Category: Latest Updates

Austrian steelmaker Voestalpine has announced that its subsidiary Voestalpine BÖHLER Edelstahl has built a new special steel plant in Kapfenberg to recover heat and utilize waste heat in order to reduce carbon emissions. The groundbreaking for the plant was held in 2018. The plant will produce around 205,000 mt of ultra high-quality special steel per year, as of 2021.

The new design involves installing heat recovery systems on the vacuum AOD convertor and electric arc furnace. This new process generates even more heat than the new special sheet plant itself needs. According to the company, feeding around 20,000 MWh of this surplus heat into the public heating network allows the municipality of Kapfenberg to reduce its natural gas consumption, resulting in an annual carbon reduction of more than 4,000 mt.

“We are actively striving to achieve environmentally friendly and purposeful production, paired with the conscientious use of valuable resources. That’s why we placed special emphasis on environmental protection when planning our new special steel plant. Air and wastewater treatment plants are state-of-the-art, meeting the most stringent environmental regulations. High-capacity heat recovery systems also help reduce emissions,” Michael Ebner, head of environment & investments at voestalpine BÖHLER Edelstahl, said.

At its 88th session held virtually on September 24-25 and 28-29, the Steel Committee of the Organization for Economic Co-operation and Development (OECD) discussed the outlook and the future of the steel sector, growing excess capacity and increasing trade tensions. The committee also discussed the challenges facing the global steel industry and policies to promote adjustment and ensure a fair playing field in the sector. The OECD expressed grave concerns about the deterioration of steel market conditions related to the coronavirus, causing demand and production disruptions that have impacted all economic sectors.

The latest available data from the OECD show that global steelmaking capacity could increase to 2.45 million mt in 2020. The global excess capacity could rise by 41.8 million mt in the current year, mainly supported by new capacities becoming available in the Middle East and Asia. The committee stated that the gap between global production and capacity is expected to reach 700 million mt in the current year, after narrowing between 2016 and 2019. The committee noted concerns that a number of planned capacity increases are premised on expectations of an increase in future demand, including demand in export markets.

In the OECD’s September 2020 Interim Economic Outlook, it is forecast that world GDP will drop by 4.5 percent in 2020, before picking up by five percent in 2021. Most major steel-producing economies have experienced significant contractions in steel production this year due to the coronavirus. The Steel Committee noted with concern the divergence from this global trend in China, where steel production reached record volumes in the first semester of 2020. These developments pose a risk of oversupply in China, exacerbating global imbalances. Besides risks related to the pandemic, the main risks to the outlook include the impacts of growing global excess capacity, supported by government subsidies and investment policies that are putting the long-run viability of producers at risk and should therefore be addressed urgently.

ArcelorMittal has announced a new target to make all its global operations carbon neutral by 2050. This builds on its existing target to cut its European units’ emissions by -30% by 2030 and become carbon neutral by 2050.

In a note sent to Kallanish the company highlights that it is currently pushing forward the use of the hydrogen-direct reduced iron route to produce steel. It is also looking at a “smart carbon” approach in which blast furnaces produce carbon neutral steel through the use of circular carbon and carbon capture technologies.

“We are working on various pilot technologies which have excellent potential,” says ArcelorMittal Europe chief executive Aditya Mittal. “In Hamburg, where we own and operate Europe’s only DRI-EAF facility, we will test not only the ability of hydrogen to reduce the iron ore and form DRI, but also then test that carbon-free DRI in the EAF in the actual steelmaking process.”

“Hydrogen has a lot of potential but given the significant transition cost, we also believe in working on solutions for the traditional integrated route,” he continues. “This essentially follows the bio-energy, carbon capture and utilisation and storage route, which as stressed by both the IPCC and the IEA will be critical to achieving net zero by 2050.”

ArcelorMittal says it believes the “smart carbon” route can deliver results sooner, to limit CO2 emissions already by 2030. Industrial scale production from the hydrogen-DRI route, though, is unlikely to be significant before 2030 due to the current high costs.

Support from authorities globally will be critical to achieving the 2050 goal, the firm says. “We intend to actively engage with governments to chart a way forward that enables the steel industry to make meaningful progress through carefully designed policy that protects against carbon leakage,” Mittal concludes.

Southeast Europe (SEE) crude steel production continued to decrease in January-August, according to the latest worldsteel data monitored by Kallanish. Regional output amounted to 2.243 million tonnes, down by -22.7% year-on-year.

In January-July regional production had fallen -28.7% on-year to 2.002mt.

Serbia was again the largest steel producer among the seven countries of SEE, which also include Bulgaria, Croatia, Slovenia, Bosnia, North Macedonia and Moldova.

Serbia’s production of crude steel totalled 973,000t in January-August, down by -24.1% y-o-y.

This time, the second-largest producer in the region was Slovenia, whose crude steel output fell -17.2% to 359,000t.

The third-largest steel producer Bosnia and Herzegovina saw production of 345,000t, down by -38.2% y-o-y.

Fourth-largest Bulgaria saw its crude steel output down by -25.1% to 310,000t.

The fifth-largest steel producer, Moldova, produced 182,000t, down by -27.7% y-o-y.

Although Serbia’s crude steel production decreased, construction growth provides a positive outlook for the country’s steel industry, according to long steelmaker Metalfer (see Kallanish passim). The Serbian government stepped up construction projects in the run up to the general election, which the ruling party of President Aleksandar Vucic won at the start of summer.

Drozapol says the largest risk for business in the remainder of 2020 is the huge uncertainty surrounding the second wave of the Covid-19 pandemic and the resulting restrictions. These should not however be as drastic as the measures seen in March-May.

The Polish distributor’s consolidated revenue fell -2% on-year in the first half of 2020 to PLN 56.79 million ($14.7m). The firm however turned to a PLN 1.19m net profit versus a PLN 2.35m loss a year earlier.

Purchasing rose 26% to PLN 45.29m as the high inventory levels in H1 2019 meant the firm procured less material last year. Domestic suppliers’ share in overall procurement rose to 44% from 31% in H1 2019, while imports’ share dropped 13 percentage points to 56%, Kallanish notes.

The steel market is counting on a further demand rebound, which began in July, but it is too early to talk about a return to normality, Drozapol says. The dynamic going forward will depend on supply levels and the pace at which EU safeguard quotas are exhausted. The latter has greatly disrupted established supply patterns and impacted the timeliness of deliveries.

2020 was supposed to be a challenging year, albeit less so than 2019, and then the pandemic struck unexpectedly, Drozapol observes. Although they held up for the first few weeks of the second quarter, steel demand and prices fell from May onwards, hampering the firm’s earnings.

Drozapol’s consolidated revenue dropped -20% on-year in 2019 to PLN 123.4m and the firm sunk to a PLN 4.4m loss versus a PLN 220,000 profit a year earlier.

Thyssenkrupp group is realigning its automotive engineering business, in the process cutting back on staff capacity, and potentially looking for partners/buyers.

In the coming months the current System Engineering business unit will be split into two independent business units, Kallanish hears from the group. The aim is to create two independent companies with different product ranges.

One will be an engineering company specialising in body assembly lines which will continue to be managed as part of thyssenkrupp’s automotive supply and service segment (Automotive Technology). The other will combine the current powertrain and battery assembly activities and will be part of thyssenkrupp’s portfolio segment (Multi Tracks).

Going forward, a solution will be found for this business outside thyssenkrupp, either in partnerships or under new owners, the group says. In the process, around 800 jobs will be reduced across both units in the current fiscal year, the company says. The reason for restructuring is a slump in order intake and sales drastically exacerbated by the coronavirus crisis, tk says.

The European Commission said Sept. 30 it has launched an investigation into the potential dumping of stainless cold-rolled steel products originating in India and Indonesia.

The move followed a complaint lodged Aug. 17 by the European steel association Eurofer on behalf of producers representing more than 25% of EU production of stainless steel cold-rolled flat products.

The investigation will cover the 12 months that began July 1, 2019. Parties have 10 days to submit information. Provisional measures may be imposed by May 2021.

According to the EC, some raw materials that represent more than 17% of the cost of production of the product under investigation may be distorted because of export restrictions.

The EC has carried out a series of investigations into stainless steel imports, with an ongoing anti-dumping investigation against stainless hot-rolled imports from China, Indonesia and Taiwan.

— Annalisa Villa

Northern European hot-rolled coil prices were nearing the Eur500/mt mark Sept. 30 as material tightness leaves little option for buyers than to accept those levels, sources told S&P Global Platts.

Although the distribution sector reported some holding back in purchasing of late, those who need material will have to accept firm offer levels from European mills.

Multiple sources said that EXW Ruhr prices have reached the Eur500/mt level following several rounds of price hike efforts by mills over the past two months, supported by tight material availability and lack of competitive imports. The daily Platts TSI Northern European HRC index increased Eur2.50/mt to Eur498.50/mt Sept. 30.

“Don’t see huge additional upturn, [but it’s] quite a good increase,” a supplier said. “First the stoppages reduced production and second automotive – not suddenly but strongly started ordering, and then in September they got stronger so they needed more material.”

A trading source said there has been some tendency towards a wait-and-see-mode which resulted in temporary price stabilization, but that more increases are likely in mid-November. The source said that inventories across Europe are still low, which will make further purchases necessary for buyers.

Latest figures from German steel stockholder association showed that flat steel stocks rose marginally from July to August to 1.31 million mt. According to the Platts sentiment survey from September, inventories have been predicted to rise slightly, although distributors expected a small decrease.

Material tightness is also apparent in Italy, where HRC prices have been increasing as well, nearing Eur490/mt EXW. Two suppliers have been heard to have delivery problems with lead times lengthening into next year.

“All the main integrated mills are off the market at the moment but we anticipate them coming back to offer for Q1 in the next week or two” said a UK-based source. “This could be timed with the return of the Chinese to the market.”

There have been signs of weakness in the Chinese market with the holiday season approaching, but the UK source expects them to be short-lived.

“As the market is so short of material with extraordinarily long lead times this will continue to have a supporting effect at least on prices and I can only see that prices have more to go in the short term,” the source said.

— Laura Varriale, Amanda Flint

IndustriALL, the European trade union federation, has issued a call to all steel sector workers to join the “Action Day” planned for 1 October.

Workers are set to demand that European authorities take all necessary actions to safeguard jobs in the sector, following the negative impact of the Covid-19 pandemic and persistent threat of unfair imports.

“The European steel sector was already suffering, and the Covid-19 pandemic has further deepened the crisis facing European steel workers,” IndustriALL says in a note seen by Kallanish. “Steel production in Europe has reduced by 40% and new orders have been cut by up to 70-75%. This has greatly impacted workers in Europe, and it is estimated that at least 45% of the workforce are subjected to (or are at risk of) temporary layoffs and reduced working.”

However, the impact of Covid-19 has not affected all countries in the same way, with China able to increase production by 1.3% in the first quarter, the federation adds.

The association has regularly voiced its concerns over the threat posed by imports; it was, for example, among the firm supporters of stricter rules for the EU safeguard system. “We cannot allow that Europe becomes dependent on steel imports because steel is and will remain an essential material,” IndustriALL deputy general secretary Luis Colunga said recently. “Europe needs steel to ensure economic recovery from the Covid-19 crisis and to deliver on its long-term environmental ambitions.”

World stainless steel melt shop production fell by 9.4% year on year to 23.673 million mt in the first half of 2020, figures released Sept. 29 by International Stainless Steel Forum showed.

Output was down in all regions monitored by the ISSF, with China showing the smallest decline, off 2.7% from H1 2019 at 13.961 million mt. Production in Asia outside of China, on the other hand, fell 24% to 2.966 million mt.

Double-digit year-on-year declines were also seen in the US, down 20% to 1.077 million mt, and Europe, down 16% to 3.131 million mt.

Output in the “others” category — comprising Brazil, Russia, South Africa, South Korea and Indonesia — was down 8.4% at 2.538 million mt.

Global melt shop production in the second quarter of this year was, however, up from Q1 levels at 11.968 million mt -— a 2.2% increase.

That was due to a rebound in Chinese output, where Q2 production rose to 7.881 million mt from 6.08 million mt in Q1.

Q2 production in the other regions was down from Q1 levels.

— Andy Blamey