China may continue to be a threat to global steel industry in 2024: TCUD
China may continue to be a threat to the global steel industry in 2024, including the Turkish steel sector, due to the possibility that it could continue focusing on export markets with subsidized prices arising from insufficient growth in its own market, Turkish Steel Producers’ Association said in a statement.
Stiff competition by China in some of Turkey’s main export markets restricted Turkish mills’ market shares in 2023, while low-priced inflows from China into the Turkish steel market pressured domestic mills’ steel pricing and output, the association said in a statement seen by S&P Global Commodity Insights Feb. 29.
The rise seen in steel imports from China was despite the anti-dumping (AD) investigation opened by the Turkish Ministry of Trade on Oct. 31, 2023, against imports of hot-rolled coil from China, India, Japan and Russia.
The result of the investigation, which is expected to be announced in the coming months, could limit import volumes in 2024, according to industry sources.
Meanwhile, Turkey’s crude steel production fell 4% year on year in 2023 to 33.7 million mt, TCUD data showed, owing to slow demand and stiff import competition that pressured Turkish mills’ prices and output.
Turkish steel producers, however, are aiming to exceed the 15.2 million mt steel export volume in 2022, which is also expected to support their output volumes.
Turkey’s steel exports already increased notably by 23% on the year to 895,000 mt in January, the recent TCUD data showed.
“The rise in high quality steel investments in Turkey in recent years, like stainless steel, armor steel as well as railway wheels, supported January steel exports,” the association said.
Turkey’s flat steel exports increased substantially by 89.1% year on year to 348,000 mt in January, while long steel exports rose only 2% to 537,000 mt due to shipping disruptions in the Red Sea, TCUD noted.
According to TCUD data, the steel export/import coverage ratio of the Turkish steel industry rose to 61.6:100 in the first month of 2024 from 55.1:100 a year prior amid the rise seen in export volumes.
The association is expecting the increase in Turkish mills’ steel exports to continue in the coming months, with interest rate cut expectations in the EU as of the second quarter of 2024 to support steel demand in Turkey’s main steel export destination.
Slowed demand both in the domestic and export markets, however, has put pressure on Turkish mills’ steel pricing in recent weeks.
Platts last assessed the Turkish HRC steel price at $680/mt ex-works Feb. 23, down $10/mt on the week in a slow market, according to S&P Global data.
Author: Cenk Can
UK Tariff-rate steel import quota should follow temporary quota suspension: ISTA
The International Steel Trade Association is suggesting tariff-rate quotas following a temporary suspension of hot-rolled coil import quotas into the UK, ISTA told S&P Global Commodity Insights March 1.
ISTA members met with the UK Trade Remedies Authority Feb. 28 to discuss the import situation particularly for category 1 hot-rolled coil as steelmaker Tata Steel will be starting to idle its two blast furnaces by the end of 2024 and commission and electric arc furnace in 2026. It would import steel products for customers during the idling from its Dutch and Indian mills and third parties.
The TRA started a suspension review of TRQs on Category 1 steel Feb. 9 while also recommending a nine-month suspension.
Julian Verden, managing director of trading house Stemcor Europe and ISTA’s chairman, told S&P Global Commodity Insights that a short suspension of quotas would not work.
“A longer one is needed, not only because it will give more time to better assess the implications of Tata’s proposed changes but mainly because it will help buyers as importers often purchase on longer lead times, usually from three to six months,” Verden said.
‘’It is key that all Tata’s likely logistical issues are taken into consideration when reviewing the current safeguards. There will be continually changing circumstances which will require great flexibility from the TRA.‘’
Due to the market fragmentation of ISTA members, there are different views on how the review should end. Most members S&P Global asked agreed a suspension should be put in place for nine months starting from April or even better in July, and after that the reconsideration of the quotas.
The TRA’s position is that a suspension for the Category 1 coils safeguard measure would provide temporary relief in the market, while the TRA finishes the TRQ review. It would suspend the TRQ for Category 1 steel products on the basis that there has been a temporary change in market conditions and no injury is likely to be caused to UK producers as a result. The TRQ review is looking whether the TRQ should be amended to reflect changes in the market since the safeguard started.
Sources said determining a quota rate would not be clear how much Tata will start to import, becoming effectively an importer of hot rolled coils and then transforming them into cold-rolled or hot-dipped galvanized coil, a move criticised by worker representatives who called for a ballot on a potential strike in April. The ballot will start March 8 and end April 11.
According to sources, TRA representatives gave an example that maybe even a quota based on importers historical volumes can be taken under consideration, but this will penalize new importers that just entered in the UK market as some sources pointed out.
“This idea will reduce market opportunities to newcomers like us, as we have recently begun purchasing Category 1 HRC; however under historical data this won’t be recognized,” Oliver Roe, CEO of OPR Group, said in the sideline echoing other importers. The company started to trade in July 2023.
Some import quotas have been swiftly filled early in the year, leaving importers unable to import from certain countries or pay an import tax up to 25%.
The HRC quota for the all other country quota category of the current period (January-March) was exhausted Jan. 18, while the quota for Taiwanese HRC imports went critical Feb. 2, leaving 1,378 mt left to import as of March 1. HRC imports from the European Union stood at an available balance of 235,351 mt March 1, and the quota balance for Turkish HRC stood at 37,005 mt March 1. The new quota period opens April 1.
Platts assessed UK HRC at GBP650/mt DDP West Midlands Feb. 29, down GBP20/mt week on week.
Authors Annalisa Villa, annalisa.villa@spglobal.com, Laura Varriale, laura.varriale@spglobal.com
Sinking ArcelorMittal Poland production reflects European deindustrialisation
ArcelorMittal Poland (AMP)’s crude steel production sunk to just 3.1 million tonnes in 2023, down 9% on-year. This represents a drop exceeding 2mt over the last five years.
Production has been gradually declining following the closure of AMP’s Krakow blast furnace in 2020, weakening European steel demand, imports’ increased share in consumption, and uncompetitive production costs in Europe. Output in 2022 was 3.4mt, after 2021 production of 4mt, a slight rebound from 3.9mt in 2020, which was plagued by the Covid pandemic, but still down from 4.8mt in 2019. In 2018, output had been 5.3mt.
According to worldsteel data, Polish crude steel production declined 13% last year to 6.44mt.
Last November, AMP announced its decision to adjust coke production levels to low demand and difficult coke pricing dynamics, by hot idling the coke oven battery in Krakow (see Kallanish passim). ArcelorMittal Tubular Products meanwhile plans to cease production at its Krakow welded pipe mill by end-March 2024 due to the weak market situation and negative economic outlook.
AMP’s electric arc furnace-based sister mini-mill ArcelorMittal Warszawa meanwhile maintained crude steel output on-year at 500,000t in 2023.
ArcelorMittal’s sales in Poland slumped 25% on-year in 2023 to $4.47 billion, seeing the country slip one place to fifth in the list of ArcelorMittal’s highest-earning countries. Of the top five, only top market the US saw sales rise in 2023, by 0.6% to $8.89 billion.
Adam Smith Poland
Argus Media EU Steel Summary
Long Steel Buyers delay restocking
Potential price increases considered by European longs producers, amid firm output costs, failed to materialise, as buyers delayed restocking, observing decreases in the international market.
In the domestic market sale prices for Italian rebar were hovering around €600/t (€340/t base) ex-works, with up to €10/t discounts available for sizable tonnages. Similar levels were indicated available for Italian rebar to nearby countries, which was still met with little interest.
Drawing quality wire rod in Italy, Spain and northwestern countries was available at €650-670/t delivered locally and to nearby markets, with Italian mesh quality wire rod quoted around €20/t lower. “Demand is low and we have to fight for every order”, a Spanish market participant said. In Poland wire rod prices locally and from other EU suppliers were still higher, at €670-700/t delivered.
In Germany and other western European countries consumption is estimated around 25-40pc down compared to previous years, with customers preferring to cover needs with local material. Smaller-sized construction companies are on short-time working as demand remains weak, a German participant said.
But German mills maintained rebar prices at €400/t delivered base, the equivalent of €665-670/t delivered including extras for sizes. Discounts for sizable tonnages up to €10/t lower were available. In the meantime, fabricators were quoting cut and bent rebar at €670-680/t, with €690/t targeted for smaller orders.
Polish rebar was still available at €640-650/t delivered to Baltic and central European customers. Spanish mills continued quoting rebar at €640-650/t cfr to nearby countries. Many participants were concerned about talks that Celsa plans to sell its assets in Poland, Norway and the UK, but the company did not respond to a request for comment.
In the Baltic region, customers adopted a wait-and-see mode amid decreasing prices, willing to restock at lower levels, given that stockists were quoting imported rebar at €630-635/t.
In Bulgaria, rebar offers stood at 1,230-1,245 lev/t (around €629-637/t) delivered, but this was negotiable.
Spanish customers were reported considering buying drawing quality wire rod at €610-615/t cfr from the Mena region last week, with Turkish suppliers willing to match the upper end of this range now, but no sales were heard concluded. In particular, Turkish rebar was quoted mainly at $610-620/t fob, with wire rod at $620/t fob and above, but some sellers were heard being more aggressive and were willing to sell $5-10/t lower.
Egyptian sellers were offering rebar and wire rod at $600/t fob and $610/t fob, respectively, but some of them were willing to accept lower levels. Sales from Egypt were reported mainly to the US, Europe and nearby markets in previous weeks. Algerian and GCC mills focused on the domestic or higher-priced outlets. Malaysian and Vietnamese wire rod was heard available at around €610/t cfr, with other Asian origins quoted slightly lower. Indonesian wire rod prices fell by $15/t lately, to $545/t fob.
European buyers were not willing to restock substantially locally or from overseas suppliers. An average distributor does not even buy at lower prices, because they are concerned of having too much inventory, an EU market participant said. Interest rates are very high too, he added.
Workable levels for high-carbon wire rod were indicated at €750-770/t delivered in Italy, with €780/t achieved in some cases.
Flat Steel
European hot-rolled coil prices have slipped over the past two weeks, with mills seeking orders in a very slow demand environment.
Argus’ daily northwest EU HRC index fell from €739.75/t on 7 February to €724.75/t on 21 February, a drop of €15/t. Over the same period of time the headline Italian index has dropped from €751.25/t to €724.25/t, a drop of €27/t.
Sentiment probably remains gloomiest in the north, given Germany’s continued manufacturing contraction. Service centres in the country are trading with each other to fill stockouts, rather than committing to imports or domestic mill production.
However, Italian prices have fallen more in recent weeks because of lower import offers. Asia has returned from the lunar new year with softer quotations from most sellers, widening the gap between import and domestic prices, and further dissuading buyers from committing to new tonnages.
Indian HRC was offered by one mill around €635/t cif, almost €90/t below domestic prices.
Revista InfoAcero – Febrero 2024
En el siguiente enlace pueden acceder a la edición de Febrero de nuestra revista INFOACERO
Destacamos a continuación algunos de sus contenidos:
- Opinión – D. José Francisco Sánchez- Junta Directiva UAHE
- Evolución del Índice de Precios de Productos Siderúrgicos – UAHE
- Información Asociativa: Webinar Ciberseguridad (8 Febrero) // Próximos Cursos UAHE
- Siderurgia: Evolución Sectores Consumidores, Consumo Real y Consumo Aparente- Informe Eurofer- 1er trimestre 2024
- Colaboración ASCEM: “Perspectivas del acero optimistas para 2024”- D. José Mª Lagos- Gerente ASCEM
- Steel Net Forum Iberia 2024: 11 y 12 de Abril en Santiago
How Ukraine’s war-torn steel industry has transformed since Russia’s invasion, with closer ties to EU
The hostilities and the loss of vital logistics routes through the Black Sea ports in the south have significantly affected the production, export volumes and sales geography of Ukrainian producers.
But the countries of Eastern and Central Europe have become the new strategic partners for Ukraine’s mining and metallurgical complex during these challenging times of war and have accepted the major share of Ukrainian exports.
In 2023, Ukraine’s total iron ore exports fell to 17.75 million tonnes, down by 26% from 22.37 million tonnes in 2022, according to the data from Ukraine’s State Customs Service. The 2023 total was also down by 60% from 28.4 million tonnes tonnes in 2021 – the year preceding Russia’s invasion.
Slovakia became the largest consumer of Ukrainian iron ore in 2023, accounting for 28.39% of total exports in monetary terms, with the Czech Republic taking 19.7% of the total and Poland 19.6%.
Back in 2021, China was the main destination for iron ore exports from Ukraine, accounting for 41.9% of the total, with the Czech Republic taking 9.6% and Poland 8%.
In terms of semi-finished steel, Ukraine’s exports dropped to 1.2 million tonnes in 2023, down by 36.7% compared with 2022’s 1.64 million tonnes and down 82.2% from 2.19 million tonnes in 2021, according to the State Customs Service data.
Around 90% of the 2023 exports was as steel billet because the key mills that produced slab – Azovstal and Ilyich Iron & Steel – were both located in the Azov Sea port city of Mariupol and were destroyed by Russia in 2022.
Bulgaria has become the main destination for Ukraine’s semi-finished exports in 2023, accounting for 36.7% in monetary terms, followed by Poland with 23%. In 2021, the main export destinations were Italy, on 30.9%, Turkey at 12.8%, and the Dominican Republic on 8%.
A similar scenario has been seen in finished steel exports.
According to the data from Global Trade Tracker (GTT), Ukraine exported around 361,000 tonnes of various finished long steel products in 2023, which is around 75% lower than the 1.5 million tonnes shipped in 2021.
Of the total, nearby countries in Europe took 292,000 tonnes, representing about 80% of the export total.
The share going to Europe was only 20% in 2021, while the countries of Africa imported 36.6%, 20.6% went to the Middle East and 15.4% to South America.
HRC exports to EU gaining pace
In terms of flat steel exports in 2023, Ukraine shipped 603,916 tonnes of HRC to the EU, up by 18.4% from 509,896 tonnes in 2022, according to GTT data.
Poland was the major destination for Ukraine-origin HRC exports, accounting for about 42% of the total.
“Ukrainian suppliers are mainly active in the commodity-grades HRC market,” a buyer in Poland said.
Fastmarkets weekly price assessment for steel hot-rolled coil domestic, exw Central Europe, was €720-730 ($780-791) per tonne on February 21, down from €740-745 per tonne on February 16.
Market participants said that Ukraine-origin coil was normally sold with a discount of about €20 per tonne compared with Europe-origin material.
In addition, European steel processors using Ukraine-origin feedstock to manufacture finished steel products (including tubes and sections among other things), are able to ship those products to the US without facing import taxes.
The US suspended Section 232 import tariffs on steel from Ukraine in May 2022, following to Russia’s invasion earlier in the year and in May 2023, US Department of Commerce confirmed that it had extended the suspension for another year.
Ukraine was also exempted from all anti-dumping duties and safeguard measures in the EU.
In September 2023, Ukraine managed to ship two vessels of steel and raw materials via the Black Sea – the first time it had used its traditional route for steel exports since it was blocked by Russia at the start of the invasion.
Since then, sources have reported sporadic offers for Ukraine-origin HRC in Italy on a CFR basis, although such deep-sea HRC exports have remained irregular and most flat steel deliveries from Ukraine go by rail to Central and Eastern European destinations.
The most recent HRC offers to Italy from Ukraine were reported at €660-680 per tonne CFR at the beginning of February.
Pig iron deliveries to the EU decline
The opposite situation now prevails in terms of pig iron supplies and, in contrast to all other products, Ukraine reduced its pig iron exports to the EU during the past two, war-affected years.
In 2023, Ukraine exported a total of 1.39 million tonnes of pig iron, according to data from GTT, but only 228,878 tonnes, or 16% of the total, was supplied to EU countries. In 2022, the EU share of Ukraine’s pig iron exports was 23% and in 2021 it was 29.86%.
The US was a preferred destination for Ukrainian pig iron suppliers in 2023, because of the price premium there.
In 2022, Fastmarkets’ average price assessment for pig iron import, cfr Gulf of Mexico, US was $643.27 per tonne, whereas Fastmarkets’ average price assessment for pig iron, import, cfr Italy, was $526.11 per tonne – putting the premium to the US market over Italy at $117.16 per tonne.
Fastmarkets understands, however, that Ukrainian pig iron supplies to the EU may increase this year, due to the reducing attractiveness of the US market.
The gap between the EU and US reduced to $68.49 per tonne in 2023, but by mid-February the gap had narrowed to $45 per tonne, with the average price assessment for pig iron imports in the US at $480 per tonne CFR, while the price from Italy was $435 per tonne CFR.
“The Italian market is becoming more and more attractive to us,” a supplier said. “The US still has some premium, but considering the difference in the freight rates, it is pretty likely that we can switch shipments to Italy.
“Freight to Italy is around 30% cheaper than to the US, because the available fleet for 10.000-15.000 tonne cargoes is larger.”
Vanishing steel plate exports
Ukraine used to be one of the key steel plate suppliers to the EU until Russia’s invasion and the EU was the key export outlet for Ukraine-origin plate.
Ukraine had an individual quota for steel plate, with a quarterly allocation of about 218,557 tonnes.
According to statistics from the regional steel industry association Eurofer, in 2021, Ukraine shipped 864,637 tonnes of plate to the EU, which accounted for 43% of the total 2.02 million tonnes of steel plate imported to the bloc that year.
But, in 2022, exports from Ukraine to the EU dropped to just 195,719 tonnes, and in 2023 that had fallen to zero.
Ukraine’s key plate-producing assets were Metinvest’s Mariupol-based plants Azovstal and Ilyich Iron & Steel, which were destroyed by Russia in the invasion.
Russia, which had been the second-largest supplier of steel plate to the EU, was also out of the European market, because the ban that was imposed on deliveries of Russian finished steel on March 15, 2022, in response to the invasion.
Since then, the European Union has had to rely on increased deliveries of steel plate from Asian suppliers, – although these volumes cannot fill the gap left by Ukraine and Russia.
Inside, the EU trading bloc, sources said they had noticed a shift in trade flows, with an increased presence of Italian heavy plate in Germany, Central and Eastern European markets.
Trading has been slow in the European heavy plate market in recent weeks, however, with buyers avoiding restocking amid downbeat price expectations and slow downstream sales. But the market situation was a bit better in Central and Eastern Europe due to supply issues, sources said.
“Prices [for heavy plate] are better in Central Europe due to limited supplies, with Ukraine and Russia gone and with two local mills [domestic producers in Poland and Romania] no longer producing for various reasons. [So it] looks like all re-rollers will try to fill up their order books in Central Europe,” a buyer source said.
Fastmarkets’ weekly price assessment for steel domestic plate, 8-40mm, exw Northern Europe, was €800-830 per tonne on Wednesday, widening down by €10 per tonne from €810-830 per tonne ex-works seven days earlier.
NLMK Europe partners with Turkish plate distributor
The plate division of NLMK Europe has appointed Turkish steel service centre Askon Demir Çelik as an exclusive partner for distribution of quenched and tempered plate in Turkey, effective 1 February.
“The partnership with Askon Demir Çelik corresponds with NLMK Europe’s strategy of collaborating with well-established organisations, offering them comprehensive support in areas such as strategy, technical expertise, and marketing,” the steelmaker says.
The collaboration will be locally supported by specialists from NLMK Turkey, Kallanish notes.
Plate under the Quard brand has superior abrasion resistance for use in heavy-duty applications in harsh environments, NLMK says. Quend brand plate has exceptional structural resistance, making it suitable for demanding applications that require high-yield strength such as crane booms and chassis of heavy-duty machinery, it adds.
NLMK Clabecq is a Belgian producer of thin premium steel plate with tight thickness tolerances. Its equipment includes a reversible quarto mill, a newly revamped continuous finishing mill with four independent stands, an accelerated cooling system on the same line, as well as a modern quenching and tempering unit.
Askon Demir Çelik has steel service centres in Turkey, specialising in processing wear plate, high-strength steels, and special and commercial quality steels for the mechanical and component sheet manufacturing needs of OEMs and end-users.
NLMK Turkey is a trading unit of Russian steelmaker NLMK which manages export supplies of steel products manufactured at all group companies.
Elina Virchenko UAE
Salzgitter signs 122 MW solar PPA with Octopus for green steel project
Salzgitter Flachstahl and Octopus Energy have signed a 10-year power purchase agreement for 112 MW from the Schiebsdorf solar farm currently being built in Brandenburg state in Germany, it said Feb. 21.
UK-based utility Octopus, which manages a Eur7 billion portfolio of green energy projects, is to supply 126 GWh/year to Salzgitter for its Salcos green steel project.
“This latest PPA adds another significant source of clean electricity to power our operations, create green hydrogen and ultimately produce greener steel for our customers,” said Ralph Schaper, Salzgitter’s head of energy procurement.
Salzgitter already secured a 50 MW PPA from EnBW’s new He Dreiht offshore wind farm, 114 MW from Iberdrola’s Baltic Eagle offshore wind project as well as an 80 MW hybrid wind/solar PPA with Friesen Elektra.
Salzgitter in April 2023 received a Eur1 billion state grant for phase 1 of Salcos to produce up to 1.9 million mt/year of crude steel from 2026.
The project includes a 100 MW electrolyzer to produce around 9,000 mt/year of the required hydrogen on site from 2026.
According to Salzgitter, full implementation of stage 1 of Salcos would replace some 2.5 million mt of CO2/year.
Octopus meanwhile plans to invest over Eur1 billion in Germany’s clean energy infrastructure by 2027, it said.
The company acquired the Schiebsdorf solar project in January via its Sky fund. The project is to enter operations later this year and is the largest solar farm in Octopus’ renewable energy portfolio.
Octopus Energy Generation’s fund management unit will also announce more deals “very soon,” said co-head Alex Brierley.
PPA consultancy firm Pexapark advised on the deal. According to Pexapark, some 18 solar PPAs with a combined capacity of 1.77 GW were signed in Germany in 2023 with the country expected to surpass Spain as the top market for PPAs in Europe this year.
The Platts-Pexapark PPA (3Pi) index for a standard 10-year solar PPA in Germany was pegged at Eur43.02/MWh on Feb. 19. This level would put the deal at a theoretical value of around Eur54 million ($57 million) over its 10-year lifespan.
Platts is part of S&P Global Commodity Insights, which is a minority stakeholder in Pexapark.
Author: Andreas Franke, andreas.franke@spglobal.com
German steel distributors’ January sales rise 74% on month
German steel distributors’ sales saw a robust rebound in January, reaching 807,924 mt, up 73.7% from the prior month, German steel stockholders’ association BDS reported Feb. 21.
The rise in steel sales and ensued destocking have drawn down inventories within the German steel distribution network to under 2.5 months’ worth of sales, from four months previously, according to BDS.
Steel sales in January were, however, 3.4% lower year on year. It exceeded 2023’s per-month average by 2.8% but remained 10% below the 900,300 mt/month sales made during 2014-2021.
Flat-rolled steel comprised 535,192 mt or two-third of the January total sales. Being broadly stable compared with January 2023, the sales in this category recovered by 85% month on month.
German distributors sold 203,901 mt of long-rolled products in January, 42% more than in December, although 11% lower year on year.
The 1.9 million mt stocks held in January reflected roughly 70 days’ worth of sales, which reveals destocking, given that in 2023 and over 2014-2022 average per month inventories would cover 75- and 77-days’ worth of sales, respectively, according to BDS.
Destocking is particularly noticeable against the inventories accumulated within the country’s distribution network in December 2023, when they were as high as four-month worth of sales.
European steel coil buyers are currently limiting their procurements and avoiding restocking due to a bearish sentiment amid weaker appetite from construction and agricultural sectors, all of which make some expect weaker demand in the second quarter of 2024 compared with significant improvement in January-March.
Platts, part of S&P Global Commodity Insights, assessed European domestic hot-rolled coil prices at Eur720/mt ex-works Italy and Eur725/mt ex-works Ruhr Feb. 20, unchanged on the day, but down by Eur20/mt each on the month.
Author: Katya Bouckley, katya.bouckley@spglobal.com
Possible sale of Celsa Steel mills sparks uncertainty for Europe metals markets
Talk of the potential sale comes during a choppy financial period for Celsa Steel, which was bought by creditors following years of issues over payment just six months ago.
Celsa, a major producer of long steel in Europe, also owns major steelmaking units in Spain and France. It is one of the largest buyers of ferrous scrap in the local markets in which it operates, including Spain and the UK.
A Celsa spokesperson said on Friday that “no decision has been taken regarding sale or acquisition of assets.” The spokesperson also noted that the company has undertaken an “exploratory exercise” with financial institution Citi to “assess the real market value of our assets.”
But a UK steel market source with knowledge of the matter told Fastmarkets on Friday that Celsa is indeed “looking to sell off some of its steel mills,” including its UK unit. That source said he believed jobs at Celsa’s facilities would be safeguarded in the short term, however.
“These mills are some of the ones that make money, whereas there have been issues with the workforce in Spain that they are struggling with,” the source said. “Even if they sell, they must ensure that jobs are kept for three to four years,” he said, but “you never know” with such a process.
In Poland, Celsa owns steel mill Huta Ostrowicec, located in Ostrowiec Swietokrzyski. The facility has two electric-arc furnaces (EAFs) with a combined capacity of around 2 million tonnes per year of crude steel. Celsa Huta Ostrowiec produces rebar and special bar quality (SBQ) steels.
In Cardiff, Celsa has two EAFs with a combined capacity of 1.2 million tpy of crude steel; that facility produces long steel products, including rebar and wire rod.
In Mo i Rana, Norway, Celsa has a 700,000-tpy EAF and produces rebar and wire rod.
Effect on Poland market
Celsa is one of only three rebar producing companies in Poland. Therefore, any change to or closure of Celsa’s assets there could have a major impact on the country’s steel market.
A distributor source in Poland told Fastmarkets that, sooner or later, the new creditor owners of Celsa Group were expected to sell Celsa’s assets in Europe. But that source said it was too soon for the creditors to do so, indicating that they believed Celsa’s owners were simply evaluating the situation to decide on future steps.
“From my point of view, it is too early to do that now. The market situation is not that good. I cannot imagine who will eventually buy the Polish assets now,” that source said.
A second Polish distributor source described the reports of a potential sale of Celsa’s plant in Poland as “rumors.”
Effect on UK market
Celsa’s position as one of the UK’s major scrap buyers and long steel producers means its operations are critical to supply and demand in both markets.
Its site in Cardiff has a nameplate capacity to produce around 1 million tonnes steel per year from an EAF, but market participants have long believed that the unit is running at reduced capacity utilization levels, Fastmarkets understands.
“The news is just breaking, but personally I do not expect any impact and business continues as normal,” a UK scrap processor source said.
A UK scrap source said that he believes the market would reserve judgement until a new owner comes in and states its plans for the company.
“All eyes will be on Cardiff ops, naturally,” he said.
Although there are no immediate changes expected, a third scrap source said that uncertainty over the company’s position could mean they need to be “careful” selling scrap to Celsa in the UK amid worries over payment.
Interestingly, the potential sale of the UK asset comes at a time when the country is moving toward greater adoption of EAF steelmaking. Both British Steel and Tata Steel have announced their intentions to switch to EAFs and away from their higher carbon-emitting basic oxygen furnaces (BOFs).
As a result of the planned rise in EAF capacity in the UK, the third source said that the UK could eventually become a net importer of scrap, swinging from its current role as a major exporter.
The UK typically generates around 10 million tonnes per year of steel scrap; of that, 8 million-9 million tonnes is exported, mostly to Turkey and the Indian subcontinent. A smaller amount is exported to short-sea destinations, such as Spain.
Restructuring plan
The reported sell-off of assets is the latest landmark in a challenging period for Celsa Group.
Creditors of Celsa, which included investment banks such as Deutsche Bank, finalized their takeover of the steelmaker in November 2023 following years of missed payments. At the time, media reports indicated that the process to sell up to 20% of the company could be launched a few months later.
This led to the implementation of a major restructuring plan, which had been approved by a Spanish court ruling in early September, to drive down Celsa’s debts and increase efficiency. The plan will allow the company to reduce its debt by €1.4 billion ($1.5 billion) and extend the maturity of the remaining debt by five years, until October 2028, Celsa said last month.
Celsa appointed Jordi Cazorla as chief executive officer of the company on November 24; Cazorla took over from Sergio Vélez, head of FTI Consulting Spain, who had acted as interim managing director.
Celsa’s most recent submission to the UK’s Companies House, on January 13, shows that Matthew Johnston of FTI Consulting LLP was delegated authority over Celsa Steel UK and has been conducting day-to-day management of the company from December 8, 2023.
According to a filing to Companies House, Celsa Steel UK lost £250,000 after tax in 2021 and made £3,000 in profit after tax in 2022. The company recorded an operating profit of £2.99 million in 2022, but £2.4 million went to interest repayments, the documents show.
Declan Conway in Galway, Ireland, and Julia Bolotova in Brussels, Belgium, contributed to this report.
