Category: Latest Updates

German steel stockholder Kloeckner is further driving its path to digitalization and wants to grow by taking over independent stockholders and digitalizing them, CEO Gisbert Ruehl told S&P Global Platts, Aug. 14.

During a press call on the company’s second-quarter results, Ruehl said online retailer Amazon would be a role model for core process automation and that Kloeckner buys from mills and sells to buyers through its own digital channels.

Asked by Platts which competitors would be suitable for a takeover and the timeline of such an undertaking, Ruehl said independent stockholders and steel service centers would be a good start and that there were and had been preliminary talks going on “here and there” when opportunities arose.

“But we are not ruling anything out,” Ruehl said. There have been reports in the past stating that Kloeckner might be eyeing German steelmaker Thyssenkrupp’s distribution arm Materials Services, but Ruehl has repeatedly highlighted that the unit would be too big to be taken over by Kloeckner alone. He added M&A would be a topic for next year under the leadership of incoming ex-Thyssenkrupp CEO Guido Kerkhoff who will take up Ruehl’s role on September 1.

Although Kloeckner was able to drive steel sales through its digital platform further, shipment volumes went down 27.6% year on year to 1.1 million mt in Q2 due to the impact of the coronavirus and related lockdown measures.

For the second half of 2020, Kloeckner expects real steel demand to drop 20% in its biggest customer regions, the US and Europe. Kloeckner sees an increasingly negative outlook for the energy industry in the US, and the automotive and shipbuilding sectors in Europe. The only positive – albeit marginal — outlook is expected for the shipbuilding industry in the US.

The restructuring program that started in March will reduce the overall workforce of Kloeckner by over 1,200 employees, of which 50% will be cut due to digitalization. The company will further close 19 sites as part of network optimization initiatives, most of these are in France.

— Laura Varriale

Die Kaltwalzwerke und die gesamte Stahl und Metall verarbeitende Industrie bekennen sich zu den Klimazielen des Pariser Abkommens. Die Erreichung der ambitionierten Vision eines klimaneutralen Kontinents gelingt nur mit einer starken, in Zukunft emissionsarmen europäischen Stahlindustrie und robusten industriellen Wertschöpfungsnetzwerken, die in Europa Wohlstand und Arbeitsplätze sichern und die Klimaziele durch Innovationen erreichen.

Die Stahlindustrie ist für den Standort Europa unverzichtbar und im Rahmen der Standortpolitik nachhaltig zu erhalten und zu pflegen. Die nachgelagerten Verarbeitungsstufen – so die Stahl und Metall verarbeitende Industrie – und weitere Akteure in der Lieferkette sind in den letzten Jahrzehnten aber nach der Zahl der Arbeitsplätze und der volkswirtschaftlichen Bedeutung gewichtiger geworden und sind im Transformationsprozess ebenso wirkungsvoll zu unterstützen.

Klimaschutz ist eine Aufgabe aller Staaten. Durch ein weltweit abgestimmtes, hohes Ambitionsniveau beim Klimaschutz können global vergleichbare Wettbewerbsbedingungen für die Industrie hergestellt werden. Bisher ist nicht absehbar, dass ein solches Level-Playing-Field, auch nicht auf der Ebene der G20-Staaten, mittelfristig erreicht werden kann. Daher hat die Präsidentin der EU-Kommission im Zusammen­hang mit der Präsentation ihres Green Deal für Europa am 11. Dezember 2019 angekündigt, „für ausgewählte Sektoren ein CO₂-Grenzausgleichssystem vor[zu]schlagen, um das Risiko der Verlager­ung von CO₂-Emissionen zu mindern“. Das System soll sicherstellen, dass in den Importpreisen die CO₂-Kosten besser wider­gespiegelt werden.

Nach unserer Einschätzung könnten umfassende Grenzausgleichsmaßnahmen unter bestimmten Voraussetzungen geeignet sein, Wettbewerbsnachteile, die den EU-Unternehmen durch hohe Klimaschutzstandards entstehen, auszugleichen. Das Risiko einer Abwanderung energieintensiver Branchen oder Produktion in Regionen mit niedrigeren Klimaschutzstandards (Carbon-Leakage) ist unbedingt zu verhindern. Dabei ist aber sicherzustellen, dass der für die exportorientierte europäische Industrie überlebenswichtige freie und regelbasierte Welthandel nicht gestört wird. Grenzausgleichsmaßnahmen müssen deshalb den WTO-Regeln entsprechen und Retorsionsmaßnahmen wichtiger Handelspartner müssen ausgeschlossen werden.

Grenzausgleichsmaßnahmen müssen die gesamte Wertschöpfungskette einbeziehen

Grenzausgleichsmaßnahmen müssen die gesamten Wertschöpfungsketten und Warenströme in den Blick nehmen und einbeziehen. Es ist nicht ausreichend und würde zu Verwerfungen führen, wenn lediglich die Roh­stoffe am Anfang der Wertschöpfungsketten vor dem internationalen Wettbewerb geschützt würden. Wir unterstützen daher nachdrücklich den Vorschlag Frankreichs, der eine Grenzabgabe auf alle Waren vorsieht, die emissionsintensive Materialien enthalten und auch eine Entlastung für den Export dieser Waren beinhaltet. 

Wettbewerbsfähigkeit der Stahl und Metall verarbeitenden Industrien in Europa erhalten

Bei einem Materialkostenanteil von ca. 60% ist die Kaltwalzindustrie sowohl auf wettbewerbsfähige Vormaterialpreise als auch auf wettbewerbsfähige europäische Vormateriallieferanten zwingend angewiesen. Eine Beschränkung des Grenzsausgleichsmechanismus allein auf den Import von Rohstoffen wie Stahl oder Aluminium würde sich durch die politische Verteuerung der Importe – und damit einhergehend auch durch die Verteuerung von in Europa erzeugten Rohstoffen – negativ auf die Wettbewerbsfähigkeit der Verarbeitungsstufen in Europa auswirken und zu einem Investitions-, und Job-Leakage führen.      

Unternehmen in Drittländern würden zudem angereizt werden, den Stahl im eigenen Land zu verarbeiten und anschließend die fertigen oder halbfertigen Produkte, auf die kein Grenzausgleich angewendet wird und die regelmäßig mit höheren CO₂-Emissionen belastet sind, in die EU zu liefern. Europäische Hersteller hätten dadurch nur eingeschränkt Zugang zu Stahlimporten aus Drittländern und kämen für die eigenen, innerhalb der EU hergestellten Produkte, unter steigenden Import- und Wettbewerbsdruck. Um die Rohmaterialen ohne CO₂-Kosten zu beziehen, könnten diese Unternehmen zukünftig gezwungen sein, ihre Produktion und die damit verbundene Wertschöpfung sowie Arbeitsplätze aus der EU hinaus zu verlagern.

Die Kunden der mittelständischen Kaltwalzwerke könnten nicht zuletzt angereizt werden, ihre Produktion in Drittländer zu verlagern, um die Kostennachteile in den Vorleistungen zu vermeiden. Viele europäische Kunden der Stahl und Metall verarbeitenden Industrie, wie z.B. der Automobilbau und der Maschinenbau, produzieren bereits in Drittländern und könnten diese Standorte erweitern.

Petitum

Die Kaltwalzindustrie fordert für den Fall der Einführung eines Grenzausgleichsmechanismus einen umfassenden Wettbewerbsschutz, der alle Verarbeitungsstufen emissionsintensiver Materialien einschließt. Nur so kann das Risiko der Carbon-Leakage-Verlagerung auf die nachgelagerten Verarbeitungsstufen verhindert und ein Schutz von Arbeitsplätzen und Unternehmen in den Wertschöpfungsketten der Stahl- und Metallverarbeitung gewährleistet werden. Ein Schutz nur für ausgewählte Sektoren würde deutlich zu kurz greifen.

Der Beitrag stammt von Martin Kunkel, Geschäftsführer Fachvereinigung Kaltwalzwerke e.V. www.fv-kaltwalzwerke.de

Der Gastkommentar spiegelt die Meinung des Autors wider, nicht notwendigerweise die der Redaktion von marketSTEEL.

Foto: Fachvereinigung Kaltwalzwerke e. V., Martin Kunkel

Autor: von Dagmar Dieterle

The US Department of Commerce has proposed modifying anti-dumping (AD) and countervailing (CV) duty order regulations, Kallanish reports.

The proposed modifications include the creation of standalone rules to govern Commerce’s conduct of circumvention inquiries and the creation of rules for Commerce to assist US Customs and Border Protection in combating duty evasion. Other modifications include creating rules to prevent foreign companies from abusing new shipper reviews and updating existing rules on scope inquiries in order to streamline procedures and expedite deadlines.

If adopted, the changes would increase the efficiency of trade proceedings as well as create new enforcement tools to be used in combating circumvention and evasion, Commerce states.

“Since the beginning, President [Donald] Trump and his administration have remained steadfast in defending the interests of American workers and the vigorous enforcement of our trade remedy laws, so those who take risks, innovate, create new products or toil on the farm receive all the protection from unfair trade to which they are entitled. The regulations being proposed today reaffirm our commitment,” says US Department of Commerce secretary Wilbur Ross.

As of 13 August, Commerce has initiated 281 new antidumping and countervailing duty investigations under the Trump administration. This is a 260% increase from the comparable period under the Obama administration. Commerce maintains 531 AD/CV duty orders on unfairly traded imports, compared to the 368 orders in place at the end of the Obama administration.

The deadline to submit public comment on the proposed rules is 14 September.

Turkish pipe producers are struggling to sell in the global market in the absence of European buyers.

Although European buyers still want to benefit from the strengthening euro, safeguard quotas prevent them from buying from Turkey. As a result, only a limited number of sales have been concluded to the European market this week. Demand from other markets has been insufficient to fill the gap left by the withdrawal of EU buyers.

Hot rolled coil prices, meanwhile, which increased to $500-510/tonne last week, have further risen to $515-525/t ex-works this week.

Turkish pipe producers are unable to reflect the increases seen in HRC prices to pipe prices, due to low demand.

Most offers for Turkish electric resistance welded (ERW) pipe made from S235 grade HRC have remained unchanged at $535-545/t fob Turkey theoretical weight this week. However, welded pipe offers at above $555/t fob are also available from some producers that have advantageous production costs or are booked for longer.

Some Turkish pipe producers have concluded sales to the UK this week, at $520-530/t fob theoretical weight. African buyers have continued concluding bookings from Turkey; however, sales quantities are too low at below 100 tonnes.

A Turkish pipe producer tells Kallanish: “We achieve the best profit margin in the European market. No other market gives us those margins as they buy thinner material. Our costs increase as the material gets thinner.”

Another producer says: “We are suffering from higher HRC prices. We have increased our prices by $50/t while our raw material costs increased $90/t. Insufficient demand is preventing us from increasing our prices at the same rate.”

Sales to Turkmenistan have continued this week, though sellers are worried about receiving payments. Israel is seen to have inquired about some material this week; however, their price expectations are at much below Turkey’s offer prices.

Thyssenkrupp’s performance in the first nine months of its 2019/2020 fiscal year through September has been significantly impacted by the initial effects of the Covid-19 pandemic.

As a result of temporary plant closures at customers, production in many areas came almost to a halt at the start of the third fiscal quarter through June.

The Materials Services division (distribution), continued to feel the effects of pandemic-related weak demand and declining prices in virtually all product segments. Both order intake and sales were clearly negative in a difficult market environment, with a noticeable decline in volumes. Nine-month order intake dropped by about one third year-on-year to €2.4 billion ($2.84 billion), thyssenkrupp says in its interim report.

The situation, particularly in warehousing and distribution, the auto-related service centres and at aerospace, weighed on business and led to negative earnings effects. Accordingly, adjusted Ebit for the nine-month period was negative €62 million down from a profit in the corresponding prior-year period of €119m.

The exception was plastics, which profited from the sale of transparent plastic sheets as a form of protection against the coronavirus.

At a conference call monitored by Kallanish, thyssenkrupp AG chief executive Klaus Keysberg maintained the group intends to hold on to its materials distribution unit. Its future in the group “…will not be questioned as it has promising prospects in the long run,” he said.

Depending on the speed at which production is restarted by customers, thyssenkrupp expects the unit to stabilise or achieve slight improvement in the September quarter.

Thyssenkrupp Steel Europe plans to improve its capacity utilisation going forward, following painful losses in its third fiscal quarter through June.

During the earnings call of parent thyssenkrupp AG, chief financial officer Klaus Keysberg said the steel plants saw production dip -38% at the beginning of the Covid-19 lockdown. Utilisation has meanwhile recovered to between 60% and 70%, he told Kallanish upon request. The idled blast furnace at Hüttenwerke Krupp-Mannesmann (HKM) is meant to come back on stream, he added.

The group nevertheless remains very cautious with predicting a clear improvement for tk Steel Europe. It says it “…expects almost all businesses, with the possible exception of Steel Europe, to report a stable performance or a slight quarter-on quarter improvement in the fourth [fiscal] quarter.”

The group suffered an operating loss (adjusted Ebit) of €679 million ($804m) in the June quarter. In the nine months through June, the loss was €1.2 billion, with Steel Europe alone accounting for €706m. Keysberg conceded that those steelmakers that depend on the automotive industry have been hit harder by the pandemic than others. Still, he maintained that the company’s focus on automotive-grade steels remains promising in the long run.

The steel unit generated a positive cashflow for many years, and the enhanced investments announced in May will keep it fit and competitive, Keysberg observed. He did not comment on speculation about partnerships with other steelmakers, but said that talks are being continued in this regard.

Tata Steel redirected sales to global markets in the first fiscal quarter through June (FQ1) when the Covid-19 lockdown paralysed Indian domestic demand, hitting 1.46 million tonnes of exports. The steelmaker has since lifted capacity utilisation to 95% and reduced exports as domestic demand is improving.

Demand in the September quarter has so far been “…much better” than a typical monsoon quarter, Tata says, adding that the price outlook continues to improve.

The export surge in FQ1 helped limit the decline in Tata Steel India’s sales to -26% on-year and -27% on-quarter, compared to the -55% on-quarter drop in overall Indian steel demand, the producer says. Deliveries totalled 2.93 million tonnes. Revenue fell -40% to INR 12,689 crores ($1.7 billion) and profit after tax was down -74% to INR 411 crores.

India average steel realisations were lower due to the Covid-19 impact in FQ1. About INR 2,000 crores of costs were under absorbed due to the lower volumes and have been charged to the profit and loss account.

“During the quarter, we recalibrated our operations and our sales across geographies in line with underlying regulatory and market conditions,” Tata Steel chief executive TV Narendran says in a report seen by Kallanish. “While this had an adverse impact on our volumes and our margins, we were successful in mitigating the impact as we pivoted the business towards export markets and successfully generated free cashflows despite adverse market conditions.”

“We are further ramping up capacity utilisation and increasing domestic sales which will lead to an improvement in our margins in coming quarters,” he continues. “While the risk of further Covid-19 outbreaks remains, we are cautiously optimistic that the worst is behind us.”

Tata Steel’s consolidated sales fell -22% in FQ1 to 4.93mt, with revenue down -32% to INR 24,289 crores and the firm turning to a net loss of INR 4,609 crores versus a profit of INR 695 crores a year earlier.

Tata Steel Europe performance was affected by the overall weakness in economic activity in Europe. “Spreads are at unsustainably low levels but are expected to improve going forward,” Narendran says of Europe. The company received short support from the UK and Netherlands governments in FQ1, including cash flow deferrals of payables.

German steelmaker Thyssenkrupp is still running at “over 60%” capacity utilization, reiterating that there is no update on a steel joint venture or sale while talks with undisclosed partners are ongoing, CFO Klaus Keyberg said at a press call Aug. 13.

Thyssenkrupp remained vague on plans for the steel unit, only highlighting that the management would be talking to external partners. Keysberg also did not rule out a complete sale of the unit at during the call on the company’s fiscal third-quarter (April-June) earnings.

“Following weeks of a great deal of speculation, there is still no comment today. We are in talks, keeping our options open,” he said, responding to a question about Thyssenkrupp exiting the steel business entirely by saying: “the options are wide-ranging.”

The sale of the Elevator unit late July has improved Thyssenkrupp’s overall position, but Keysberg highlighted that the much needed cash injection of the sale worth Eur17.2 billion ($20.4 billion) would not last forever and that measures in steel in particular would be “rigorous.”

“Maybe that is a difference to the past — the measures are more detailed,” CFO Klaus Keysberg said.

“We have performed worse than our peers, you have to admit that. Restructuring has been overdue, it should have happened earlier,” Keysberg said.

Thyssenkrupp will carry on with its so-called “20-30” restructuring plan which entails staff cuts and investments to improve the product portfolio and quality.

Slow ramp up in line with customer demand

Current capacity utilization at the steelworks would be “over 60%” and slowly ramping up in line with the automotive industry. The blast furnace at semis producer HKM remains down, but will be restarted while other furnaces would then lower their output — although timing for this had not yet been determined.

Thyssenkrupp will continue to focus on the automotive industry, despite being one of the major reasons the steel unit underperformed, as there are “still long-term growth prospects.”

“Uncertainty is still high. We also don’t know what is going to happen to auto demand next year if buying incentives for consumers stop,” Keysberg said.

Keysberg hinted that a sale of the Materials Business into a JV would be off the table for now, and the unit remaining a core business for the group despite suffering from similar seasonal problems, high fixed costs and structural problems to the steel unit.

Production cuts become visible in Q3

Crude steel production at Thyssenkrupp decreased 26.11% year on year to 1.55 million mt in fiscal Q3, while HKM produced 24.2% less at 458,000 mt. Shipments of cold-rolled material dropped 30.1% to 1.16 million mt, hot-rolled production dipped 39.7% to 637,000 mt.

Italian special steel producer AS Terni produced 176,000 mt of steel in Q3, down from 222,000 mt a year earlier due to a temporary plant closure in April during the national lockdown in Italy.

Order intake in Q3 at the steel unit was down 57% year on year at Eur943,000 with significantly lower volumes across all industries, in particular the auto industry. Materials services also had a major drop in orders of 33% year on year to Eur2.24 million, although slightly mitigated by orders from the plastics industry.

The company expects a 10% increase in shipments for Q4, but also higher raw material prices, describing them as “still insufficient cost base.”

— Laura Varriale

A fire broke out the morning of Aug. 13 at the Arvedi Cremona, Italy, steel plant, a mill source close to the matter told S&P Global Platts.

The fire is not expected to affect production at the 3.4 million mt capacity plant, although the mill source said word of the fire would “help to increase Italian steel prices.”

The fire was said to have been caused by a short circuit in the plant’s cooling tower and is now reportedly under control, with no worker fatalities or injuries reported.

The Arvedi Cremona production site is Europe’s first and the world’s second mini-mill for the manufacture of flat rolled steel.

The plant’s hot-rolled production area has two complete lines equipped with two electric arc furnaces), four ladle furnaces and one vacuum oxygen decarburization furnace.

— Amanda Flint

Chinese steel futures and seaborne iron ore prices were fluctuating on Wednesday amid some uncertainty. Iron ore was adjusting to longer processing times for imports from Australia, Kallanish notes.

On the Shanghai Futures Exchange the October rebar contract closed CNY 10/tonne higher than Tuesday at CNY 3,805/t ($547/t), while the same contract for hot rolled coil closed CNY 28/t higher at CNY 3,900/t. In Tangshan, billet prices slipped CNY 20/t to CNY 3,420/t.

The Kallanish KORE 62% Fe index gained $0.38/t to $121.32/dry metric tonne cfr Qingdao. The Kallanish KORE 65% Fe index increased $0.06/t to $128.97/dmt cfr, but the KORE 58% Fe index slipped $0.61/t to $106.39/dmt cfr.

On the Dalian Commodity Exchange, January 2021 iron ore settled down CNY 20.5/t at CNY 819.5/t, while on the Singapore Exchange September 62% Fe futures settled up $1.11/t at $116.32/t. The same contract for 65% Fe and 58% Fe futures settled up $0.99/t at $125.72/t, and up $0.44/t at $105.27/t respectively.

Markets were volatile on Wednesday even though prices did not move far from their starting points. One trigger for uncertainty was the increase in time it takes to acquire permits for commodities imported from Australia. Effective from 11 August, imports from Australia will take 11 days to receive import permits. Cargos were reportedly being affected on Wednesday.

The impact on prices is uncertain, but in the short term it is likely that a slowdown in deliveries of cargos into port stocks will support prices.