Category: Latest Updates

Ukrainian steel production fell 6.6% on the year to 13.68 million mt in January-August due to weak demand and falling prices on world markets, Ukrmetallurgprom, the country’s steel making industry association, reported Sept. 16.

Ukraine’s production of rolled steel fell by 2% on the year to 12.27 million mt in January-August, pig iron output fell 1.2% to 13.55 million mt and output of steel pipes and tubes dropped by 26.9% to 540,000 mt, Ukrmetallurgprom said.

“The results of the steel sector performance for eight months of 2020 indicate that the industry remains in a difficult situation caused by the crisis on the world steel market, exacerbated by the coronavirus pandemic,” Ukrmetallurgprom said in a statement. “The main reasons for the decline in production, along with global quarantine, are lower prices and reduced demand for steel products.”

In January-August Ukraine’s coke output decreased by 6% on the year to 6.46 million mt.

Ukraine increased production of sintered iron ore by 0.8% on the year to 21.28 million mt in January-August. Ukraine is one of the world’s largest producers of iron ore.

In January-August, Ukraine’s metallurgy sector consumed 1.24 Bcm of natural gas, down 2% on the year, while power consumption decreased by 5% on the year to 7.35 TWh, the association said.

As of Sept. 11, 18 of the 21 blast furnaces in Ukraine were in operation, the association said. Six out of eight open-hearth furnaces, 10 out of 16 converters, five out of 15 electric arc furnaces and 16 continuous billet casting machines out of 17 were also in use.

In August alone Ukraine produced 1.83 million mt of steel, down 5.7% from August 2019, Ukrmetallurgprom said.

Over the same period, production of rolled steel increased to 1.63 million mt from 1.54 million mt, but output of pig iron fell to 1.81 million mt from 1.83 million mt.

In 2019, Ukraine’s steel output fell 1.4% on the year to 20.8 million mt, according to Ukrmetallurgprom.

— Alexander Bor

European galvanized market pushed higher Sept. 16 with increasingly tight availability amid rapidly recovering demand driving prices higher,, sources told S&P Global Platts.

The Platts TSI HDG index was assessed at Eur568/mt ex-works Ruhr Sept. 16, Eur18/mt higher week on week and its highest level since April 15.

In Southern Europe, HDG rose Eur2 on the week and was assessed at Eur550/mt ex-works South Europe, its highest mark since May 31, 2019.

A Central European mill source said better than expected order intake from the Automotive sector now meant there would be extremely limited volumes remaining for the spot market.

“We received so many orders from the automotive industry so material they did not take in the spring they take again now, so its compensation quantities,” he said. “It is not that business is booming just that they need to build cars they did not in the spring time.”

An Italy-based mill source said that demand was now at a good level however he was not certain how sustainable the demand would be.

“Yes we are running but don’t know how long the demand will last so the point is production can be fine but how many cars can be sold? Demand now is absolutely good and they are back in the market,” he said.

A Central European service center source said he was seeing good demand from premium automotive segment but that declining disposable incomes would limit consumer demand.

“Unemployment forecasts are saying that people will not be in a position to buy new cars,” he said. “At the moment we are seeing good demand which is the backlog generated during the three-month closures of assembly lines in the spring time.”

— Len Griffin, Amanda Flint

The typical flow of hot-dipped galvanized steel imports into Europe from Asia has dried up over August and September despite plenty of safeguard quota allowances being available, with material fetching better prices in Far East markets than in the European market.

However, with the recent recovery in European prices, a sizeable portion of the category 4b import quota for Asian producers untouched and just over two weeks left until the new safeguard quota allowance is made available Oct. 1, sources are expecting imports to return to the market at some point.

This is complicating the near term picture and adding to mounting European oversupply concerns, as more local capacity is expected to return from maintenances or COVID shutdowns this month.

An Italian service center source said he still didn’t expect to see any import volumes in October, but noted it would be “really difficult this moment to give a forecast on prices. I’m sure imports will come back because it’s impossible that they will decide to stay out [of Europe] for much longer.”

However, the same source said that “for the moment we see absolutely nothing coming into the EU from South Korea or India. They’re staying out of the market and choosing to remain in Asia where there are higher domestic prices.”

The Platts TSI HDG index was assessed at Eur550/mt ($652/mt) ex-works Ruhr Sept. 9, up Eur4/mt on the week, and in Southern Europe HDG was assessed at Eur548/mt ex-works, up Eur12/mt. In China, HDG export prices were assessed at $613/mt FOB Shanghai.

Options for imports of hot-dipped galvanized material for automotive use under category 4b are fairly ample, specifically tariff quotas for South Korea, India, Taiwan and other “non-country specific” destinations.

China, however, has nearly exhausted its quota with just 9,022 mt left (7%) as of Sept. 16. Once a quota balance dips below 10%, importers are obliged to deposit with customs authorities a 25% bank guarantee to cover any potential duty liability.

Taiwan’s quota balance stood at 30,386 mt as of Sept. 16, or 94% left of its available allowance, and India’s allocation is also relatively high at 46,482 mt, or 60% of its quota balance left.

India’s largely unused balance is in keeping with import behavior seen at the end of 2019, when the country had an unused balance of 45%.

An Italian mill source said he had heard that hot-dipped galvanized material from India could be due for delivery into the EU for November, but said that because of “higher international prices and the current Italian [pricing] situation, no one wants to buy from imports.”

The source added, “If you buy now from imports, galvanized material will not be guaranteed [for arrival] until next year.”

Meanwhile, a Central Europe-based trader said exporters were fetching better prices in other markets, with Indian producers — one of the largest suppliers to Europe — “completely out” since June.

The European Commission data also showed the “non-country specific” quota now stands at 24,647 mt, or 30% left, with 1,366,551 mt awaiting allocation at European ports.

In the fourth quarter of a year, named countries that have exhausted their own allocations — notably China and South Korea — are permitted to utilize the “non-country specific” available balance.

For material falling under category 4a — material mostly used for non-automotive applications — the “non-country specific” quota balance currently sits at 173,040 mt or 35% still available for import.

South Korea’s quota allowance for category 4a material is nearly used up, with just 946 mt or 2% still available for import as of Sept. 16, with India having exhausted its 54,409 mt allowance as of Aug. 18.

A Benelux-based service center source also said that hot-dipped galvanized material was “significantly under pressure” in Europe due to limited supply and long lead times, reopening the possibility of imports.

“If EU delivery times extend to 13-14 weeks, imports could make sense,” he said.

— Amanda Flint

Spanish long steel supplier Celsa Group is considering applying to the Spanish government rescue fund to help overcome the impact of the Covid-19 crisis on its business, Kallanish notes.

“The company is currently studying carefully the conditions disclosed by the solvency fund and whether to take advantage of the temporary public aid offered to strategic companies, which as a consequence of the pandemic need additional financing on a temporary basis,” Celsa says in a note.

Celsa is trying to secure €200 million ($237m) from the fund, according to media reports. In order to obtain financial support, as required by the Spanish government, the steelmaker needs to demonstrate its economic situation was viable to the end of 2019. It also needs to show Covid-19 has had a highly negative impact on its activity or employment, at the national or regional level.

Russian steel consumption will recover to pre-Covid-19-pandemic levels no earlier than mid-2021, says MMK deputy general director for sales Sergey Ushakov. Consumption in January-July decreased by -8.4% on-year.

After passing the lowest point of recession in the second quarter, consumers are adapting rapidly to the changed working conditions and striving to restore the previous way of work, Ushakov says.

“The most likely scenario for the further development of the situation is a prolonged recovery of the market,” Ushakov comments. “This includes state support for national projects, support for mortgage lending and apartment construction, a programme for renewing the Russian Railways, for the machine-building sector and stimulating the automotive industry.”

MMK also plans to develop a new sales strategy, since its supplies to large metal trading groups, regional traders and small and medium companies are consistently strong. About 50-60% of sales are accounted for by independent companies.

Product is being sold by its own distribution network – MMK Trading House (TD) – which is reaching out to consumers with whom the steelmaker does not have direct contracts due to the low-tonnage orders, Kallanish notes.

TD has a developed warehouse network consisting of 30 sites in Russia, as well as five divisions in Kazakhstan. It works also with small businesses and is developing market niches, including the segment of high-strength and wear-resistant rolled products.

Since 2014, MMK’s sales through its own trading house have grown by 31%.

The steel industry Wire & Tube fair will be going ahead as planned early December, fair operator Messe Düsseldorf said Sept. 15.

The event is due to be held Dec. 7-11 in Düsseldorf, Germany, after already been postponed from March when the pandemic started to hit Germany.

The news comes despite concerns over future pandemic developments raised by market participants and companies such as steelmaker Thyssenkrupp pulling out of the event.

“In a meeting of the European associations acting as conceptual sponsors of the events in Düsseldorf the decision has now been taken that a commitment to the leading trade fairs from their respective sectors of industry is indispensable despite these challenging times,” Messe Düsseldorf said in a statement.

The organizer said that due to travel restrictions they expect a “primarily European character” of the Wire & Tube this year.

German steelmaker Thyssenkrupp announced Sept. 8 that the group would not attend the fair due to infection risks and unforeseeable developments of the pandemic.

There has been growing market chatter over major European mills pondering whether to pull out of this year’s trade show in order to save costs after being hit with cash flow problems and general concerns over travel restrictions and safety.

After the postponement of the Euroblech fair to 2021, Wire & Tube is set to become the only major industry event planned in Europe in 2020. The fair is held every two years and is one of the major trade shows in Europe for the flat and long steel industry. In 2018, the Wire & Tube fair attracted more than 71,000 visitors.

— Laura Varriale

NLMK Clabecq has made the first supply of “Quard” 450 wear-resistant steel, expanding further its customer portfolio.

The delivery was made to Feniks, a company producing special-purpose machinery installed on chassis frames. “The unique wear-resistant properties of this steel grade more than triples the durability of individual special-purpose equipment components,” NLMK tells Kallanish.

“Our company plans to further develop this product and to introduce new grades of wear-resistant rolled products into production for our Russian and international customers,” it adds.

Earlier this year Clabecq signed a supply contract with Brazilian company Innova for the delivery of Quard 500 abrasion resistant plates (see Kallanish passim).

French steel exports to non-EU countries fell again in April after declining in the first quarter, Kallanish learns from new data released by national steel association Fédération Française de l’Acier (FFA).

French exports of flat and long steel to countries outside the EU28 declined by -34.2% year-on-year in April to 104,000 tonnes. Flats exports decreased by -33.6% to 93,000t, compared to 140,000t in April 2019. Longs exports declined by -38.9% to 11,000t, compared to 18,000t a year earlier, the association reveals.

In January-April French long and flat product exports to non-EU countries also decreased on-year, by -24.8% to 109,000 tonnes/month. Exports of flat products fell by -24% on-year to 95,000 t/m, while long products exports declined by -30% to 14,000 t/m, the association concludes.

Spanish special steels supplier Sidenor has opened negotiations with local trade unions to apply a flexible temporary layoff plan for the entire workforce in Spain, Kallanish learns from local sources.

The company wants to agree a plan that could remain in place until the end of 2021, and have the flexibility to use it when needed as long as demand remains under pressure in Europe.

The company is mainly supplying the automotive sector and has been impacted by the slump seen in this industry since last year, which has been exacerbated by the coronavirus pandemic. Local sources note that Sidenor is producing at around 50% of its capacity on average across Spain.

Carmaker associations in the EU and UK have joined forces to voice their concern regarding a possible “no deal” Brexit. They calculate this event could cost €110 billion ($131 billion) in lost trade over the next five years.

The automotive sector is already suffering from the effects of the coronavirus pandemic, but a further shock to the trade system without a Brexit deal would be “…devastating”, the associations add.

“Without a deal in place by 31 December, both sides would be forced to trade under so-called World Trade Organisation (WTO) non-preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks,” the associations say in a letter seen by Kallanish.

“Such tariffs – far higher than the small margins of most manufacturers – would almost certainly need to be passed on to consumers, making vehicles more expensive, reducing choice, and impacting demand,” they continue. “Furthermore, automotive suppliers and their products will be hit by tariffs. This will make production more expensive or will lead to more imports of parts from other competitive countries.”

The associations calculate that the production of 3.6 million units of vehicles has already been lost this year due to the coronavirus. Over the next five years a “no deal” Brexit could wipe away a further 3 million units of cars and vans production.

Combined, the EU27 and UK automotive sector is responsible for 20% of global motor vehicle production and spends some €60.8 billion on innovation per year. “Any deal should include zero tariffs and quotas, appropriate rules of origin for both internal combustion engine and alternatively fuelled vehicles, plus components and powertrains, and a framework to avoid regulatory divergence,” the associations conclude.