European HRC producers reject lower bids despite low orders, citing costs
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe, at €625.63 ($662.05) per tonne on September 27, down by €2.45 per tonne from €628.08 per tonne on September 26.
The index was down by €9.25 per tonne week on week and by €18.12 per tonne month on month.
Trading in the region has been persistently weak throughout September.
Slowing consumption and a poor macroeconomic outlook were limiting purchasing activity in the spot market, according to sources.
“We can wait a couple weeks more to make any bookings; our inventories are enough for the current levels of demand [from end users],” a stockholder in Germany said.
Mills had short orderbooks and could offer HRC with 5-6 weeks lead times, sources said.
But producers tended to reject lower bids despite low orders, citing mounting input costs.
Notably, a bid for HRC in the region was reported at €590 per tonne ex-works, but an integrated mill had reportedly rejected it.
“€600 [per tonne ex-works] is already a breakeven price for us, anything lower than that would be just lossmaking,” a mill source said.
Producers avoided giving generalized offers to the market, claiming that “buyers just talk the price down and make no bookings.”
Estimations of tradeable values from the mills in Northern Europe were heard at €620-640 per tonne ex-works.
Buyers gave indications of €610-630 per tonne ex-works, and one source reported a bid a €600 per tonne ex-works, but it was not clear by the time of publication whether it was accepted by the seller.
Sources agreed that output cuts at European steelmakers could help balance the oversupplied market. Nonetheless, the effects of the reduced output will likely only be seen in the first quarter of 2024.
“We need to see European steelmakers gradually switching off furnaces – that would create supply concerns and motivate buyers to make bookings for the first quarter [of 2024]. But so far, only a few mills [have cut output],” a trading source in the region said.
Meanwhile, Fastmarkets’ calculated its daily steel hot-rolled coil index, domestic, exw Italy, was €608.96 per tonne on September 27, down by €4.79 per tonne from €613.75 per tonne the previous day.
The Italian index was down by €13.12 per tonne week on week and by €26.04 per tonne month on month.
Trading in Italy was said to be largely non-existent, with buying interest for both domestically produced and imported HRC close to nil.
Early November-delivery coil was offered by Italian mills around €630-640 per tonne delivered, which would net back to €615-625 per tonne ex-works.
Bids were reported at €570-590 per tonne ex-works on Wednesday, but those were not accepted by the mills due to the costs factor.
“Mills will defend €600 per tonne ex works as a threshold, the line they wouldn’t like to cross. [We] will see how situation with imports shapes in October, probably by the end of the month buyers will return to the market and start bookings for January delivery,” a buyer in Italy said.
Meanwhile, buying interest for imported coil was also very weak in Europe, mainly due to the long lead times, the small gap with domestic prices and safeguard-related risks.
HRC from Asian countries was said to be on offer at €600-610 per tonne CFR Italy for January arrival, with only Vietnamese mills offering below that levels – at €585 per tonne CFR.
Bids from European buyers were no higher than €540-550 per tonne CFR.
Therefore, no new business for overseas coil was reported over the past week due to the bid-offer mismatch.
Published by: Julia Bolotova
EU recyclers warn against Critical Raw Materials Act
European recyclers umbrella organisation EuRic has issued a note of concern on a report presented to the European Parliament on critical raw materials (CRMs).
The report was drafted by the Parliament’s Committee on Industry, Research and Energy (ICRE) and EuRic expressed satisfaction with its original version issued at the beginning of the month. The organisation stated it was particularly satisfied with the lists of strategic and critical raw materials which prevented the inclusion of materials like ferrous scrap or aluminium.
However, amendments occurred around mid-month that have raised concern. “The recent last-minute endorsement for the formation of a secondary list of strategic raw materials (SRMs), with ferrous scrap quoted as example, raises several questions,” Euric writes in its latest statement. “The inclusion of ferrous scrap without sufficient data sets an alarming precedent for the unrestricted addition of materials to the list, lacking clear conditions or a methodology for assessment,” Kallanish reads.
According to EuRic, consistent data gathered over years demonstrates that steel faces no supply risk issues; it is abundant, enabling Europe’s recycling industry to meet and even exceed steel demand. Essentially, EuRic and its members fear that the inclusion of ferrous scrap will block EU scrap merchants from selling scrap to overseas markets (see separate story).
EuRic calls on the Parliament to incentivise the environmental advantages of using recycled steel scrap in steelmaking, and to promote electric arc furnace technology in Europe. This latter ambition however creates a contradiction, as increasing EAF production would require increasing scrap feed, which would be an argument in favour of export restrictions.
Christian Koehl Germany
New EU Russia sanctions concern UK manufacturers
New EU sanctions on Russia could significantly impact UK downstream manufacturers who source steel worldwide. They must therefore urgently study the legislation, warns the Confederation of British Metalforming (CBM).
The new rules, which come into force from 30 September, require evidence that iron and steel used to produce goods in a third country – outside the EU, including the UK – does not originate from Russia. Material test certificates will be required to confirm the facility and location at which the material was originally melted and poured as well as for secondary steel processes.
CBM president Stephen Morley says many firms will be unaware of this change to exporting. It could cause products to be delayed at customs and, in some instances, trigger “catastrophic production stoppages in critical automotive and aerospace sectors”, he tells The Manufacturer magazine.
“It is important to recognise that the scope of the EU measures on iron and steel products extends far beyond primary and secondary steel products to encompass many finished goods, including fasteners and other industrial consumables. They will also cover many ‘retail’ products, such as stoves, cookers and kitchen and sanitary ware,” Morley observes.
“Effectively, it is a case of prepare for the worst-case scenario, while fervently hoping that EU authorities recognise that the stringency of compliance requirements will jeopardise the flow of UK to EU supply chains,” he adds.
“There’s a lot of mixed messaging out there currently, with some suggestions that German Customs may take a more pragmatic view about what evidence is required, whilst the latest info from Belgium and France suggest a more stringent approach,” Morley continues.
“These sanctions – across the board – could have a dramatic impact on both UK exporters and importers, with many of our members bringing in their steel from all over the world. It’s a delicate issue and our best advice is to plan ahead to avoid any supply chain disruption,” Morley warns.
CBM represents UK manufacturers of fasteners, forgings and pressings, cold rolled and sheet metal products.
The new sanctions have recently seen Turkish billet buyers postpone bookings from Russia to evaluate their impact (see Kallanish passim).
Adam Smith Poland
EU raw materials act hits scrap business: Stahltag
Amendments to the EU’s Critical Raw Materials Act (CRMA) are concerning the bloc’s scrap merchants. The latest version of the CRMA report contains ferrous scrap, to the surprise and dismay of many in the sector.
This “is a blow for us,” Sebastian Will, head of ferrous scrap at German recycling federation BVSE, said at last week’s MBI Infosource Stahltag in Frankfurt. “We fear the consequences that list will bring for us.”
Earlier this month, the European Parliament adopted by 515 votes to 34, with 28 abstentions, amendments to the latest report version published in early September. The adopted text states: “By six months from the adoption of this Regulation, the Commission should submit to the European Parliament and to the Council a list of strategic secondary raw materials, including ferrous scrap.”
Will said political limitations on ferrous scrap exports would take away overseas markets for EU merchants. It would especially limit exports meant for Turkey, “where the scrap price is made”. He pondered: “Will the price double?” Will anticipates that EU mills would not be able to cover their demand, and might go for scrap from the USA. “And then the Turks will bid, too, and we will be in the four-digit figures,” he warned at the event attended by Kallanish.
Another topic he addressed in his presentation is the increasing role of analytical tools in scrap processing., especially as “there will be much consumer scrap accruing in the mid-term”. He referred to “Reders”, the joint project of thyssenkrupp and recycling group TSR, which created the “TSR40” scrap grade that is especially suited for feed in blast furnaces. He spoke of “designer scrap” that reduces risks in the steelmaking process. But he also noted that a facility, as set up at TSR last year, “is expensive, and not immune to errors”.
He presented three scenarios of scrap demand in Germany if oxygen-route mills increase their feed in the converter, or blast furnace as in the project above. With a scrap feed of 15%, oxygen-route mills would need 3.7 million tonnes; at 30%, it would be 7.5mt; and if 50% is technically feasible, demand would reach 12.4mt. In that case, it would surpass the demand of the country’s EAF mills, which currently stands at 10.1mt.
Christian Koehl Germany
EU flat steel producers expected to trim Q4 output to balance supply, demand
A deteriorating macro-economic situation in Europe, coupled with an expected influx of steel imports into the region in the fourth quarter were the key factors putting pressure on domestic steel prices, sources said.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe, at €628.08 per tonne on September 26, down by €3.80 per tonne from €631.88 per tonne on September 25.
The index was down by €6.92 per tonne week on week and by €15.67 per tonne month on month.
Apart from slow end-user demand, market participants said they were waiting for the start of the new import quota period on October 1, to better gauge the situation regarding HRC shipments to the EU.
“There are significant tonnages of imported HRC sitting in European ports, awaiting the new safeguard quota period. It is likely that those volumes will put downward pressure on domestic European prices once they [are released],” a trading source in Germany said.
Market participants said they estimate imported HRC volumes of between 500,000 tonnes and 1 million tonnes in October.
But some sources said that the impact of an influx of imported material on domestic HRC prices will be less significant than expected.
They said that much of the imported HRC was booked at the end of the second quarter – when the gap between domestic and import prices was more than €100 per tonne – and domestic prices have fallen significantly since June, so the gap will, ultimately, not be that dramatic.
By way of comparison, Fastmarkets’ daily steel HRC index domestic, exw Northern Europe, averaged €692.69 per tonne in June, while the monthly average for August was €643.86 per tonne, and prices have been trending lower through September.
Getting the right balance
Sources also said that, considering the weak end-user demand and limited hope for a price rebound this year, the logical step for the European mills would be to trim output to balance supply and demand.
But most agreed that the effect of the various shutdowns would only start to show in the first quarter of 2024.
“The only thing the European mills could do to shift the balance in the market [in the near term] would be to reduce their own output and take a more unified approach to pricing – because we still can see some producers making panic sales at quite low prices,” a trading source said.
“If producers gradually start switching off furnaces now, we might see a [price] rebound in the first quarter of 2024,” he added.
Some capacity has already been taken offline in Europe during the third quarter and some further stoppages have been announced for October 2023.
Notably, Europe’s leading steelmaker, ArcelorMittal, announced some equipment stoppages at its mill in Bremen, Germany, in the week to September 22. It said it will be halting blast furnace (BF) No2 on October 1 for about 30 days, while BF No3 will be subject to a five-day outage from October 9.
ArcelorMittal Bremen’s two BFs have a combined capacity for 3.6 million tonnes per year of pig iron and the Bremen steelworks also produces hot-rolled, cold-rolled and galvanized coil.
The company also started maintenance at its 2.35-million-tpy BF “A” at Gent in Belgium in mid-September, with repair works scheduled to last until the end of November.
ArcelorMittal Gent has two BFs with a combined capacity of around 4.35 million tpy of pig iron. The Gent steelworks also produces hot-rolled, cold-rolled and galvanized coil.
Salzgitter, one of Germany’s leading steel producers, idled its 2-million-tpy pig iron BF “A” for relining from August 14.
Sources said that production lost from the planned relining of BF “A” would be compensated through the stockpiling of slab delivered from other companies in the group, as well as by the restarting of its 800,000-tpy pig iron BF “C”, which has been idle since 2019.
SSAB considers cutbacks at Raahe
SSAB announces that its Finnish business unit is in cost-cutting negotiations, potentially to reduce its workforce, in Raahe because of continued weak demand.
The objective is to structurally reduce fixed costs by at least €10 million ($11m) on an annual basis, the steelmaker tells Kallanish. The negotiations will discuss alternatives to increase flexibility in operations and adjust to weakened demand, while taking account of future needs.
”The aim is to work together to find solutions to increase flexibility, mobility and multi-skills so that our operations respond more flexibly than at present to future needs,” says Jarkko Matkala, SSAB Raahe’s site manager.
The negotiations concern the Raahe works’ organisation, and would affect around 2,400 employees. Unless agreement is reached on the primary operations models, the negotiations could result in workforce reductions, the company notes.
The negotiations will last an estimated six weeks unless otherwise agreed. SSAB employs a total of around 4,700 people in Finland.
Christian Koehl Germany
Spanish auto industry’s summer performance remains stable
The Spanish automotive sector saw a year-on-year recovery in production in July but lost strength during the August holidays. Exports followed a similar seasonal pattern, Kallanish notes.
National automotive association Asociación Nacional de Fabricantes de Automóviles y Camiones (Anfac) released July and August figures jointly due to the summer seasonality.
Output in July and August reached 204,142 units and 91,837 units, representing growth of 34% and a 17.9% decline on-year, respectively. Eight-month cumulative production amounted to 1.61 million vehicles, up 15.3% over the same period last year.
A recovery in sales in major markets boosted Spanish vehicle exports in July. Exports totalled 188,062 units, up 38.2% y-o-y. In August, however, shipments declined sequentially by 49.1% to just 95,622. This volume was down 8.1% on-year. Spanish eight-month exports grew 21.3% over January-August 2022 to 1.47 million vehicles.
European markets represented 90% of Spanish deliveries in both July and August, Anfac data show.
Todor Kirkov Bulgaria
Beltrame creates downstream partnership for carbon-neutral steel
Italian merchant bar maker Beltrame is partnering with purchasing group Sider Center for the distribution of its carbon-neutral steel products under the brand name “Chalibria,” the company confirms to Kallanish.
The agreement comes in the wake of Beltrame’s investment in the sustainability of its products. The steelmaker is heavily reducing its European facilities’ carbon footprint and developing a circular economy across its supply chain.
“The synergy and common vision between players in the same sector, of which Gruppo Beltrame and Sider Center represent a positive example, is the winning card for finding solutions that mutually optimise the business towards the sustainable transition,” Beltrame cco Enrico Fornelli comments.
“This strategic collaboration confirms the intention to provide the national market with expertise and availability of the carbon neutral product on which Beltrame is making important investments,” Sider Center’s president, Stefano Dall’Aglio, says in a note sent to Kallanish.
Beltrame will invest around €200 million ($212m) in its plants in Italy, Romania, France and Switzerland over the next five years as part of its Chalibria plan. This is a structured decarbonisation process based on energy efficiency, consumption reduction and a revamp of the reheating furnaces. There will be an increase in the use of renewable energy and the circular economy. The project will replace the consumption of natural resources with recycled polymer material and reuse of white slag instead of lime and hydrogen solution. The steelmaker intends to cut 40% of emissions by 2030 compared with 2015 levels (see Kallanish 3 April).
Natalia Capra France
Vallourec closes German pipe operations for good
Vallourec’s Düsseldorf-Rath plant produced its last pipe last Thursday. This marks the end of the German pipe operations of Vallourec, which it took over from Mannesmann in 2005. The mill in Mülheim an der Ruhr stopped production earlier this month.
“This is the closing of an important chapter of German industrial history,” said a commentator at radio station WDR. According to daily newspaper NRZ, the last rolling of a customer order occurred on Thursday. Some other operations, such as delivery, will be maintained until the final shutdown at the end of the year, Kallanish learns from the paper, which cites shop chairman Vilson Gegic.
The mills started production in the late 19th century under the Mannesmannröhren-Werke (MRW) brand. Following the dismantlement of the traditional Mannesmann group in the early 2000s, Vallourec took over four pipe mills, of which two were closed earlier. For the two remaining mills it started looking for a buyer in late 2021, but half a year later decided on a closure. The two sites together have employed 2,200 people.
Other German pipe mills under the Mannesmann/MRW label back then were acquired by Salzgitter AG and are still operational.
Christian Koehl Germany
August crude steel production rises in India, falls in Iran, Worldsteel says
Significant growth in India
Crude steel production in India increased year on year by 17.4% to 11.9 million tonnes in August, and by 10.5% year on year for the period from January to August, Worldsteel said.
The country was also the world’s second-largest steel producer in August, with domestic consumption for the full year of 2023 expected to increase by 7.5% to 128.85 million tonnes, the Indian Steel Association (ISA) said in May.
Moderate increase for Chinese steel output
The top crude steel producer, China, reported a moderate increase in output in August, to 86.4 million tonnes. This was up by 3.2% compared with the corresponding month a year earlier, as well as a more modest 2.6% year-on-year rise for the period January-August.
The production increase in China was despite strict government restrictions intended to limit the sector’s growth, according to Jens Björkman, chairman of the raw material suppliers committee of the International Rebar Producers and Exporters’ Association (Irepas).
But with winter approaching, China was expected to reduce its steel production, Björkman said.
Recent monetary relaxation and stimulus packages, specifically targeting the real estate and steel sectors, might fall short in terms of reviving demand and stabilizing prices, he added.
Sharp decline in Iran
Steel production in Iran decreased by 24.1% in August to 1.6 million tonnes, and the country produced 19.7 million tonnes of crude steel in the first eight months of the year, an increase of 1.1% year on year.
The reason for declining production in the Middle Eastern country was electricity shortages.
Such shortages are a common problem in Iran during the hot summer months, when household consumption for air-conditioning increases. As a result, supply to industries is reduced, and steelmaking is no exception.
In addition, the Iranian government imposed a 2% export duty on all raw materials and steel products, announced on September 4. This would be in addition to a pre-existing 0.5% duty.
Published by: Serife Durmus
