Category: Latest Updates

US steel producer Nucor expects long product demand to remain steady in the second half of fiscal 2020, Kallanish reports.

In its second-quarter earnings conference call, the company revealed that it expects its long products divisions to benefit from sustained demand in a solid non-residential construction market for the remainder of the year.

“We continue to see the benefits of our recent initiatives to improve the performance of our businesses that serve the [non-residential construction markets], specifically in rebar fabrication and metal buildings,” says ceo Leon Topalian.

Following a volume decline in Q2 as a result of Covid-19, the company expects a strong rebound in its long divisions as development projects come to fruition. Specifically mentioned during the conference is the company’s Frostproof, Florida, rebar micro mill, which is on track to start-up in Q4.

“Our new Sedalia rebar micro mill Missouri has already achieved positive Ebitda from June,” adds Topalian. “We forecast that the mill will be bottom-line profitable by September, and will be capable of full production capacity early in the fourth quarter.”

“Year-over-year, we’re up 8% in rebar and then 3% on the construction product side,” notes cfo Jim Frias.

As the COVID-19 pandemic hit demand notably, especially in April and May, Turkish buyers’ imports of hot-rolled coil in the first five month of the year remained lower than the same period the previous year. However, imports from some Asian countries, particularly South Korea and Japan showed some notable year on year surge in that period,S&P Global Platts observed from the latest Turkish Statistical Institute (TUIK) data.

Turkey imported 1.48 million mt of HRC in January-May, lower than 1.72 million mt imported in the same period the previous year, the data showed.

Despite a notable 46% on-year decline, Russia remained Turkey’s largest HRC supplier at 374,000 mt in the five-month period, while imports from Ukraine totaled 269,000 mt, higher than the 211,000 mt imported in the same period the previous year.

Some Asian suppliers raised their shares notably in the Turkish market this year with competitive prices. South Korea exported 132,550 mt of HRC to Turkey in the five-month period, sharply higher than 15,000 mt exported in January-May 2019.

According to the terms and conditions of the Free Trade Agreement (FTA) signed by Turkey and South Korea in 2013, the gradual reduction period in customs duties finished January 1, 2020 and the customs duty on all steel products from South Korea zeroed, as Platts has reported.

Turkish imports of HRC from Japan also surged in January-May to 62,380 mt, significantly higher than just 3,160 mt imported in the same period of 2019.

Imports from France remained strong in January-May at 153,000 mt, up 21% on year, while Romania shipped 113,200 mt of HRC to Turkey in the five-month period, down from 140,700 mt in the same period the previous year.

Turkey’s other HRC suppliers in January-May were the Netherlands (91,800 mt), Italy (59,300 mt), Brazil (46,700 mt), Germany (39,300 mt) and Belgium (34,600 mt).

Turkish buyers even imported 20,400 mt of HRC from Tanzania in January-May, Platts observed from the latest TUIK data.

— Cenk Can

Crude steel production in the 64 countries reporting to the World Steel Association in June dropped 7%, year on year to 148.3 million mt due to the ongoing difficulties presented by the COVID-19 pandemic, the group said July 23, underscoring much of the June data estimates that may be revised with next month’s production update.

Asia produced 642 million mt of crude steel in the first half of 2020, a decrease of 3% compared to the first half of 2019.

China produced 91.6 million mt of crude steel in June 2020, marking an increase of 4.5% compared to June 2019. India produced 6.9 million mtof crude steel in June 2020, down 26.3% from June 2019.

The European Union produced 68.3 million mt of crude steel in the first half of 2020, down by 18.7% compared to the first half of 2019.

The largest European producer, Germany, produced 2.5 million mt of crude steel in June 2020, down 27.3% from June 2019.

Italy, the second largest EU producer, registered a decrease in the production of 13% to 1.8 million mt of crude steel in June 2020.

France and Spain each produced 800,000 mt of crude steel in June 2020, down 34.9% and 31.5% respectively on June 2019.

Turkey’s crude steel production for June 2020 was 2.8 million mt, up by 4.1% from June 2019.

North America’s crude steel production in the first half of 2020 was 50.2 million mt, a decrease of 17.6% compared to the first half of 2019.

The United States produced 4.7 mt of crude steel in June 2020, a decrease of 34.5% compared to June 2019.

In South America crude steel production was down by 30.4% to 2.56 million mt in June respective to June last year with Brazil registering a decrease of 27% to 2.1 million mt of crude steel in June.

Production in the C.I.S. was estimated to be 7.9 million mt in June 2020, down 5% from June 2019. Ukraine produced 1.8 million mt of crude steel in June 2020, up 9% from June 2019.

— Annalisa Villa

The Italian steel industry will start to recover in the next few weeks thanks to government investments in the construction sector, Giuseppe Pasini, chairman of Feralpi Group, one of the main European steel producers focused on the construction industry and special products, told S&P Global Platts on July 23.

The company’s mill in Brescia will stop only one week in August on positive orders from the domestic market and internationally. Usually Italian mills do maintenance for two to three weeks in August. “In this way we will manage to recover partially the time lost from end of February to mid of April due to the lockdown,” Pasini said.

Brescia has been one of the hardest hit regions in Italy affected by the coronavirus outbreak, along with Bergamo and Milan.

Feralpi’s steel output was 2.5 million mt in 2019, down 0.3% for the year, on turnover of 1.3 billion euros ($1.5 billion), 1.3% lower than 2018. Output held up well due to a good performance by its German mills.

Investments came to 54.5 million euros, mainly in decarbonization of production activity. “The positive results achieved in 2019 strengthen our group, even in a situation where the market slowed down, especially in the second half of the year,” Pasini said. “What didn’t slow down was our inclination towards investments, which continued to be robust to remain competitive, and picking up on what the UN 2030 Agenda and the European Green New Deal are asking to manufacturing companies. In other words, the use of sustainable, circular development models that contribute to decarbonization, foster social inclusion and create value for the area and community where we operate. These are also the pillars of our development strategy, which are steering investments and R&D projects.”

Pasini welcomed the recovery funds legislation just signed by the EU, and said that Italy should direct the stimulus to healthcare and to efforts to make industry greener.

— Annalisa Villa

US white goods manufacturer Whirlpool saw its earnings fall by about half on-year in the second quarter, largely due to Covid-19, Kallanish reports. 

Whirlpool generated net earnings available to the company of $35 million on sales of $4.04 billion in Q2, down from earnings of $67m on sales of $5.19 billion in Q2 2019. 

“Delivering a solid Q2 performance despite the far-reaching impact of Covid-19 on our business is the result of the decisive actions we took throughout the quarter and ultimately demonstrates the resilience of our business model,” says ceo Marc Bitzer. “While we recognise the uncertainty and volatility which lies ahead of us, we are proud of the way in which we managed through the most difficult quarter of this global crisis.”

Whirlpool now expects its overall 2020 sales to be down about -10-15%, lower than its previous estimate of -13-18%. This is partially due to a faster-than-anticipated recovery in demand in North America. 

The return of white goods manufacturing and other contract business was the stated reason for a recent $40/short ton flat-rolled increase announced earlier this week (see related story).

Schüco has reported a considerable growth in steel systems sales in 2019. The German firm is a supplier of systems for window frames, doors and facades.

The family-owned company is based in Bielefeld and has global operations with more than 5,600 employees. It develops and sells system solutions in aluminium, steel and PVC-U for building envelopes. In 2019, it achieved an increase of revenue by 5% on-year to €1.75 billion ($2 billion).

Its Metal Construction division accounts for the lion’s share of activities, with around €1.5 billion of the total revenue. Steel, in particular, enjoyed increased demand in 2019 and recorded double-digit growth, the company says but does not give precise figures.

For its steel systems, Schüco cooperates with Swiss tubemaker Jansen, Kallanish learns from a spokeswoman. The German construction group foresees more steel being used in facades. Jansen develops, designs, manufactures and markets precision steel tube and steel systems as well as plastic products for the building and other industries.

The Covid-19 outbreak has deeply impacted Spain’s automotive sector performance. The industry is adjusting to “…the new normal” and has reduced its annual production target, says carmakers’ association Asociación Nacional de Fabricantes de Automóviles y Camiones (Anfac).

Output is seen falling by 600,000-700,000 units on-year in 2020, or between -20% and -25%. The outlook, however, will depend on the evolution of the pandemic and production rate of car factories after Covid-19-related stoppages, Anfac says.

Spain’s automotive production totalled 210,880 units in June, -19.2% down year-on-year. During the first half of 2020, output amounted to 955,763 vehicles, -37.8% less than in January-June 2019, Kallanish notes.

Spanish vehicle exports fell -14.9% on-year in June to 178,075 units, while six-month shipments abroad were -35.7% less totalling 793,536 units, Anfac adds.

Italy’s Profiltubi has sold a majority stake to German investment fund Auctus Capital Partners. The re-roller was previously controlled by the Alfieri family, which will remain a minority shareholder, Kallanish notes.

Together with Auctus Capital Partners, Profiltubi aims to widen its product range through new investments, improve the efficiency of its existing equipment and strengthen its presence in Europe. The new owners have appointed Giorgio Frigerio as managing director, Profiltubi says in a note seen by Kallanish.

Profiltubi, located in Reggiolo, northern Italy, manufactures HF-welded tube in a wide range of shapes and sizes. The company has extended its product range through its Steel Service division, which has distributed beams and merchant bar in Europe since 1994. In 2019 the company generated over €100 million ($115m) in turnover.

Lower steel sales volumes and unfavourable raw materials price dynamics decreased Severstal’s revenue in the first half of 2020, the company says. The Russian steelmaker foresees domestic steel demand partially recovering in the second half.

Second-quarter revenue slid -10.5% on-quarter to $1.59 billion, resulting in H1 revenue falling -20% on-year to $3.367 billion. Q2 net profit increased 5.4% on-quarter to $391 million, meaning H1 profit fell -1.95% to $463m.

Ebitda in Q2 decreased by -25.4% on-year to $1.056 billion.

“Severstal’s businesses demonstrated a strong performance despite the market disruptions made by the Covid-19 outbreak,” says chief executive Alexander Shevelev. “We have maintained an almost 100% utilisation rate at our steelmaking facilities. At our mining operations we have increased sales volumes of coking coal by 34% on-quarter, maintained strong sales volumes of iron ore products and achieved significant end-to-end optimisation effects.”

At the same time, weighted average selling prices in Q2 declined by -4% on-quarter as the firm continued developing downstream operations, Kallanish notes. Free Cash Flow increased from $54m in Q1 to $190m, even though the capital investment level remained high.

“In Q2 global steel demand was impacted by the spread of Covid-19 as a result of lockdown restrictions throughout the EU and Russia,” the company says. “According to industry experts, global steel demand is expected to decline by 6% on-year in 2020. Iron ore prices demonstrated strong upward dynamics due to high production rates in China, whereas production contraction elsewhere resulted in lower demand for coking coal.”

Russian domestic steel demand reduced significantly in Q2. However, Severstal expects demand to partially recover in the second half of 2020.

Salzgitter suffered a pre-tax loss in the first half of 2020, which however turned out less harsh than expected, Kallanish learns from the steelmaker.

Once the impact of Covid-19 kicked in, capacity utilisation across the group’s different subsidiaries in the second quarter was between -10% and -70% lower than in Q2 2019. Salzgitter did not provide details of utilisation by plant.

The group closed the first half with a pre-tax loss of €128 million ($146m), thereby exceeding the capital market’s expectations of a loss of €151m, it notes. External sales decreased to €3.6 billion from €4.5 billion in the first half of 2019, due to lower volumes and lower prices.

“We anticipate that the second and third quarters will likely mark the bottoming out of the current crisis,” Salzgitter executives say. At the same time, they emphasise great uncertainty about a recovery in the second half. “In this volatile environment, the development cannot be predicted in the customary manner,” they add.