SSAB signs letter of intent with Norway’s Smith Stål for fossil-free steel deliveries
Swedish steelmaker SSAB and Norwegian stockiest and distributor Smith Stål have signed a letter of intent Sept. 30 for the future deliveries of fossil-free steel, SSAB said in a statement.
The companies did not disclose the volumes of the agreement.
SSAB has developed two types of low-carbon steel — SSAB zero and SSAB fossil-free steel. SSAB zero is based on recycled steel scrap and produced with fossil-free electricity and biogas, while SSAB fossil-free steel is produced from iron ore using the HYBRIT technology developed together by SSAB, iron ore producer LKAB and energy company Vattenfall.
The technology, which has been tested on a pilot scale, uses hydrogen produced with fossil-free electricity to produce iron, the primary raw material in steelmaking and is expected to be available commercially from 2026 onward.
“It is a great pleasure for our company that we in the future can deliver SSAB’s fossil-free steel to our customers in Norway,” Eirik Berg, director at Smith Stål, said. “Being top 3 among Norwegian steel distributors, we feel a great demand on us when delivering to industry, building and offshore segment.”
Smith Stal provides a stock of plates, beams, hollow sections, pipes and bars and has also its own service centers to produce value-added steels.
“I am happy to welcome Smith Stal as a fossil-free steel partner, adding another distribution partner to our very important Norwegian market,” Matts Nilsson, SSAB’s head of sales Sweden and Norway, said. “Together we are building a strong value chain for our Norwegian customers.”
The agreement between SSAB and Smith Stal is the fourth one that the steelmaker has signed for its future steel deliveries in only two weeks.
Following the market trend and recent technology innovations, Platts, part of S&P Global Commodity Insights, launched Sept. 11 the first ever carbon-accounted rebar and medium sections assessments. It previously launched in May 2023 the world’s first carbon-accounted flat steel assessment for hot-rolled coil.
Platts last assessed Northwest European hot-rolled coil carbon-accounted at Eur625 per metric ton ex-works Ruhr Sept. 27, up Eur5/t on the day.
Platts last assessed Northwest European carbon-accounted rebar at Eur645/t ex-works Northwest Europe Sept. 25, down Eur10/t on the week. Platts assessed European carbon-accounted medium sections at Eur845/t DDP Europe Sept. 25, down Eur10/t on the week.
European HRC prices edge lower on sluggish demand, continuing destocking
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €541.67 ($604.66) per tonne on Monday, down by €3.54 per tonne from €545.21 on Friday September 27.
The index was down by €14.33 per tonne week on week and by €49.58 per tonne month on month.
Official offers remained limited in the market, with deal prices decided on case by case basis, Fastmarkets understands.
One integrated mill in Northern Europe was heard offering HRC at €570 per tonne ex-works.
But market participants estimated the workable level at €530-550 per tonne ex-works.
One buyer source told Fastmarkets the situation was likely to change once China’s Golden Week national holiday (October 1-7) had come to an end.
The source said China would change the direction of steel prices after the holidays, leading to an uptick that will even be felt in the European HRC market.
On Friday, China’s central bank announced several measures to support the economy to meet this year’s 5% growth target, resulting in positive sentiment across the Chinese steel market.
But a second buyer source told Fastmarkets the situation in Europe might turn out to be more complicated.
“The automotive industry is still struggling and destocking continues,” the source said, adding that that rock bottom HRC prices might be close and that some positive changes were likely before the end of the year.
In Southern Europe, Fastmarkets’ corresponding daily steel HRC index domestic, exw Italy was €539.00 per tonne on Monday, down by €2.67 per tonne from €541.67 per tonne on Friday.
The Italian index was down by €17.25 per tonne week on week and by €52.25 per tonne month on month.
In Italy, one domestic supplier was heard offering HRC at €560 per tonne delivered, with lead times ranging from late October to early November. This would be equivalent to €545-550 per tonne ex-works, according to sources.
Other European suppliers were heard offering HRC to Italy at a similar level, but some deals were heard at €540 per tonne ex-works, Fastmarkets understands.
Buyer estimates for the workable market level came in at €540-550 per tonne ex-works.
Some sources said that even €520-530 per tonne ex-works could be achieved for larger tonnages, although such levels could not be widely confirmed.
Interest in imported HRC, meanwhile, remained limited in Europe.
LME Week: European steel sector committed to decarbonization despite ongoing economic woes
Downturn in Europe
Steel consumption in Europe has been deteriorating in 2024 so far, and European steel industry association Eurofer has downgraded its outlook for the sector several times already this year.
Apparent demand is expected to recover by 1.4%, rising to 127 million tonnes in 2024, Eurofer said in the latest report in July – a downward revision from the previous, more optimistic, forecast from the end of April, when it predicted a 3.2% recovery to 130 million tonnes.
Notably, the automotive and construction sectors, the two key steel-consuming sectors, are both facing downturns.
Automotive is now expected to decline by 3% in 2024 (revised down from a 0.4% decline in a previous outlook) before recovering in 2025, with a predicted increase of 2.3% (up from a previous estimated growth of 0.8%).
“We have around 20% fewer orders from the automotive sector year on year,” a steel service center source in Germany told Fastmarkets.
One of Germany’s leading car producers, Volkswagen, is considering closing of some German factories, claiming that the transition to electric vehicles (EVs) has been “brutal” for the European car market.
The downturn in the automotive sector was reflected in Eurofer’s latest quarterly report.
“Uncertainties around the [introduction] of EVs and delays to launches of new models – many of them, hybrid or fully electric vehicles, preparing the ground for the ban on petrol cars in the EU by 2035 – have proven [to be] unsupportive factors [in terms] of consumer demand. Coupled with the lack of facilities such as recharging points, they have also delayed investment decisions by carmakers,” Eurofer said in the report.
Construction, which is the largest steel-using sector and represents 35% of total steel consumption in Europe, is widely expected to have declined for the second year in a row in 2024, although Eurofer predicts the decline in construction activity will slow to 1.4% rather than its previous prediction of a 1.9% decline.
Despite the looming challenges, however, European steelmakers remain committed to the green steel transition and expect the market for green steel to grow exponentially in the upcoming years.
Public investment in ‘Green Steel Hubs’
The EU is fully committed to the transition to green steel, with multi-billion investment projects announced and more than 50 million tonnes of new steelmaking capacity expected to come online in 2025-2027, according to Fastmarkets estimates.
And in 2023-2024 alone, more than €10 billion ($11.1 billion) in public investment has been granted by European governments to finance new green steel capacity among producers in Germany, France, Spain and Sweden, among others.
“The steel sector is a backbone of the European economy. To meet EU’s climate goals, it needs support, especially [at a] time like this,” a mill source told Fastmarkets.
Green steel premiums a challenge
In the past few years, European steel producers have accelerated their decarbonization efforts and the new market for steel with a reduced-carbon footprint has emerged. with all the major flat steel suppliers in Europe developing their own green steel brands – XCarb, Arvzero, SSAB Zero, Bluemint, Greentec, among them.
But there is no common standard or official definition for “green steel” as yet.
Fastmarkets’ methodology, however, provides a the following definition for European green steel: “Steel produced with Scope 1,2 & 3 emissions of maximum 0.8 tonne CO2 per tonne of steel.”
Sources estimate that green steel volumes traded in Europe have amounted to about 100,000 tonnes so far in 2024.
Offers for green steel produced in European electric-arc furnaces and with emissions for Scope 1,2 and 3 of below 0.8 tonnes per 1 tonne of steel were reported at €200-350 per tonne in September.
However, most buyers estimated the achievable premiums for green steel with Scope 1, 2 and upstream Scope 3 emissions below 0.8 tonnes of CO2 per tonne of steel at closer to €100-200 per tonne.
“Premiums of €250-350 per tonne can be achieved for steel sold under long-term contracts. In the spot market, but it is possible to get lower prices,” a buyer source said.
Notably, recent trades for steel with Scope 1, 2 and upstream Scope 3 emissions of less than 0.8 tonnes of CO2 per tonne of steel were reported at €100-150 per tonne in September, with some transaction undercutting the mark of €100 per tonne, Fastmarkets reported.
“This year [2024] started on a positive note, but [overall] steel demand is deteriorating, the steel market is weak in general and the willingness to pay a premium [for green steel] is not there,” a mill source told Fastmarkets.
Market participants said there was a lack of projects across Europe requiring green steel and that demand from the key consumer – the automotive industry – had also been slowing down lately, in line with the general downturn in the steel sector.
And Fastmarkets’ steel hot-rolled coil index, domestic, exw Northern Europe, fell to its lowest level since November 2020 when it dipped to €549.88 per tonne on September 25, down by €2.83 per tonne from €552.71 per tonne the previous day
And there have been no signs that the downtrend in the carbon market has stopped, sources said, with short-term expectations among market participants were quite bearish given the lack of end-user demand.
“This year [2024] is a lost cause; [There are] No signs of demand recovery until the year-end and European mills are selling [HRC] at prices below costs to fill order books,” a steel service center in the Benelux area told Fastmarkets.
As a result, European suppliers have also started to be more flexible with their green steel sales prices and have been offering discounts for bigger lots, sources said.
Fastmarkets’ weekly price assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €100-200 per tonne on September 19, stable on-week.
Decarbonization remains the priority
Despite the limited demand for green steel and the difficulties with charging a premium for it, most market participants said they remain optimistic that green steel will take off in Europe in the coming years.
“The transition to green steel is still on the cards – it’s coming; it’s inevitable. But considering the current economic situation [in Europe], it is going to be delayed,” a source at a large buyer in Northern Europe said.
One of the major drivers behind the decarbonization of steelmaking in the EU and globally remains the European Carbon Border Adjustment Mechanism (CBAM) – 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.
The CBAM will be phased in, starting from January 1, 2026, alongside the phasing-out of the free carbon allowances applicable under the European Emissions Trading Scheme (ETS).
The price of CBAM certificates will be calculated by the European Commission on a weekly basis, based on the average price of the closing EU ETS carbon dioxide (CO2) allowances for each week.
The price of a carbon emissions permit in the EU was €66-70 per tonne in September 2024. And the EU envisages that the free allocation of such permits will be fully eliminated by 2034.
Market participants told Fastmarkets that CO2 allowance prices will jump to €200-250 per tonne when the free allocations are halved in 2030, and that there will be a surge above €400 per tonne by 2034, when free allocations are fully phased out.
EU Steel Distribution: pessimistic outlook for Q4 2024
The latest EUROMETAL Market Sentiment Survey highlights a cautious and somewhat pessimistic outlook for the steel and metals distribution sector as we move into the final quarter of 2024.
Based on 241 respondents for September 2024, the survey gives insights into current activity levels, future expectations, stock positions, and price development. Below is a summary of the findings:
Current Activity Assessment
- September 2024 saw a relatively stable perception of current activity, with responses consolidating below the neutral line. The responses are consistent with the previous months, with little significant deviation from the average.
Future Activity Forecast
- Expectations for activity in the fourth quarter of 2024 show weak activity. There is a clear downward trend compared to previous months.
Stock Position Forecast
- Stock positions are anticipated to remain steady through the next quarter. Data from September 2024 shows most respondents forecasting stock levels at or slightly below current levels, suggesting cautious inventory management in light of market uncertainty.
- The prior months also show a similar pattern, with no significant expectations of stock increases or aggressive restocking by distributors.
Price Development Expectations
- Price expectations for the fourth quarter are leaning towards slight declines. There is a growing belief that prices will decline further, as evidenced by the most significant responses positioned below the neutral axis.
- The previous 2 months have shown a relatively cautious stance, with price expectations more neutral or slightly negative.
The current activity remains stable but consistently below the neutral line, mirroring the trends observed in the past few months. Looking ahead, the future activity forecast for Q4 shows a clear downward trajectory, with weak activity expected. Distributors appear to be bracing for softer market conditions in the near term.
In terms of stock positions, respondents anticipate little change, with stock levels forecasted to remain steady or slightly reduced. This reflects a pragmatic approach to inventory management amid ongoing market uncertainty.
Meanwhile, price development expectations suggest a further decline in the coming quarter. The survey shows a growing consensus that prices will continue to soften, reinforcing the cautious sentiment expressed in recent months.
Overall, the industry appears to be preparing for a challenging end to 2024, with subdued activity levels, stable stock positions, and potential price declines on the horizon.
Interested in our Sentiment Tool? Contact us.
EUROMETAL met French distributors in Lyon
EUROMETAL was present at the FFDM 2024 Convention in the French city of Lyon.
The two-day event began with company visits to EDF Bugey Nuclear Power Plant, specialist copper conductor manufacturer Gindre Duchavany and ArcelorMittal Industeel Châteauneuf specialized in the production of hot rolled as well as forged steel plate.
The XVII Convention was held at the Musée des Confluences, a stunning contemporary museum known for its remarkable architecture, located at the meeting point of the Rhône and Saône rivers.
On Friday, we were welcomed by Pierre Olivier, Mayor of the 2nd arrondissement of Lyon. The day’s program took place under the theme: “The Future is already here!”.
In the era of innovation, where every year gives rise to revolutions, the FFDM has drawn attention to current themes such as artificial intelligence, energy and the environment.
We were able to attend presentations on the conditions for a recovery in the building industry, the possible economic winter after the Olympic summer, health and environmental risks linked to mining sectors, how to welcome an iA collaborator into your teams and how to strengthen collective performance!
InfoAcero magazine for September 2024
Check out the latest issue of our INFOACERO magazine for September!
We highlight some of its contents below:
- Opinion: Mr. José Velasco – UAHE Board of Directors
- Steelmaking: Eurofer Forecast – third quarter report
- Events: 20th Steel Products Forum – Program and registrations
- Metal: Productive Activity and Foreign Trade – Confemetal Current Affairs Report September
- UAHE Training: scheduled courses for October and November 2024
Hydnum Steel partners with Knauf Interfer to expand green steel distribution
Hydnum Steel, a pioneer in green steel production on the Iberian Peninsula, has entered into a strategic partnership with European steel processing and distribution company Knauf Interfer. The collaboration aims to accelerate the adoption of sustainable steel solutions across Europe.
Under the terms of the agreement, Knauf Interfer will purchase green steel from Hydnum Steel for an estimated value of €80 million annually. This partnership will leverage Knauf Interfer’s extensive distribution network, including a trimodal hub in Duisburg, Germany, to efficiently deliver green steel to customers in Central Europe.
Beyond steel supply, the two companies plan to explore opportunities for value-added services, such as cutting, segmentation, and re-coiling. Knauf Interfer’s commitment to transparency will ensure that customers have access to clear information about the carbon footprint of Hydnum Steel’s products.
To further strengthen their sustainability efforts, Hydnum Steel and Knauf Interfer will collaborate on a circular economy initiative. This involves recycling ferrous scrap generated by Knauf Interfer’s operations at Hydnum Steel’s Puertollano plant, creating a closed-loop system that minimizes waste and maximizes resource efficiency.
This partnership marks a significant step forward in the transition to a more sustainable steel industry. By combining Hydnum Steel’s innovative green steel production with Knauf Interfer’s distribution expertise, the two companies are poised to drive the adoption of low-carbon steel solutions across Europe.
European Commission study on the potential extension of the scope of the CBAM to downstream products
European Commission Directorate-General for Taxation and Customs Union (TAXUD) is conducting a Study on a potential CBAM scope extension to downstream products.
The objective of this study is to assess the feasibility of extending the scope of the CBAM to products further down the value chain (downstream products) of the goods that are currently listed in Annex I of the CBAM Regulation (upstream CBAM basic goods).
The purpose of including downstream products is to mitigate the risk of carbon leakage of upstream CBAM basic goods as well as the downstream products.
As part of the study, they are carrying out a stakeholder survey. The aim of this survey is to gather both evidence and the views of relevant stakeholders on the major concerns, areas of consensus or points of contention as regards a CBAM scope extension to downstream products.
Particularly, input is sought on the administrative burden and costs importers of downstream products may face in complying with the CBAM if the scope were to be extended to downstream products.
The survey will be open from today until October 25th, 2024.
You can find the link to the survey here: CBAMScopeDownstream2024
More background information n the objectives of the study can be found in the introductory section of the survey.
Cinzia Vezzosi (Assofermet): the quality and cost of scrap will be crucial
The element that has now marked 2024, i.e. the lack of demand, is also the one that is worrying the distribution the most.
And if a recovery in the third quarter is now unlikely, the possibility of a more positive development in the medium term is possible.
Cinzia Vezzosi, president of Assofermet, explains this in a siderweb interview. She clarified on recycled steel and scrap: quality and costs will be decisive.
Decision on US Steel takeover delayed until 2025
Joe Biden could determine the future of US Steel in one of his last acts as President of the United States after postponing a decision on whether to block Nippon Steel’s proposed takeover for at least 90 days.
The Committee on Foreign Investment in the US (CFIUS) had been carrying out an investigation to determine whether the USD14.9 billion bid should be blocked on national security grounds. Following the submission of its findings, President Biden will be allowed 15 days to decide whether to block the Japanese company’s takeover.
However, reports in the Financial Times, New York Times and Washington Post revealed that the President had agreed to allow Nippon Steel to resubmit its filing with CFIUS. This will activate a 90-day extension to the committee’s considerations, making any decision unlikely before January – just days before the inauguration of the US’s next President.
Democratic presidential candidate, vice-president Kamala Harris, and Republican candidate Donald Trump both oppose the foreign ownership of US Steel. A desire to keep the company in US hands – strongly argued by the United Steelworkers union – could significantly affect US supply chains.
Potential restructure and plant closures
The chief executive of US Steel, David Burritt, said that the company would be forced to close plants and concentrate on its minimill operations without the USD2.7bn pledged by Nippon to upgrade its older facilities. The company may also move its headquarters to Arkansas, from Pittsburgh.
According to US Steel’s 2023 annual report, its minimills accounted for around 15% of its total 22.4 million short ton production. However, most of US Steel’s recent investment has been focused on the Big River Steel (BRS) minimill facility in Arkansas. Its current 3.3 million short ton capacity will double following the construction of the BRS2 EAF plant, which is expected online by the end of 2024.
US steelmaker Cleveland-Cliffs submitted a USD35 per share bid for US Steel in August last year. Nippon’s subsequent offer is worth USD55 per share. Cleveland-Cliffs has continued to state that it would resubmit a bid for US Steel if Nippon’s bid was blocked.
Antitrust concerns could stall a Cleveland-Cliffs takeover of the entire US Steel business, however. It has been estimated that such a deal would place 65% to 90% of steel used by US carmakers under the control of a single company.
Hopes for improved demand for domestic steel
The closure of US Steel’s older mills, resulting from a blocked Nippon takeover, would have little effect on a US steel market currently challenged by low demand. MEPS respondents can readily source material and are apprehensive about buying stock following months of price decline. MEPS’s US coil prices recovered slightly in September after falling to their lowest level since December 2022 during July and August. Plate prices are now at their lowest since January 2021, following a further decline.
However, the Federal Reserve’s decision to lower interest rates by 0.5 percentage points, on September 19, could help to strengthen demand in the US. A reduction in the cost of finance could prompt increased investment activity, particularly in construction. A further half of a percentage point cut is expected by the end of this year.
As steel buying demand increases once more, the importance of domestically produced steel will grow. Increasing trade protection measures – including Section 301 tariffs that will be increased from September 27 – will continue to deter imports.
Against the backdrop of this protectionist stance, however, US Steel chief executive David Burritt insists that foreign ownership of the country’s third-largest steelmaker would “strengthen national security, economic security and job security”.
