,” urges Arimany Ferro executive Josep Arimany.
Todor Kirkov Bulgaria
Iberian distributors gathered in Santiago de Compostela
EUROMETAL Steel Net Forum Iberia 2024 brought together 185 participants in Santiago de Compostela.
This event was organized in collaboration with Unión de Almacenistas de Hierros de España (UAHE) and the Associação Portuguesa dos Grossistas de Aços, Metais e Ferramentas (Açomefer).
The Steel Net Forum Iberia 2024 featured presentations by Luis Ángel Colunga (Ministry of Industry) the special commissioner for the Industrial Decarbonization PERTE, Colin Richardson from Argus Media, Charles Kirby from EY, Andrés Barceló from UNESID, Eva Fraguela from Megasa and Àngel Sánchez from SILO.
It also featured a panel discussion on “Steel Distribution in Iberia: are we prepared to also face the new challenges?” moderated by Juan Carlos Núñez and with the panelists: Manuel García Neira (Hierros Diego), Manuel Nobre (Açomefer / FAF Produtos Siderúrgicos), Roberto Gonzalez (UAHE / Tirso CSA) and Jose Arimany Palau (Arimany Ferros).
Here you will find some repercussions of the event in the press:
- Iberian steel distributors remain cautious about market recovery
- UNESID cautiously optimistic for Spanish steel sector in 2024
- Costlier energy impacts Spain’s steel industry: Unesid
Thyssenkrupp to cut steel output in Germany by around 20%
During a meeting of its executive board on Thursday April 11, the company decided to scale back steel output at its largest steelmaking hub in Duisburg, North Rhine-Westphalia, it said in a press release on the same day.
The Duisburg site has a production capacity of around 11.7 million tpy of pig iron at four blast furnaces (BFs) and around 11 million tpy of crude steel.
The company said steel output will be brought down in line with actual steel shipment levels over the past three years. The registered steel shipments from Thyssenkrupp’s steel assets were around 9-9.5 million tonnes, while actual production levels were noticeably higher at 11.5 million tonnes, the company said.
The company operates mainly in the flat steel products sector and is one of the largest global suppliers of high-grade flat steel.
Thyssenkrupp said it expects shipment volumes to remain at mentioned levels, that is around 20% below previous production levels.
Rising costs of production, increased import pressure from Asian countries and ongoing deterioration of steel balance were the key factors undermining the competitiveness of Europe-produced steel, the company said.
“Shipping volumes are expected to remain at the level registered over recent years in the future as well. In comparison, the total production capacity still installed today is far too high, meaning that the entire production network is structurally underutilized,” Thyssenkrupp said in the release.
The company said that planned measures would entail job cuts, but did not give details on the number of losses.
Fastmarkets asked Thyssenkrupp for further information on the exact steps and the timeline for scaling production down but the company did not comment.
“Most likely it will be one to two BFs down, but then rolling lines in Bochum also need to be adjusted. Hard to say exactly at this stage,” a source in Germany said.
Speculations about output and job cuts at Thyssenkrupp first emerged in February this year, but the company denied all allegations at the time.
European flat steel market brief
Prices for flat steel in Europe have been falling non-stop since early February 2024, following a short-term rebound in January driven by restocking.
In March 2024, Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe averaged €691.99 ($742.78) per tonne, down by €46.29 per tonne from €738.28 per tonne in February.
On April 11, the index was calculated at €640.35 per tonne, down by €2.90 per tonne from €643.25 per tonne the previous day.
And market sources were not ruling out further downward correction in April amid weak demand and oversupply.
“For months, we have been talking about the need to reduce steel production in Europe, but nothing has been done,” a buyer in Germany said. “[HRC] prices have decreased a lot since January and keep sliding, but nobody is booking because lead times remain short and the downtrend has not stopped.”
And sources say end-user demand for steel in Europe is unlikely to rebound strongly in 2024, but rather remain rather stable at low levels.
This view follows outlooks Worldsteel and Eurofer, the European steel industry association.
Notably, in its short-range outlook published in April 2024, Worldsteel pointed out that the EU remains the region currently facing the biggest challenges.
“The region and in particular its steel using sectors are challenged on a multitude of fronts – geopolitical shifts and uncertainty, high inflation, monetary tightening and partial withdrawal of fiscal support, and still high energy and commodity prices…After only a technical rebound in 2024, the region’s steel demand is expected to finally show a meaningful recovery with a 5.3% growth in 2025. The forecasted steel demand for the EU in 2024 is only 1.5 Mt higher than the pandemic trough in 2020,” Worldsteel said.
According to Eurofer, EU apparent demand is expected to recover by 5.6%, rising to 137 million tonnes in 2024. This was revised down its previous upbeat forecast of a 7.6% recovery for the year.
Will other European steelmakers follow?
In the past years, crude steel output in Europe has been declining.
In 2022, crude steel production across Europe amounted to 136.3 million tonnes, down from 152.6 million tonnes in the previous year. The decline was due to massive output cuts implemented by European mills in the third and fourth quarters of 2022, facing deteriorating demand and falling steel prices.
In 2023 steel output sank even deeper, even considering the low comparative base in the previous year. Crude steel production in 2023 was 126.3 million tonnes.
In the same year, steel production in Germany, which is the Europe’s largest steelmaker, hit the lowest market since 2009, reaching just about 35.4 million tonnes of steel. This was down 3.9% year on year amid challenging market fundamentals and high costs of production.
Some market sources believe this tendency will prevail in the upcoming years.
“We are heading toward a post-industrial society, with less steel needed in the upcoming years. [The steel] industry is clever enough not to create overcapacity,” a mill source in Europe said.
“Steel production in Europe would be no more than 120 million tonnes [per year] by 2030,” another producer source told Fastmarkets.
‘Green transformation unaffected’
Thyssenkrupp stressed that production realignment measures will not affect its green transformation plans.
“The construction of the first direct reduction plant at the Duisburg site will continue as planned, supported by the funding released by the federal and state governments for this purpose and essentially relating to the ambitious ramp-up of the plant’s hydrogen-based operation,” the company said.
Thyssenkrupp is building a 2.3 million tpy DRI module in Duisburg and by 2030, the plans be capable of producing around 5 million tpy of low-CO2 steel, Fastmarkets reported previously.
https://dashboard.fastmarkets.com/a/5108753/thyssenkrupp-sets-aside-funds-for-hydrogen-powered-dri-plant
Most European BF-based steelmakers have been investing in green steel projects in the past years, cutting emissions to comply with strict EU regulations.
But market sources did not expect new capacities to result in oversupply in the steel market because old furnaces will be gradually switched off.
“Interest for fossil-free steel will be bigger than supply, so in the short term there definitely will be room for new capacities,” a mill source said.
UNESID cautiously optimistic for Spanish steel sector in 2024
The Spanish steelmakers association UNESID has shared its 2023 data regarding the steel sector and its forecasts for this year.
Accordingly, the association stated that in 2023, due to high energy costs, local crude steel production decreased by 1.2 percent year on year to 11.4 million mt, which was the level recorded in 2020 and that the sector faced challenges because of the same reason. Despite the drop in production, scrap recycling activities in the country increased by 3.2 percent year on year to 9.3 million mt. Thus, Spain remained among the main recyclers in the EU. However, in the given year, domestic sales amounted to 6.4 million mt, down by 1.3 percent compared to the previous year, which was closer to the level recorded in 2020.
UNESID pointed out that demand in the local market rose by 1.2 percent year on year to 12.6 million mt in 2023. Specifically, demand for long products increased by 4.3 percent, which offset the 0.5 percent decrease in flats demand. Yet, imports from third countries represented more than 30 percent of total domestic consumption. Regarding foreign trade, the association highlighted that in 2023 steel imports went up by 3.3 percent year on year to 10.1 million mt and that imports from third countries, which showed a 1.3 percent decrease, were at the highest level of the last 15 years at 4.1 million mt. On the other hand, total exports from Spain dropped by 5.8 percent compared to 2022 to 7.6 million mt, while exports to third countries were down by 0.7 percent year on year to 2.1 million mt, which was one of the lowest export levels.
Andrés Barceló, general director of UNESID, stated that, despite the ups and downs of the last two years, the preliminary data for this year shows optimism, though it should be approached with caution. Mr. Barceló also pointed out that activity figures have shown some improvement since the end of last year. He also warned that carbon costs and a drop in European industrial demand will continue to affect the steel sector. “The industry is committed to decarbonization, but in order to achieve it, it needs the authorities to facilitate the conditions that guarantee the competitiveness of its companies,” Barceló added.
Blastr appoints Mark Bula as CEO
Blastr Green Steel (Blastr) has appointed Mark Bula as its new chief executive officer to lead the development of the greenfield venture, which plans a steelworks in Inkoo, Finland.
Mark Bula will be based in Finland, taking over for Hans Fredrik Wittusen, who has led Blastr through an important project maturation and pre-feasibility stage.
With 35-years of experience in the global steel industry, “Mark has delivered commercial development that has unlocked significant financing for start-up projects. He also developed go-to-market strategies in the Nordics, Europe, the Middle East, and the US,” says Lars-Eric Aaro, chairman and co-founder at Blastr.
Bula will drive Blastr’s strategic development, capital-raising, and project execution, leveraging extensive C-suite and start-up experience, Kallanish hears from Blastr. This includes being first in demonstrating European demand and an attainable price premium for decarbonised steel, the company notes.
Mark Bula previously was one of the people behind the other Nordic green-steel-greenfield venture, H2 Green Steel in Sweden, and used to be with US company Big River Steel as chief commercial officer.
He will assume the position in May and will, together with Hans Fredrik, ensure a seamless transition and continuity and momentum in achieving the Company’s strategic objectives, Blastr says.
Christian Koehl Germany
Turkey restricts exports to Israel amid ongoing attacks in Gaza
Turkey’s Ministry of Commerce has announced that it has restricted the exports of 54 product groups to Israel, which continues to violate international law with its attacks on Gaza in Palestine since October 7, 2023.
No details regarding these restrictions, which came into force as of today, April 9, have been disclosed yet. There was already public pressure for measures against Israel. Market sources see this decision as “more of a political one”, SteelOrbis understands.
The restricted products include rebar, wire rod and flat steel products, as well as steel pipes and fittings, profiles, iron and steel construction materials, iron-steel wire, cement, aviation and jet fuel and metal processing machinery. It was reported that the measure will remain in effect until Israel declares a ceasefire in Gaza and allows an uninterrupted flow of humanitarian aid to the Gaza Strip.
Meanwhile, in the January-February period this year, Turkey exported 49,990 mt of rebar and 11,387 mt wire rod to Israel. In the given period, Israel was Turkey’s second and fourth main market for rebar and wire rod exports, respectively.
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