Category: Latest Updates

“We are still experiencing a moment of great uncertainty,” Alessadro Banzato, president of the Italian steelmaker association Federacciai said on July 15 during a meeting of the group in which he was confirmed for another two years at the helm.

“The two key steel industry [markets], cars and construction, are still in extreme difficulty with very worrying numbers, so it is difficult to say today if we will experience a substantial recovery in the coming months, also because the effects of the various measures implemented by the government are not visible yet.”

On July 15 Anfia, Italy’s automotive Industry association, said that from January to June just 584,052 new cars were registered, a 46% decline from the same period of a year ago.

According to Federacciai’s data, in the first five months of the year Italian steel output stood at 8.3 million mt, down 21% on year. Italy, Europe’s second largest steel producer after Germany, did worse compared to the rest of Europe. In the first five months of the year, EU(28) production stood at 58.3 million mt, down 17.3% on the same period of the previous year.

According to market sources, the Italian steel market is in a “stabilization” mode with mills working to balance demand and supply while pushing for higher steel prices to offset costs. After a positive start to 2020, HRC gaining some 6% between January and February to a year to date high of Eur458/mt EXW South Europe on March 2, the COVID-19 crisis and subsequent lockdowns drove European steel prices lower. From the March high, HRC prices fell 14% reaching Eur387.50/mt at the start of July – price levels last seen in August 2016.

Federacciai is part of Confindustria and has about 130 associated companies that manufacture and transform over 95% of Italian steel production. The Italian steel sector has about Eur40 billion in annual sales and employs about 70,000 workers direct and indirectly.

— Annalisa Villa, Len Griffin

Turkish producers have welcomed The US Court of International Trade’s (CIT) July 14 ruling that US President Donald Trump’s decision to impose additional duties on imports of Turkish steel under Section 232 of the Trade Expansion Act of 1962 was in violation of the law, saying this decision could contribute to trade relations between the countries.

“The US court’s latest decision once again approved that additional duties imposed on imports of Turkish steel were against objective law rules, and were politically motivated,” Veysel Yayan, general secretary of Turkish Steel Producers’ Association (TCUD), told S&P Global Platts on July 15.

President Trump raised Turkey’s steel tariff rate from 25% to 50% in August 2018 under Section 232, amid increased political tension between the countries due to the detention of a US religious leader. Turkey’s tariff rate on steel was later dropped back to 25% in May 2019, amid some developments in relations between the countries.

“The duties which were paid unfairly in that ten-month period should be refunded following the US court’s latest decision,” Yayan told Platts, adding that the US should also lift Section 232 tariffs on Turkey, like a few other countries, to reach the goal of $100 billion in trade between the countries, previously set by Turkish President Tayyip Erdogan and US President Donald Trump.

As the court’s decision also removed the concerns of Turkish producers and US importers about another tariff increase in new dealings, the general secretary is expecting a recovery in steel trade between the countries.

Some recovery in Turkish mills’ steel shipments to the US have already been seen this year. Turkish mills’ rebar exports to the US reached 226,750 mt in the first five months of 2020, sharply higher than just 18,400 mt exported in the same period of 2019, Platts observed from the Turkish Statistical Institute (TUIK) data.

Turkish mills’ rebar shipments to the US fell to just 108,300 mt in all of 2019, down from 305,800 mt in 2018, due to the Section 232 tariff, as reported.

The general secretary of TCUD also told Platts on July 15 that he is pretty sure customs duties could be soon impose on steel imports from the EU in response to the EU’s imposition of additional measures against imports of Turkish steel. “The Turkish government stated its intention about it,” he said.

Turkey informed the World Trade Organization on May 25 about possible duties against EU steel, as Platts has reported. But no presidential decree about it has been published yet, despite Turkish steel producers’ demands.

— Cenk Can

The seasonal slowdown of business in the summer months this year should be less pronounced than in “…normal” years, given that business is already slowed down massively. Some observers have raised the possibility that summer may even bring a revival of activity.

One German trader of coil products suggests exactly this. “Some say that summer could compensate for the lack of activity we have had over the last months,” he tells Kallanish. Another German source, a buyer of a processor company, is sceptical, however. “The expectations are diverging wildly, everyone believes something different,” he says. “But honestly, I do not believe in a summer of business, I simply do not see activities increasing much.”

A service centre manager from the Netherlands has observed that June did bring noticeably more business than April and May. But he refrains from predicting that this will sustain throughout July and August.

He also observes the gap between hot rolled coil prices in Italy and north-western Europe is narrow at present, with some €400/tonne ($454) ex-works fetched in the north and nearly €390 reached in Italy. This could be an argument for some more hikes in the north. But then, as Kallanish suggested last week, July business in Italy has quickly slowed down after a good start. Conversely, a too small gap could lead to another softening of prices in Italy.

Two Austrian IT companies have created a partnership to jointly offer services that improve traceability of documentation in the steel industry. The “Steel But Smart” venture comprises blockchain interface solutions provider Riddle&Code and S1Seven, a company developing solutions particular to the steel industry.

Europe’s steel production sites and processing companies exchange around 100 million paper certificates every year to meet regulatory requirements for material quality documentation, the partners say. While more and more machines are becoming connected to the internet, these documents remain paper-based and non-machine readable.

Such traditional inefficiencies, along with a lack of data processing standards, keep opening opportunities for fraud and negligence, the companies tell Kallanish. Riddle&Code and S1Seven aim at building a blockchain-based notarisation service for certificates. This provides a product with a digital, tamper-proof identity, and traces each step of its journey, from raw material to final application.

Steel But Smart supports all currently used tagging methods such as numerical marking and barcoding, but enhances the security by adding mass balance proofs. It ensures that certificates can only be issued for actually physically produced or transferred quantities, the companies claim.

Riddle&Code has worked within the highly-regulated Swiss banking industry, and developed solutions with partners such as Daimler, utility Wien Energie and Deloitte.

Spanish industrial group Grupo Industrial CL announced July 11 it has reached an agreement with US fund KKR to buy 100% of Grupo Gallardo Balboa, an Extremadura-based holding company for various steelmaking corporations that makes corrugated steel, for theequivalent of Eur145 million ($164 million).

The steel group will be absorbed into Grupo Industrial CL which owns a gas distribution network as well as retail cosmetic and packaging businesses and has recently moved into the renewable construction and maintenance business.

The offer means CL will take on financial obligations of Eur145 million, which includes a Eur70 million capital increase plus the existing credit lines of Grupo Gallardo Balboa.

The company also said it will immediately inject Eur30 million to guarantee purchases of raw materials, maintain production at all of Gallardo’s sites and guarantee payments to 100% of its suppliers. Grupo Industrial CL also said it will retain the existing workforce at Grupo Gallardo.

CL said it plans to carry out an industrial plan to reinforce Gallardo and make it into a reference for the European steel sector.

Grupo Gallardo owns production sites with 1.5 million mt of annual smelting capacity and 2.8 million mt/year of capacity for steel products.

“Following the COVID-19 crisis, we are certain that Extremadura and Spain need to back a reindustrialization plan to reduce our dependency on Asian markets,” said Miguel Angel Leal, CEO of CL’s Industrial Division.

The purchase fits in with the company’s strategy of applying its management methods to industrial groups that are in difficulty but have a market and a future, he said.

Balboa announced June 24 it was close to sealing a deal with an industrial partner and an agreement with financial groups to restructure its debt, after previous debt issues led to a takeover by US fund KKR in November 2019 after the companies worked together since 2014 alongside creditor banks to reduce Gallardo’s debt and sell off non-steel assets.

The offer had support from the regional government of Extremadura where CL is based and by Grupo Gallardo’s works council.

— Gianluca Baratti

ArcelorMittal is expected to restart during August one of the two temporary idled blast furnaces at its site in Dunkirk, northern France, a spokesperson from the company confirms.

The spokesperson, however, declined to provide further details. ArcelorMittal temporarily idled two of Dunkirk’s three blast furnaces during March and April amid the slump in demand caused by the coronavirus emergency, Kallanish notes.

BF no.3 is expected to restart producing in August. While this indicates the market is gradually recovering, sources also note the decision could well impact the possible restart of ArcelorMittal’s other idled blast furnaces across Europe.

French trade unions welcomed the planned restart of the blast furnace and explained this is understood to be linked to a slight recovery of demand and some orders for the export markets. Another factor that played a role is the planned temporary idling of one ArcelorMittal blast furnace in Ghent, Belgium, from the beginning of September.

The hot strip mill at Dunkirk will see its planned stoppages reduced during the summer due to the partial recovery in demand.

The total throughput of the Port of Antwerp fell by 4.9% in the first half of the year compared to the same period in 2019.  After a strong first quarter, the port experienced a decline in the transhipment of all flows of goods, with the exception of the container sector.  Despite the impact of the coronavirus crisis on global production and logistics chains and a pandemic-driven drop in demand, the port remained 100% operational.

Container traffic status quo

Container traffic increased in the first quarter of the year, but felt the effects of cancelled sailings from April onwards. Nevertheless, for the period January-June 2020, container traffic recorded a slight increase of +0.4% in TEUs compared to the same period last year (with April and May 2019 as absolute record months).  The number of calls made by vessels decreased, but this was compensated by a higher average volume per vessel and by additional calls on top of the normal sailing schedules.  Notable climbers in this special period were the transhipment of pharmaceutical products, e-commerce and health foods.  At the beginning of June, the port also welcomed the world’s newest largest container ship, the HMM Algeciras with a capacity of 23,964 TEU.

Slight recovery in breakbulk sector in June

Since mid-2019, global trade issues continue to adversely affect goods flows in the conventional breakbulk sector. This has culminated in an overall 29% decrease for the period January-June compared to 2019, with inbound and outbound flows being affected to the same extent.  The throughput of iron and steel, the most important freight group within this sector, experienced its best month of 2020 in June but a total decrease of 33.1% for the first six months of this year.

The automotive sector was already struggling in 2019 with the introduction of stricter rules on passenger car emissions in Europe and this trend continued in 2020. From March onwards, the coronavirus crisis only compounded this situation: less exports of new European cars, less supply of new Asian cars and downtime in the second-hand market due to travel restrictions.  As a result, the total RoRo throughput fell by 21.8%.

Bulk cargo declined due to reduced demand for energy

While the transhipment of coal continued to grow in the first quarter, it came to a standstill in the second quarter. This resulted in a 13.1% drop in dry bulk transhipment in January-June 2020 compared to the same period last year.  This decrease is partly attributable to the growing supply of green energy, which reduced the need for coal, partly by reduced demand for coal from the steel sector and partly by a strong second quarter in 2019. Fertilisers, which represent the largest share of dry bulk volumes, grew slightly (+1%) compared to January-June 2019.

Liquid bulk decreased by 7.5% compared to the first half of 2019 because of the coronavirus crisis, which wiped out demand for oil products, combined with price wars.  Thanks to the gradual lifting of the coronavirus measures and the recovery of the oil price, fuel throughput increased in May and June.  Moreover, chemicals decreased by 8.9% compared to the first six months of 2019, mainly due to reduced demand from the automotive sector.

Seagoing vessels

Over the past six months, 6,797 seagoing vessels called at Antwerp, representing a decrease of 5.6% compared to the same period in 2019. The gross tonnage of these vessels fell by 7.9% to 193 million.

Port of Antwerp grants postponement of payment

Following discussions with the Antwerp port community about the consequences of the coronavirus crisis, the Port Authority decided to grant a postponement of payment for the shipping and inland navigation dues and for the domain concessions.

Impact coronavirus and prospects

For the third quarter, while the Port of Antwerp is still expecting blank sailings, it is also seeing the first signs of recovery and an upturn in the European economy.  The Port of Antwerp is making every effort to continue to ensure the efficient functioning of the port.

Source: Port of Antwerp

The International Stainless Steel Forum (ISSF) has released figures for the first three months of 2020 showing that stainless steel melt shop production decreased by 8.0% year–on–year to 11.7 million metric tons.

Source: ISSF

The European tube and flat stainless steel market is struggling with low prices despite orders from distributors having picked up slightly in recent days, service centres and re-rollers tell Kallanish.

The market for stainless flat and tube products is still feeling the consequences of the global health crisis and weak demand from end-use sectors. With stocks very high in most European countries, destocking and uncertainty are still hampering sales.

Some European flat stainless steelmakers continue to produce at full capacity and are adopting very aggressive commercial strategies. “Unless Aperam and Outokumpu implement some stoppages to cut overcapacity, demand for stainless in Europe will not resume,” a coil buyer believes. Other mills in Europe, however, have reduced output by some -40% in the past weeks. Producers are still facing poor order levels and short delivery times.

Eastern European countries are currently driving demand in Europe, together with Scandinavia. Germany is particularly sluggish. The country is facing massive destocking and poor orders from service centres and distributors, sources indicate.

French activity is slowly picking up, while Italian stainless flats and tubes consumption has fallen by an average of -25% year-on-year in the second quarter. Prices for both tubes and re-rolled flat products have lost €50/tonne on average in June and more falls are expected.

Stainless hot rolled coil in Europe is at €1,650/t ($1,866) delivered on average this month. Cold rolled coil is at €1,780-1,800/t delivered on average, down some €30/t ($33.8/t) month-on-month, sources suggest.

European suppliers of flat products are expected in the short term to be successful in somewhat widening the spread between local finished steel prices and input costs. This comes after they reached a record-low level, Andreas Schneider from Stalhmark Consult explained during a webinar organised by EUROMETAL. 

According to the analyst’s calculations, in June this year spreads for hot rolled coil produced through the blast furnace route in Europe fell to below €200/tonne ($226). Back in 2017/2018 these were stable at above €300/t, before starting a steady descent in the fourth quarter of 2018.

“Assuming raw material prices will not change drastically from the current levels, my assumption is that prices for flat products in Europe cannot go lower,” Schneider said. He added that he forecasts a stabilisation with a small upward movement.

Spreads will rise by some €10-20/t, possibly taking the HRC spread to above €200/t again, he continued.

According to Kallanish price series, HRC transaction prices in northern Europe remain under pressure despite attempts by local mills to raise their offers by as much as €50/t. Prices remain at around €400/t base ex-works, the lowest level registered since Q2 2016.