Italian government approaches investors for the former Ilva

The Italian government is actively looking for private investors in Acciaierie d’Italia (ADI) after Prime Minister Giorgia Meloni said authorities intend to avoid nationalising the troubled steelmaker, Kallanish notes. They are rumoured to be in talks with local steelmaker Arvedi but also with Metinvest and Jindal Steel subsidiary Vulcan Green Steel, informed sources say.

While Arvedi is not commenting on its potential involvement with ADI, Metinvest has stated its interest. The company is currently supplying Taranto with raw materials and sourcing slab from Taranto for its Italian facilities (see Kallanish 31 January). Almost all local steelmakers and large steel processors have also been contacted by the government about investing. In an interview with local TV show Porta a Porta, Giorgia Meloni said that several potential investors are looking at the dossier.

Last week, the Italian government placed ADI into extraordinary administration, thereby passing control of the company to government appointed commissioners, headed by Giancarlo Quaranta. Sources in the market expect the government to name two more commissioners. Quaranta is meeting with the unions, while Italy’s Minister of Enterprises and Made in Italy (MIMT), Adolfo Urso, is discussing with the European Commission a grant of €320 million ($346m) to help pay for raw material and contractors.

ADI sold 2.5 million tonnes of steel in 2023 and currently has 1mt of steel in stock, including raw materials and finished products. It produced about 3mt of crude steel last year. At Taranto, ADI is producing using only blast furnace No.4, which was however idled on 21 February for maintenance for 24 hours.

Natalia Capra France

kallanish.com

Trading quiet in European HRC market; buyers wait for prices to fall

Trading remained quiet in the European hot-rolled coil spot markets on Monday February 26, with buyers expecting prices to fall further in the coming week, sources told Fastmarkets.

Mills in Northern Europe continued to offer HRC at €730-760 ($790-822) per tonne ex-works for material with April lead times, sources said, adding that discounts for firm bids were still available.

“Mills in Northern Europe need volumes to fill their order books [for the second quarter], which is why they are accepting lower prices,” a buyer source told Fastmarkets.

But the lower HRC prices did not result in more-active trading, sources said.

Deals for small volumes were heard at €720 per tonne ex-works in Germany.

Sources estimated the tradable market level at about €700-730 per tonne ex-works.

“Demand [is still] slow despite the lower prices. Buyers think the bottom has not been reached yet,” a second buyer source told Fastmarkets.

According to a third buyer source, customers will try to push the price down to €700 per tonne.

Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €718.75 ($777.64) per tonne on Monday, down by €3.38 per tonne from €722.13 per tonne on Friday February 23.

The index was down by €6.25 per tonne week on week and by €32.50 per tonne month on month.

In Southern Europe, meanwhile, Fastmarkets corresponding daily steel hot-rolled coil index, domestic, exw Italy was calculated at €715.50 per tonne on Monday, nearly unchanged from €715.00 per tonne on February 23.

The index was down by €7.83 per tonne week on week and by €29.50 per tonne month on month.

Offers to Italy of April-delivery material were heard at €740 per tonne delivered, which nets back to about €720-730 per tonne ex-works.

A fourth buyer source told Fastmarkets that trading in Italy was calm, due to high stocks and buyer expectations that prices still have further to fall.

Sources told Fastmarkets that small volumes of HRC had been traded at €710-720 per tonne ex-works.

Market participants estimated the tradable market level for April-delivery HRC at €700-730 per tonne ex-works. But the workable level for May deliveries is expected to narrow to €705-710 per tonne ex-works.

“With the policy of postponing bookings, buyers have been successfully bringing prices down,” the third buyer source said.

Sources added that import offers from Asia were available for April shipment and July arrival.

HRC from Vietnam was offered to Italy at €620 per tonne CFR, Indian HRC at €640-650 per tonne and HRC from Japan at €620-660 per tonne CFR.

Published by: Julia BolotovaDarina Kahramanova

fastmarkets.com

Polish domestic rebar prices increase slightly, but outlook remains uncertain

Polish domestic steel rebar prices increased slightly in the week to Friday February 23, despite the uncertain market outlook, sources told Fastmarkets.

Sources said that demand from the construction sector, the main consumer of rebar, remained low.

Polish mills kept their official offers unchanged at 2,900 zloty ($727) per tonne CPT, which nets back to about 2,870 zloty per tonne ex-works, sources told Fastmarkets. But some buyers were heard to have been offered discounts for larger volumes at 2,850 zloty per tonne CPT, which nets back to about 2,830 zloty per tonne ex-works.

Fastmarkets’ sources estimated tradable market prices were at similar levels in the range of 2,850-2,900 zloty per tonne CPT, which nets back to about 2,830-2,870 zloty per tonne ex-works.

Some deals were heard to have been concluded at slightly lower prices in the range of 2,807-2,894 zloty per tonne CPT, which nets back to about 2,787-2,864 zloty per tonne ex-works.

Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, exw Poland was 2,787-2,870 zloty per tonne on Friday, up by 7-50 zloty per tonne week on week from 2,780-2,820 zloty per tonne on February 16.

The assessment reflected the deals heard in the market and buyers’ estimations of achievable prices.

In the secondary market, rebar was traded in the range of 2,780-2,830 zloty per tonne CPT, sources told Fastmarkets.

Some offers of imported material from Italy were heard at €650 ($704) per tonne CPT.

A distributor source told Fastmarkets that even lower offer levels were available for imported rebar from European producers in the range of €635-640 per tonne CPT.

Market participants in Poland shared mainly negative expectations for the future. The weak activity of the construction sector was the major reason for concern.

“I cannot see [any signs of] a pick-up in the construction sector, especially in the infrastructure subsector,” a buyer source told Fastmarkets.

“Demand is poor. The construction sector should be more active, but the last few weeks were rainy in Poland,” a distributor source told Fastmarkets. The distributor source added that buyers purchase only the quantities they really need.

“Buyers are in a wait-and-see mode now,” the source said.

The distributor source expressed hope that the situation would improve with the days getting longer and the weather warmer.

“Demand [is] average to poor. All bigger distributors keep away from stocking up, counting on better prices soon,” a second distributor source told Fastmarkets.

Published by: Darina Kahramanova

fastmarkets.com

Dutch green steel research receives national funding

The “Growing with Green Steel” consortium of the Universiteit Leiden in the Netherlands will receive €100 million ($108m) from the National Growth Fund, Kallanish learns from the university.

Leiden will be granted the subsidy in the coming eight years to develop technologies based on hydrogen, renewable energy, and circular iron and steel processing. Within the project, Professor of Industrial Ecology René Kleijn will appoint two PhD candidates and a postdoctoral researcher for research collaboration with the universities in Delft and Utrecht.

Kleijn aims to assist technology developers in designing their processes and products. “We want to avoid solving old problems only to create new ones. This includes addressing issues like the release of hazardous substances during recycling,” he says.

To achieve this, the Leiden team is mapping out which material flows are associated with current and new methods of steel production. “It’s crucial that the proverbial mammoth tanker gets on the right course from the start,” Kleijn explains.

He adds that he strongly believes in the approach of growth fund projects. “With projects like these, we can develop new, sustainable technology in the Netherlands that strengthens and sustains our own economy. Subsequently, other countries can adopt this technology,” he concludes.

Christian Koehl Germany

kallanish.com

EU approves Germany’s €1.3 billion aid to ArcelorMittal

The European Commission approved on Friday a €1.3 billion ($1.4 billion) state aid measure to support steelmaker ArcelorMittal to decarbonise its operations in Germany.

The German measure, made available part through the Recovery and Resilience Facility (RRF), will support ArcelorMittal Bremen and ArcelorMittal Eisenhüttenstadt through a direct grant. The company plans to use the funding to build a direct reduction plant and three new electric arc furnaces, Kallanish learns.

The project, expected to enter operation in 2026, will enable the replacement of two of ArcelorMittal’s three existing blast furnaces, and two of the four existing oxygen furnaces. The new direct reduction plant will initially operate with natural gas, but “ultimately operate exclusively using renewable hydrogen,” the EC says, without providing a timeline.

“By making steelmaking greener [through the use of hydrogen], it helps to achieve the EU’s target of climate neutrality by 2050. At the same time, the measure ensures that possible competition distortions remain limited,” comments Margrethe Vestager, executive vice-president in charge of competition policy.

ArcelorMittal expects to produce 3.8 million tonnes/year of green crude steel in Germany, which will avoid the release of over 70mt of carbon dioxide over the 16-year lifetime of the project.

The EC says the steelmaker has committed to “actively share” the experience and technical know-how through the project with industry and academia. It did not specify how much hydrogen demand the project would potentially unlock.

Germany’s Federal Ministry for Economic Affairs and Climate Action issued the subsidy pledge earlier this month (see Kallanish 7 February). The announcement gave ArcelorMittal the assurance that it can expect the same state support as the other German oxygen-route steelmakers. Salzgitter, thyssenkrupp Steel and Saarland mills Dillinger and Saarstahl have already received the green light for subsidies for their respective transition projects.

Thyssenkrupp has started a tender for the supply of low-carbon hydrogen for its first direct reduction plant at its Duisburg site. Procurement will start in 2028 at 104,000t, before rising to 143,000t/y during 2029-2035. Hydrogen purchase should then increase to 151,000t/y in 2036-2037.

Gabriela Farhangi UK

kallanish.com

EU coil mills hold firm in contract talks

While mills are having a hard time keeping their coil prices up on the spot market, they appear more successful in asserting them in the outstanding talks for long-term supply contracts.

Most contracts of this type were finalised by early/mid-January, especially those negotiated directly between mills and OEMs.

“We completed all our talks with automotive customers in December,” one mill source tells Kallanish. He points ahead at negotiations the mill will hold in April for other contracts starting in the second quarter for some customers, mostly non-automotive.

Still, a smaller number of contracts that started in January have not yet been concluded retroactively, mainly with tier-1 type suppliers, sources suggest.

“We for ourselves have completed all contracts, but I did hear that mills are still negotiating with some of the tiers,” a manager of a cold-roller firm says.

Contracts closed earlier were signed at a lower price than one year previously, but the concessions turned out to be milder than feared by mills. Initially, OEMs wanted at least a €100/tonne ($108) reduction from last year’s figure, but eventually confined it to €20/t year-on-year. Some contracts ended with larger gaps, depending on the figure struck a year ago. Roughly, hot rolled coil has been secured by many for a little under €800/t.

Big customers were careful not to hurt their reliable domestic steel suppliers too much, whilst generous figures of annual contracts helped in pulling up the spot market prices in their wake. But the wind on the spot market has turned, and prices keep softening, to now around €730/t for HRC, or less. There is some doubt among market participants that this will affect the outstanding long-term contract talks.

“Mills have concluded the lion’s share of their contracts, and so they will not be willing to divert from the figures they secured earlier,” the cold-roller manager says.

His opinion is backed by the manager of a large German service centre. “Mills remain uncompromising and are keeping their talks separate from the spot market,” he says.

He states that mills are standing firm in case buyers from tiers ask for a discount on the volumes already delivered in January/February.

Christian Koehl Germany

kallanish.com

European buyers avoid HRC bookings despite lower prices from the mills

Major European steelmakers were ready to accept lower prices for domestic hot-rolled coil Feb. 23 to draw interest from buyers who were avoiding restocking and were focused on back-to-back trade of smaller volumes.

Buyers, however, remained reluctant to restock due to sufficient inventories and limited end-user demand.

A major German steelmaker with significant exposure to automotive contracts were reported at Eur720/mt delivered Ruhr for May shipment material, which market sources estimated as an equivalent to Eur700/mt ex-works Ruhr.

“Spot prices are getting lower, but it seems that the mills ready to sacrifice prices to get volumes,” a mill source said. “They settled long-term contracts at prices they wanted and the mills might look at average prices – long term and spot and have positive figures in the quarter.”

A smaller German mill offered at Eur720-730/mt ex-works Ruhr for April shipment cargoes. Tradable values were estimated at Eur700-730/mt ex-works Ruhr.

Tradable values have been heard at Eur700-730/mt ex-works Ruhr.

Platts assessed the price of domestic hot-rolled coil in Northwest Europe stable on day at Eur715/mt ex-works Ruhr Feb. 23.

Market sources expected steel demand in the second quarter to not be softer than what has been witnessed in Q1.

Owing to weak demand, some market participants also anticipated mills to trim output by idling some blast furnaces soon. However, others believed prices will bottom out soon as lack of imported material can aid domestic sentiment.

Longer lead times and geopolitical conditions dampened appetite for seaborne material along with concerns that safeguard quotas may get exhausted within the first week of April after being declared for Q2. In addition, the European authorities are expected to prolong safeguard measures for two more year – until mid-2026 following the ongoing review. As buyers remained uncertain if any changes in quotas would be included in the updated measures they remained cautious with booking for Q3 arrival.

No offers were heard for imported HRC in Northwest Europe but tradable values for Asian material were estimated at Eur640/mt CIF Antwerp.

Platts assessed the price of imported HRC in Northwest Europe stable on the day at Eur650/mt CIF Antwerp Feb. 23.

In South Europe, tradable values were estimated at Eur700-720/mt ex-works Italy. Mills made offers at Eur715-720/mt ex-works Italy.

Platts assessed the price of domestic HRC in South Europe stable on the day at Eur710/mt ex-works Italy Feb. 23.

Tradable value for imported HRC in South Europe was heard at Eur620/mt CIF Italy for Asian HRC. Import offers for July delivery cargoes were reported at Eur600-640/mt CIF Italy from Japanese, Vietnamese mills for late June-July arrival.

Platts assessed the price of imported HRC in South Europe down Eur4/mt on the day at Eur620/mt CIF Italy Feb. 23.

Author Maria Tanatarmaria.tanatar@spglobal.comRituparna Nathrituparna.nath@spglobal.com 

spglobal.com

Surprising Polish construction slump in January bodes poorly

Polish construction activity slumped 6.1% on-year in January, compared to the consensus of 8.1% growth. This follows impressive 14% on-year growth in December. ING, which projected a 3.1% increase in January, says the data bodes poorly for a recovery in investments this year.

Many EU-backed projects from the previous perspective have ended, with a slow start to new ones and a weaker housing market, the bank observes.

Production growth in civil engineering construction plunged 10.5% in January, reflecting the final phase of infrastructure projects financed by disbursements from the 2014-20 EU financial perspective. Launching new projects, financed by the new EU budget, is time-consuming.

Building construction also declined, by 7.3%. “In December, the ‘2% Safe Credit’ programme came to an end. A new programme is unlikely to be launched before the second half of 2024, and its details are still being worked out. Data for the end of 2023 show that, after a period of rapid growth in mortgage credit demand, there was a sharp slowdown,” ING observes.

“Given the cap on the price of housing qualifying for public subsidies, the completed programme saw most impact in smaller towns. It is probably difficult for developers to assess locations of the most favourable places to start new investments,” the bank adds.

In early January, Poland’s main construction steel producer, CMC Poland, said supply-side adjustments and the impact of increasing levels of residential and infrastructure construction should drive sequential improvements in financial results beginning in spring (see Kallanish passim). However, conditions in Europe are expected to remain challenging, it added.

Adam Smith Poland

kallanish.com

 

European steelmakers remain concerned over green hydrogen cost

European steelmakers are concerned by the high costs of green hydrogen and how these could slow down or jeopardise the transition towards low- or zero-emission steelmaking, Kallanish notes.

ArcelorMittal Europe chief executive Geert van Poelvoorde reiterated this point by confirming that the use of green hydrogen – especially produced in Europe – would make steelmaking uncompetitive. In an interview this week with Belgian magazine Trends the executive said that using green hydrogen in the short term would push steelmakers out of the market for being uncompetitive. European green hydrogen production is still too expensive and imports from Africa, for example, still incur a high freight cost.

The view echoes the official position of ArcelorMittal reported in its climate action report published in July 2021.

Green hydrogen-based direct reduced iron production would increase the cost of steel production by $150-250/tonne compared to natural gas-based DRI, the report stated. “On a like-for-like basis (excluding CO2 costs), hydrogen would need to fall below $1/kg to compete with natural gas DRI in Europe, and below $0.7/kg to compete in the USA,” the firm said.

ArcelorMittal anticipated that green hydrogen costs could drop to $1.5/kg by 2030 if renewable energy costs drop further – on a global level.

As a result of the issues related to high costs of green hydrogen, European steelmakers might focus their attention in the short term on electric arc furnace-based steel production rather than building captive DRI plants. A solution in the medium term could be finding other sources of DRI beyond Europe, where hydrogen production costs are lower.

Emanuele Norsa Italy

kallanish.com

Northern European wire rod prices remain flat

Northern European wire rod prices are stable again this week, with the market sluggish due to low demand, sources say. Participants do not expect the market to change this month.

“The trade in Europe is very weak. There are not much new deals,” one buyer from the Netherlands tells Kallanish.

Domestic transaction prices for drawing-quality wire rod are at €650/tonne ($702/t) ex-works and mesh-grade wire rod is at €660/t.

Producers are asking for €680/t ex-works, on average, for mesh-quality rod.

“The scrap market in Europe is also weak and prices will probably fall in March, and this is also influencing the wire rod market,” another buy-side participant notes.

German old thick scrap sort 3 is at €350/t, while new scrap sort 2/8 was at €350/t. E40 shredded scrap was at €365/t. In Austria, scrap prices are stable in February. For new scrap, sort 2/8 is at €350/t, with old thick scrap sort 3 at €360/t.

“Imports for countries outside the EU, like Algeria and Egypt, continue not to influence the European wire rod market,” another participant in the market observes. “Offers are being heard from outside the EU at €620-630/t cfr Rotterdam, which is too expensive.”

Italian wire rod prices are relatively stable this month (see Kallanish passim). Drawing quality is between €680-680/t delivered. Domestic material is, however, being challenged by competitive import offers from Northern Africa and from Europe.

Svetoslav Abrossimov Bulgaria

kallanish.com