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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France’s metal industry output up 0.9 percent in February from January
France’s manufacturing output in February this year increased by 0.9 percent month on month, after going down by 1.5 percent in January, according to the statistics released by France’s National Institute of Statistics and Economic Studies (INSEE).
In the December-February quarter, France’s manufacturing output was up by 0.2 percent year on year and down by 0.1 percent quarter on quarter.
In the given month, France’s production in manufacture of basic metals and fabricated metal products, except machinery and equipment, increased by 0.9 percent compared to January, after a 2.6 percent decrease month on month in the previous month.
On the other hand, in February production of France’s motor vehicles, trailers and semi-trailers industry went down by 1.3 percent on month-on-month basis after going down 5.3 percent on month-on-month basis in the previous month, while the output of the domestic construction industry decreased by 2.1 percent month on month in the given month after going up by 0.2 percent in January compared to December. In the December-February quarter, output of the domestic construction industry increased by 0.2 percent quarter on quarter.
Mood in the EU HRC market remains bearish on weak demand
Sentiment in the European hot-rolled coil market was bearish on April 4 due to weak demand and oversupply.
On April 4 Northwest European HRC prices remained stable after a Eur25/mt drop a day earlier.
The decline was driven by lower offers from the mills that have been struggling to fill May order books.
“The offers drop shows that the mills are desperate to fill order books and they are willing to drop the prices,” a German service center said. “They should have reduced production.”
Majority of market sources agreed that the production cuts and blast furnace stoppages are the only solution to prevent the price collapse.
Market participants believe that the domestic HRC prices would reach Eur600/mt ex-works by the end of April.
Platts assessed domestic prices for hot-rolled coil in Northwest Europe unchanged on day at Eur640/mt ex-works Ruhr on April 4.
Tradable values were reported at Eur630-640/mt ex-works Ruhr with majority of data heard at Eur640/mt ex-works Ruhr.
Offers from integrated mills have been heard at Eur650-670/mt ex-works Ruhr.
Platts assessed domestic prices for hot-rolled coil in South Europe down by Eur15/mt on the day to Eur620/mt ex-works Italy on April 4.
The assessment was based on tradable values heard at Eur615-625/mt ex-works Italy.
Europe longs: Mills expect firmer market
Most European producers increased their offers for long products this week, anticipating demand to improve after the Easter holiday period and propped up by a rebound in scrap costs.
The Argus weekly Italian rebar and drawing-quality wire rod assessments remained at €570/t ($620/t) ex-works and €645/t delivered, respectively.
In Italy, rebar sales prices remained at €560-570/t ex-works, including extras for sizes, but mills announced offers at up to €600/t ex-works, referring to increasing scrap costs. Buyers were sceptical about the price increases as mills still needed to fill their April order books and there were no expectations for substantial increases in consumption. Buyers that needed to replenish stocks placed orders in late March, when there were signs that prices had bottomed out.
In the nearby markets, no fresh offers were reported. Rebar was quoted at €570-580/t fca late last week, when some Italian mills were eager for new sales. In particular, the tradeable value for rebar in Poland was reported at €615-620/t delivered this week, while in late March deals were concluded slightly below this. In the meantime, offers for Polish rebar stood at €625-630/t delivered to domestic buyers, while in nearby markets prices were pegged at €625-640/t delivered. Similar prices were available for overseas material from docks in the Baltic region.
In Germany, prices for small-to-medium purchases of rebar remained at €630-640/t delivered. Spanish rebar was still quoted at €615/t cfr to northwest Europe, with small discounts deemed available. But mills are likely to try and increase prices should they see demand.
In the Balkan region, Bulgarian rebar prices settled at 1,190-1,210 lev/t (€608-619/t) delivered late last week, while in Romania rebar was available at €630-640/t delivered.
But some customers showed more interest in overseas offers in late March. Rebar was mainly booked from Turkey, as prices were at $585-590/t fob, which would be below €600/t delivered in any region. Egyptian rebar was quoted at $580-590/t fob, but was available for later shipment.
Southern and northwestern European customers were booking Asian wire rod at $520/t fob in late March, which is estimated at no higher than $600/t cfr depending on the ports. Some buyers expressed concerns that the next “other countries” quota could be exhausted promptly again, as almost 83,771t were awaiting clearance in the first days of April. Turkish allocation was estimated to be filled promptly in this period too.
Trade restrictions supported stronger prices for wire rod in Europe, with mills announcing up to €20/t price increases. In particular, new offers for drawing quality material in the Italian market were indicated at €650/t delivered. In other markets, mills pushed up offers from €660/t delivered to up to €680/t delivered. Mesh quality wire rod in Germany and other nearby markets was available at €620-630/t delivered.
How will the EU’s CBAM impact global iron and steel?
The Carbon Border Adjustment Mechanism has big implications for international trade patterns.
While it’s an EU regulation, the Carbon Border Adjustment Mechanism (CBAM) aims to encourage decarbonisation at a global level. As the new rules will affect anyone who exports to the EU, it promises to have significant consequences for international trade.
In our latest insight, our metals and mining sector analysts set out the details of the Carbon Border Adjustment Mechanism and assess its implications for the iron and steel sector, which is the largest by import value of the six sectors covered by the first phase of the scheme.
Fill out the form to download a free extract from the report, or read on for an overview that touches on the implications for other commodities.
What is the Carbon Border Adjustment Mechanism?
The CBAM aims to address the issue of so-called ‘carbon leakage’. The EU defines carbon leakage as ‘the situation that may occur if, for reasons of costs related to climate policies, businesses were to transfer production to other countries with laxer emission constraints’.1 The EU looks to address the risk of carbon leakage by taxing imports to equalise the carbon price paid by EU and non-EU products.
What sectors does it cover?
Initially, the CBAM will cover six sectors, with a focus on carbon-intensive and trade-exposed industries that are at the high risk of carbon leakage. These are electricity, hydrogen, cement, fertilisers, aluminium, and iron and steel. Later it will be extended to all sectors covered by the EU’s Emissions Trading System (ETS) by 2030. The bloc will also assess whether to extend the mechanism to organic chemicals and polymers by the end of the transition period, and will look at the potential to cover indirect emissions for more sectors and a wider range of downstream products.
When does it come into effect?
- October 2023 – Transitional period: Importers of products covered by the initial scope only have reporting obligations for the purpose of the CBAM
- January 2026 – Financial obligations commence: Importers will face financial obligations of surrendering CBAM certificates, which will ramp up progressively. Free allowances for CBAM-targeted sectors under the EU ETS will start to phase out.
- On or before 2030 – Extension: Regulations will be widened to all sectors covered by the EU ETS
- By 2034 – Full implementation: The CBAM will reach full effect for the initial batch of sectors and allowances will be all allocated via auctions for these sectors under the EU ETS
How will it work?
Until now, industrial installations within the EU considered to be at significant risk of carbon leakage have been receiving free allowances under the EU ETS to support their competitiveness. The CBAM will replace these free allocation, which will be phased out between 2026 and 2034 at the same pace as the CBAM is phased in.
CBAM financial obligations will be determined by the embedded emissions of imported goods and the price of the CBAM certificate, which is based on the EU ETS price. Carbon price effectively paid in the export country can be deducted (see diagram below).
Why has iron and steel been chosen?
The iron and steel sector is large, trade exposed and emissions intensive, making it a prime candidate for inclusion in the CBAM. European producers face significant competition, with 30% of EU demand for steel basic materials and key intermediates met by foreign supply. Price is a major factor, with EU steel producers facing higher production costs than their foreign competitors. As the energy transition progresses, higher carbon prices will further corrode their competitiveness.
Emissions from crude steel production in most of the bloc’s major steel trade partners, including China, India and Russia, are notably higher than the EU average, yet none of these countries places a carbon price as high as the EU’s. The CBAM is intended to address this discrepancy and create a level playing field for domestic production. The mechanism will cover CO2 emissions from a range of imported products, including pig iron, semi-finished and finished steel, some fabricated steel, and downstream items like nuts, bolts and screws.
What will the impacts of the CBAM be?
In the long term, the CBAM could lead to global decarbonisation of affected sectors and downstream consumption. However, collateral damage should also be expected.
Cost growth will be moderate in the first few years of the CBAM payment. During this period, exporters to the EU could reorganise their production and sales to direct lower-emissions products to the European market as a short-term fix. However, they may simply avoid the higher cost of operating in the EU market, creating supply shortages. Meanwhile, carbon costs will rise for EU producers as free allowances are phased out.
In the longer term, however, carbon will become an increasingly important cost component to consider. This will eventually impact steel trading patterns and encourage exporters to the EU to invest in emissions reduction technology. At the same time, the bloc’s trading partners will be incentivised to introduce or raise their own domestic carbon prices to prevent revenue leakage (although it should be noted that they are likely to remain structurally weaker than the EU’s).
On the downside, higher carbon costs and disrupted supplies will impact downstream manufacturing, leading almost inevitably to price increases for both domestic and foreign products. Steel is also widely used for renewable energy applications such as wind turbines and electric vehicles; higher prices and added strain on the supply chain could, therefore, make the energy transition more expensive in the EU than elsewhere.
Learn more: Implications of the CBAM for the iron and steel sector
Revista InfoAcero Marzo 2024
En el siguiente enlace pueden acceder a la edición de Marzo de nuestra revista INFOACERO.
Destacamos a continuación algunos de sus contenidos:
- Opinión – D. Manuel García- Junta Directiva UAHE
- Evolución del Índice de Precios de Productos Siderúrgicos – UAHE
- Sector Metal: Actividad Productiva y Comercio Exterior – Confemetal
- Siderurgia: Previsión de los sectores consumidores de la UE 27 – Informe Eurofer – 1er trimestre 2024
- Información Asociativa: Nuevo servicio UAHE-Gestión de Riesgos // Próximos Cursos UAHE
- Steel Net Forum Iberia 2024: 11 y 12 de Abril en Santiago- ¡ÚLTIMA LLAMADA!
DRI usage will continue to grow: IIMA adviser
Expansion in direct reduced iron (DRI) consumption is likely while the world’s steelmakers strive to decarbonise production and to secure future feedstock, Kallanish learns from an article by consultant Robert Mazurak.
Mazurak, an adviser to the International Iron Metallics Assocaition, says the use of DRI and hot briquetted iron (HBI) in steelmaking is gaining broader acceptance. Global DRI production has risen since 2016 by nearly 8 million tonnes per year.
“The accelerated growth rate in DRI production may well continue, such that likely we will be seeing another 60mt of incremental DRI output by the end of 2030 to reach an annual level of 185-190mt, rising to 13% of the combined BFI plus DRI ironmaking total,” Mazurak states in his article, published on the Midrex website.
The president of Mazurak Resource Consulting is cautiously optimistic that ore-based metallics (OBM) growth rates will be sustained, with accelerated production and use of all forms of DRI. This comes with new iron ore briquetting hubs, including one announced by Vale, that will likely rise to serve multiple off-takers in targeted regions to feed both existing and new DRI plants.
Straight melting of scrap in an electric arc furnace (EAF), combined with “green” power sources such as hydrogen, results in much lower emissions and carbon footprint compared with traditional steelmaking. Melting scrap and DRI in an EAF is the next best alternative.
To that end, hydrogen-enriched gas-based reduction of iron ore in DRI plants, plus arc furnace melting of DRI and scrap, currently offers the primary pathway for lowest carbon emission steelmaking.
“I’ve been chastened in my belief that breakthrough smelting reduction technologies would have gained more traction by now as competition to the DRI-EAF steelmaking route. It now seems clear that the ‘tried and true,’ proven DRI technologies will be the ones to proliferate over the next several decades,” states Mazurak, adding: “Advancements in direct smelting technologies could slowly develop and ultimately impact DRI plant capacity growth rates.”
Over the last 20 years, cold DRI (CDRI) production went from 39mt to 102.1mt, while hot DRI (HDRI) soared nearly eight-fold, from 1.8mt to 13.0mt in 2022.
“The rapid rise in HDRI use in the EAF is from the recognition that it provides the benefits of quicker melting and an energy savings from the retained, latent heat. However, global hot briquetted iron production has increased only marginally, from 8.6mt in 2003 to 11.4mt in 2022, despite being the most desirable DRI form for seaborne trade,” notes Mazurak.
Other recognised applications gaining acceptance include HBI use in blast furnaces for productivity enhancement and in basic oxygen furnaces as trim coolant.
John Isaacson USA
