Another Polish distributor plans to delist
Bydgoszcz-based steel distributor Drozapol-Profil plans to delist from the Warsaw Stock Exchange by carrying out a compulsory buyout of shares from minority shareholders, Kallanish notes.
The firm’s revenue in the nine months through September 2023 halved on-year to PLN 46.3 million ($11.5m) and the firm sank to a net loss of PLN 5.7m versus a year-earlier profit of PLN 10.9m. Of its total shareholding, 36% is free floated.
The move follows fellow Polish distributor Konsorcjum Stali’s delisting from the stock exchange in 2020. Poland’s third-largest distributor Bowim remains listed on the stock exchange for the time being.
Adam Smith Poland
Von der Leyen suggests Mauritania-EU green steel exports
European Commission President Ursula von der Leyen has suggested Mauritania use its renewable energy resources to produce low-emission steel for export to Europe, Kallanish notes.
Von der Leyen, together with Spanish Prime Minister Pedro Sanchez and European banking and industry representatives, met with Mauritanian President Mohamed Ould Cheikh El Ghazouani in Nouakchott last week to discuss regional security, migration and green hydrogen development.
The Commission President said the EU wants to produce 10 million tonnes/year of green hydrogen by 2030, but also needs to import another 10mt and is therefore looking for partners abroad. With the right investment and infrastructure, Mauritania can harness over 350 gigawatts of renewable energy from the wind and sun, she added.
But, somewhat surprisingly given the concerns over deindustrialisation in Europe, von der Leyen also suggested Mauritania go into green steel competition with the EU.
“Mauritania is … Africa’s second-largest iron producer and the majority of your iron is exported as raw ore,” she noted. “But if we have clean energy coming into the game, the processing into green steel could stay here in Mauritania and that’s a huge step because this is the added value, this is where the jobs are, this is where the prosperity is.”
“You could export iron and premium green steel. The technology works, but … the production of green steel needs an essential input and that is green hydrogen,” she continued.
“Demand for Mauritania’s green hydrogen and potentially green steel is set to grow exponentially in the European single market … This is an excellent business case,” von der Leyen opined. The Commission will support building the required infrastructure and training the local workforce, she added.
A European business mission will visit Mauritania in March to explore investment opportunities, following up on the 8 February meeting in Nouakchott.
German steel market sees prices remaining strong, production weaker
German steel traders and producers expected prices to remain strong during February, though the expectation was less firm month on month as mills tried to aim for higher prices but buyers held back, according to an S&P Global Commodity Insights survey.
The February index for traders’ sentiment stood at 60 points, compared to 68.75 points in January, data from S&P Global’s German Steel Sentiment Survey showed.
The index for producers’ sentiment was 62.50 points, compared with a January index of 87.50 points, showing that producers were significantly less firm compared to traders regarding near term price increases.
The overall index for prices was at 61.25 points, compared with 78.13 points for January.
Overall, steelmakers in Europe were aiming for higher prices for steel products.
One European long steelmaker expected prices in Germany for long steel products to remain stable or firm up. “We could cut down capacities rather than lowering prices,” the source said, adding there did not seem to be any fundamental reason for prices to go down.
“Medium sections prices are the lowest level in the last three years,” the source said. “Energy prices are still high. Not at [Russia-Ukraine] war levels but still high. Scrap seems to be still strong, but market is not ready to accept current high prices which is not workable for mills.”
One long steel distributor in the Benelux region expected prices to remain stable during February. “Demand is overall too weak, for prices to be able to increase.”
Platts assessed European medium sections price (category 1, S235 JR) unchanged week on week on Feb. 7 at Eur780/mt ($840/mt) delivered, according to S&P Global Commodity Insights data. Platts assessed Northwest Europe Rebar down Eur2.50/mt week on week at Eur632.50/mt ex-works.
On the flat steel side, sources reported strong prices, though trading activity in the European hot-rolled coil market remained muted. Platts assessed domestic prices for hot-rolled coil in Northwest Europe unchanged day on day at Eur745/mt ex-works Ruhr on Feb. 8.
The overall index for German inventory sentiment reflected that the market unanimously expected stock levels to remain stable during February. The index for the month stood at 50 points compared with 46.88 points in January.
The index for steel producers for February was at 50 points, compared with 37.50 points in January. The index for traders’ sentiment stood at 50 points, compared with 56.25 points for the previous month.
One European long steelmaker said while inventory levels were low, “everyone is waiting for prices to cut down”, so he expected inventory levels to remain stable at current levels.
The long steel distributor also expected inventory levels to remain stable at low levels “due to weak demand and near-term uncertainty regarding price direction.”
“The market is very quiet, buyers do not need material as they have enough coil in stocks,” a German service-center source said. “And prices are rather high now, distributors often struggle to transfer the rising prices to their clients.”
Production to fall
Market sources expected production levels to either be cut or maintain low capacities due to weak demand.
Some long steel producers had already cut production, sources said. The Benelux-based long steel distributor source also expected that mills might cut production levels during the month due to weak demand.
The index for production outlook was around at 38.75 points, compared with 46.88 points for January. The index for traders’ sentiment was 40 points, down from 43.75 points. The index for producers’ sentiment was at 37.50 points, down from 50 points as producers were more bullish regarding production activity than traders.
UK reviews temporary suspension of hot-rolled coil import safeguard quotas following Tata BF closures
The UK is to review the suspension of the safeguard import quotas on hot-rolled coil in response to Tata Steel UK’s plan to idle its two blast furnaces later this year ahead of building an electric arc furnace, the UK Trade Remedies Authority said Feb. 9.
The TRA’s preliminary view would be to suspend the measure for nine months because Tata Steel is the UK’s sole HRC producer.
Tata Steel hopes to commission its EAF early 2027 and will import steel products for customers from its Dutch and Indian operations or third parties until then.
“Given the importance to the UK economy of managing the projected reduction in domestic production of hot rolled flat and coil steel, we are carrying out the reviews in parallel with the consultation between Tata Steel UK and trade unions,” the TRA said.
Tata’s UK blast furnaces have an installed capacity of 5 million mt/year but produced 3.2 million mt in the past few years. The new EAF will have a capacity of 3 million mt/year.
News of the possible suspension of quotas was welcomed by market participants.
“A suspension would open the market up to free and fair competition and will be welcomed by traders, service centers and traders alike,” one UK trader said.
The TRA has opened a tariff rate quota review parallel to the suspension review as Tata Steel and UK trader Kromat have applied for a review whether the current tariff-rate quotas would be appropriate overall. The TRA expected the TRQ review to take longer than the suspension review.
It is considering whether it is appropriate to change the method of allocation to give importers an individual allocation of TRQs. The proposed scheme would not tie quotas to an individual country so that importers would be free to choose the source of imports.
TRA is collecting feedback until Feb. 25 for both reviews.
Similar to the EU’s safeguard import quotas on steel, the UK’s were set to expire June 30 but the TRA has been investigating whether they should be extended by two years.
UK HRC import quotas balances differ by origin.
UK steel trade organization ISTA said earlier this year the import quota system would need to be overhauled not only because of the idling of blast furnaces but also because Tata Steel has already been importing HRC from India to substitute its UK production over the past year.
The UK is a net steel importer. In 2022, the UK met 55% of its demand with imports, according to UK Steel.
The import quota for hot-rolled coil of the other country quota — which includes Indian material — in the current quota period (Q1 2024) was exhausted by Jan. 18. The quota was set at 22,589 mt. Any excess material faces a 25% duty.
The quota for the EU remained open as 262,006 mt of material — as of Feb. 9 — can still be imported. The quota for Taiwanese material has achieved critical status, which means a duty deposit needs to be paid as the quota is at risk of exhaustion — 1,378 mt could still be imported Feb. 9. The quota for Turkey remained open, at 37,100 mt.
Author Laura Varriale, laura.varriale@spglobal.com
European Commission investigates extending steel safeguard quotas
The European Commission initiated a review into a possible extension of safeguard quotas on steel imports into the European Union, according to a notification in the Official Journal Feb. 9.
According to the EC, 14 EU member states sent a request to extend the tariff-rate quotas to 2026.
“The request contains sufficient evidence suggesting that the safeguard measure continues to be necessary to prevent or remedy serious injury and that Union producers are adjusting,” the EC said.
As part of the extension investigation, the EC will review the allocation of tariff rate quotas, products as well as categories. The deadline for feedback is Feb. 26.
Market participants mostly welcomed the investigation Feb. 9.
“We need the safeguard extension,” an Italian flat steel service center source said. “Otherwise imports would flood the European market, and the prices would collapse. Neither mills nor distribution need the removal of safeguard.”
European market participants have been warning of the redirection of trade flows while the US is holding up its section 232 measures on imports as European producers are making costly technical changes at steel plants to decarbonize.
“The mills need the steel prices to remain higher to cover the costs of green transition, and exposure of the European market to import without safeguard would make it more challenging,” a European flat steel mill source said.
One European long steel buyer hoped for an update of specific country quotas.
In the current quota period, running from Jan. 1 to March 31, the hot-rolled coil as well as the wire rod other country quotas were exhausted swiftly after opening Jan. 3. The country-specific quota for hot-dipped galvanized coil for automotive use was also exhausted swiftly. Other steel import quotas remain open as of Feb. 9.
“The safeguard is a legitimate and indispensable tool for stabilizing the EU steel market and ensure the sustainability of the European steel industry, which is on its way to decarbonisation,” Axel Eggert, director general of the European Steel Association, or Eurofer, said Feb. 9.
“Massive, market-disruptive import surges from third countries, mostly with little or no climate ambition, further jeopardize the transition,” Eggert said.
Eurofer particularly warned of excess capacity being directed toward Europe without safeguard quotas, as particularly in Southeast Asia, the Middle East, and North Africa steel production is increasing, while China was close to record steel exports in 2023.
“Consequently, the European Union has become a primary target for trade deflection, with steel exports increasingly redirected towards its market,” Eurofer said.
The UK, which has set up its own steel safeguard quotas, is also investigating extending its safeguards while reviewing a temporary extension of the HRC import restrictions for nine months as Tata Steel UK will idle its two blast furnaces this year and not produce HRC until its electric arc furnace starts 2027.
Authors: Laura Varriale, laura.varriale@spglobal.com, Maria Tanatar, maria.tanatar@spglobal.com, Rabia Arif, rabia.arif@spglobal.com
Eurofer welcomes the new EU steel safeguard investigation
The initiation of a new steel safeguard investigation announced today by the European Commission is a pivotal step that could ensure the continuation of current measures beyond June 2024. This welcome move comes in response to worsening challenges in the global steel market, where carbon-intensive steel imports originating from excess capacity are inundating the EU market, posing a risk to the sustainability of the European steel industry, says the European Steel Association.
“The conditions for initiating such a procedure are undeniable. The U.S. Section 232 tariffs are still in place, while we see protectionist measures proliferating in other markets and overcapacity escalating across the globe. All this poses significant challenges to European steel producers”, said Axel Eggert, Director General of the European Steel Association (EUROFER). “China is now very close to the massive export levels of a decade ago, current global overcapacity has reached 600 million tonnes, and further 150 million are underway in the next three years. These figures speak for themselves: the current steel trade picture is far from fair”, he added.
The unprecedented expansion of China’s steel capacity over the past two decades has resulted in a profound imbalance in global steel markets. Those repercussions were firstly deeply felt during the steel crisis of 2015-2016, when Chinese domestic steel demand stagnated, leading to massive export surges totalling around 100 million tonnes. Today, data point to a potential repetition of the same scenario, as China’s steel exports in 2023 nearly matched these historical highs, reaching 94 million tonnes.
Adding to the complexity of the situation, new dynamics of excess steel capacity are emerging also on a regional scale, particularly in Southeast Asia (ASEAN countries, India), the Middle East, and North Africa. These new capacities are shifting trade patterns, as traditional exporting countries are being replaced and faced with reduced export opportunities and more closed markets, compelling them to seek alternative export markets. Consequently, the European Union has become a primary target for trade deflection, with steel exports increasingly redirected towards its market.
“The safeguard is a legitimate and indispensable tool for stabilising the EU steel market and ensure the sustainability of the European steel industry, which is on its way to decarbonisation. Massive, market-disruptive import surges from third countries, mostly with little or no climate ambition, further jeopardise the transition. We count on the Commission for a thorough assessment of the global situation and take the necessary measures to safeguard European steel production”, concluded Mr. Eggert.
UK Trade Remedies Authority expects steel HRC safeguard to be suspended
The UK’s safeguard on hot-rolled coil (HRC) may need to be removed, the UK Trade Remedies Authority (TRA) said today, announcing both suspension and tariff-rate quota reviews on the product.
The TRA has initiated both reviews following applications from Tata Steel UK and Kromat Trading, each in response to Tata’s plan to close its blast furnaces and import HRC and slab, it said today.
“Based on the applications and from other evidence available on the current state of the market, it is the TRA’s preliminary view that the measure should be suspended,” the TRA said. Tata’s plan would mean the current level of duty-free quota for HRC would be insufficient for UK needs, it said, suggesting imports are already facing duties because of the increase on volumes contributed to by Tata’s importation of HRC.
The TRA provisionally believes the safeguard on HRC should be suspended for nine months.
Its review considers the plan Tata submitted to trade unions on 19 January, and if these plans change, it will take this into account during its review. Once the TRA has completed its review, it will make recommendations to the Secretary of State for Business and Trade, who makes the final decision.
If any suspension recommendation is made and accepted by the government, the TRA will use the period to rework the quota system, enabling sufficient volumes for the market going forward. The quota could be global and importers potentially would be apportioned their own volumes, but it is not yet clear how this would be worked out, or if the plan could be amended in the course of the review.
“These reviews are designed to prepare the current steel trade regime for future changes in production at Port Talbot,” TRA chief executive Oliver Griffiths said. “We want to avoid a situation where new imports needed to backfill reduced domestic production pay tariffs of 25pc, loading additional costs on to the UK economy.”
EU Safeguard Measure is to be reviewed for a possible extension
The European Commission officially announced today that the EU Safeguard Measure is to be reviewed for a possible extension. This is backed by 14 member states who had already requested a review from the EC in January 2024.
The European Commission officially announced today, Friday, February 9, 2024, that the EU Safeguard Measure on certain steel products, which was due to expire in mid-2024, is to be reviewed for a possible extension at the insistence of 14 EU member states.
In addition, the measure is most likely to be extended to the longest possible and WTO-compliant period of 8 years.
US Section 232 tariffs have come to stay
Since the US Section 232 tariffs of the Trump Administration from 2018 are still in force and it is not to be expected that they could be repealed in the foreseeable future, the EC has now also recognized: “…that there are no elements suggesting that the US will be removing the Section 232 measures on steel”.
The introduction of the US punitive tariffs triggered a backlash from the European Union and led to the existing EU Safeguard Measures against steel imports to Europe in 2019.
German steel regions had called for EU Safeguard extension
Last Wednesday, we reported on the German steel regions’ call for the German government in Berlin to support a continuation of the Safeguard measure and that it is therefore only a matter of time before the EC takes action.
Source: steelnews.biz
Investment breeds US success, scrap imports likely: Tayfun Iseri
The success of the US steel industry comes down to investment and location management, whereas Europe has fallen behind in this regard. With electric arc furnace-based flat steelmaking capacity growing, competition will increase for prime grade scrap, which mills in the US South will start importing. So says Turkish Flat Steel Import, Export and Industry Association (Yisad) chairman Tayfun Iseri.
US mills have reinvested bumper profits into building 10 million tonnes/year of EAF capacity in the last five years. They have taken obsolete blast furnaces offline and invested into EAFs amid the push for decarbonisation. Europe has meanwhile fallen behind, implementing improvements to existing production processes rather than greenfield investments, according to Iseri.
While most BFs were built in the Midwest and Great Lakes areas, the new EAFs have been built in the South. Midwest/Great Lakes BF capacity shrunk from 44.5m t/y in 2019 to 39.6mt in 2023, while EAF capacity in the South rose from 34.8mt to 38.3mt. This will result in reduced US scrap exports.
“Most EAF investments in the US are coming from flat steel. You need better scrap for this. Higher knowhow, better raw material. Everything is possible in an EAF. If somebody tells you it’s not possible, it is possible!” Iseri told delegates at Kallanish Steel Scrap 2024 in Istanbul on Thursday.
While prime grade scrap competition will increase, local generation will decrease amid consumers holding onto their cars for longer, and car ownership reducing in general. Mills in the South will therefore import the required scrap through Gulf of Mexico ports, Iseri continued.
Increasing Mexican EAF capacity will also compete with US mills for scrap supply, which will lift prices. Meanwhile, “Europe is not ready to consume its prime scrap yet”, so will continue to export material, Iseri noted.
Overall, the US and EU will continue generating more scrap than they can consume, meaning export restrictions are unlikely to be implemented, as “they can’t sit on this big pile of scrap”, he added.
Iseri also challenged the assertion that Turkey dictates scrap prices. Since US mills have bought out multiple scrap collectors, they control 60% of the US scrap market. “The US dictates what the price will be,” he concluded.
Adam Smith Poland
SSAB operates Italian plant with renewable energy
SSAB is now operating its Italian service centre in Ghedi fully with clean energy after investing last year in solar panels installed on the roof of its production facility, Kallanish notes.
The solar panels will generate an estimated 830 megawatt-hours annually. Ghedi will consume approximately 50% of the solar energy for production, office buildings, and for the charging of electric vehicles, while the rest will be sold back to the grid.
The steelmaker is accelerating the design and production of its two “zero emission” steel products. It is working on a new product that will be commercialised from 2026, while the so-called SSAB Zero is currenlty available, made of recycled steel with fossil-free electricity and biogas.
“The new steel roof… uses a trapezoidal profile provided by Ruukki Construction, a division of the SSAB Group, and is made from sustainable GreenCoat colour coated steel. GreenCoat colour-coated steels use Swedish rapeseed oil in the coating. This unique, patented solution from SSAB reduces the environmental footprint and makes the GreenCoat colour-coated steel product portfolio the greenest offer for roofs, faҫades and rainwater systems on the market,” the company says in a note obtained by Kallanish.
The SSAB Steel Service Center in Ghedi has capacity of 80,000 tonnes/year of cut-to-length products from the steelmaker’s brands such as SSAB Laser, Strenx, SSAB Domex and SSAB Boron.
Natalia Capra France
