Category: Latest Updates

The Port of Marseille in Fos-sur-Mer saw some positive signs in steel and breakbulk traffic towards the end of June. Exports of steel products rebounded by 2% on June 2019 after the quiet period of European lockdown, Kallanish learns from the port authority.

In the first half of 2020 the port saw overall traffic fall by -15% due to the global pandemic. In 2019 it had a turnover of over €169 million ($190m) and total traffic reached 79 million tonnes. Last year it received 257,721 tonnes of metallurgical products, while 109,154t were shipped from the port.

To stimulate the recovery, the Port of Marseille Fos Supervisory Board has decided to maintain its €57m capital expenditure for this year and support its customers affected by the health crisis. This includes increasing container terminal capacity and implementing the Fos-Graveleau rail link project, which consists of connecting more container terminals to improve train traffic.

French exports of flat and long steel to non-EU countries fell -33.1% on-year in March to 101,000t, after declining in January and February (see Kallanish passim).

The slump in consumption and standstill in production during the pandemic has led to a decrease in bulk steel imports at the French port of Marseille Fos in the first half of 2020, the French port authotity said July 10.

The halt in vehicle sales caused a 23% drop in car import and export flows at the port in H1, leading to a 23% reduction in bulk steel imports compared with the same time last year. The port did not give a volume.

In the first half of 2019, the total throughput of dry bulk metallurgical products at the port was 188,796 mt.

The port reported a slight recovery towards the end of June, with steel products and breakbulk exports bouncing back by 2% and 6% year on year, respectively.

“The Port of Marseille Fos has never stopped operating, which has helped to mitigate the effects of the crisis,” Chairman of the Management Board of the Port of Marseille Fos Herve Martel said. The Port accommodated an average of 18 cargo vessels a day during the lockdown compared to 25 during a normal period.

To attract more business, the port is offering a 50% reduction in port dues for the container sector for four months from September 2020.

The port had a tumultuous first half of the year as port workers staged large scale strikes in January as part of the anti-government movement in France which led to steelmaker ArcelorMittal declaring force majeure at its Fos Sur Mer plant at the time as port yards quickly reached maximum capacity and raw material supply became critical.

— Laura Varriale

EUROMETAL organized yesterday its first webinar on the subject of “After Covid-19: survival strategies for Steel Distribution, SSC and Steel Trade”.

This online event got 92 registrations and was attended by 71 participants.

Andreas Schneider, Chief Executive Officer at Stahlmarkt Consult, started by
presenting the COVID-19 impact regarding EU Steel industry and Distribution.

Yuriy Rudyuk, Partner at Van Bael & Bellis, presented the EU measures affecting trade in steel: Second review of the EU safeguards and other notable legal developments.

Colin Richardson, editor at Argus Media highlighted significant headwinds for EU steel markets in coming years.

The event was concluded by a discussion panel about the strategies and challenges for the steel distributors, SSC and steel traders. This panel moderated by Daniel Guinabert, EUROMETAL Director General, had the participation of Fernando Espada from TATA Steel Distribution representing the Steel Service Centres, Robert Kay from Ferona and Fabrice Guazzoni from ArcelorMittal representing the Multi-product Stockholding Distribution and Alexander Julius from Macrometal and Julian Verden from Stemcor representing Steel Trading.

EUROMETAL intends to continue with this format of online conferences until the end of this pandemic. A new webinar will take place in early September.

The third quarter could be the worst in 2020 for long products, but raw materials should perform strongly thanks to markets rebuilding and government stimuli adding a push, says the International Rebar Exporters and Producers Association (Irepas).

Chinese demand is helping the steel industry rebound, with the country importing significant semi-finished steel and hot rolled coil in recent months to support its huge backlog of demand after Covid-19 restrictions loosened. However, there is more competition in the global market at the lowest price.

China typically produces 50% of the world’s steel, but that is now approaching 65% because of the downturn in the rest of the world and increased production in China. Strong domestic demand is preventing Chinese exports. It is now rather “…cheap steel from Europe” that is searching for destinations, Irepas observes.

Global longs demand is not as bad as widely reported, but mills operating at more than 60% of capacity utilisation are nevertheless “…blessed,” Irepas says in its latest short-range outlook seen by Kallanish. “Of course, those operating under 50% are in trouble.”

The Covid-19-driven backlog of building applications and delays in investments will reduce demand for all steel products. But, so far, long products have not been hit as hard as flats.

Stimulus activities are buoying up markets, as the rest of the world gradually reopens from lockdowns. Manufacturing and construction activity that was previously halted in many places is gradually and simultaneously boosting demand.

EU market sentiment is far more negative than pre Covid-19. Private investments may be put on hold but the public sector could use construction to stimulate the economy and inject money into it.

“Reopening means utilisation rates have been picking up from bottom levels,” Irepas says. “Scrap inventories were depleted in May as industry closures meant low scrap availability. June buying surpassed the levels for a normal month as scrap needed to be restocked.”

Shipments of steel, one of the main products handled at the port of Antwerp, saw a noticeable drop in the first half of the year, according to statistics issued by the port this week.

In January-June, trans-shipments of iron and steel were -33.1% lower than in the first six months of 2019. The overall group of bulk goods in total saw throughput fall by -29%, with inbound and outbound flows being affected to the same degree, the port says in a note.

Dry bulk shipments fell by -13.1% in the reporting period, largely due to declining loads of coal. This decrease is partly attributed to reduced demand from the steel industry, but also to the rise of green energy, and due to the base effect of a strong second quarter in 2019.

The year-on-year drop is attributed mainly to the overall economic slowdown and global trade issues adversely affecting goods flows in the conventional breakbulk sector. “The coronavirus effect only comes on top of it,” a port spokesman tells Kallanish.

June was the strongest month for steel shipments at the port. This, however, does not necessarily indicate a recent surge in imports or exports. “Figures change quickly, depending on if a big vessel comes in on the last day of one month or on the first of the next,” the spokesman explains.

Two more reviews of the safeguard measures in place in Europe for steel imports are expected to take place by July 2021, Yuriy Rudyuk from the law firm Van Bael & Bellis explained during a webinar organized by EUROMETAL attended by Kallanish.

The new review is set to be opened by the end of the current year to find a solution for the exit of the UK from the European Union. As a consequence, safeguard quotas could be revised downward to factor in the volumes used by the UK market. Rudyuk explained there will be a number of problems to solve following Brexit. UK steelmakers are likely to request an exemption from safeguard quotas and the UK government could decide to impose its own measures to control imports, in some cases mirroring the existing European system.

Further in 2021, a sunset review of the measures is expected to be initiated to decide whether to extend the measures beyond their current deadline of July 2021. Rudyuk noted that in the past the European Commission never extended safeguard measures beyond its first timeline. However, in this case, an extension is likely, as the import restrictions in the US that originally triggered the EU safeguards are likely to remain in place.

An extension for a further period of three years will nevertheless present some challenges, in particular for the tariff-free quotas that will be calculated from July 2021.

Germany’s mechanical engineering industry continues to suffer from a slump in orders, with only a slight recovery expected in 2021, industry association VDMA said July 9.

According to a VDMA survey, more than half of mechanical engineering companies expect drops in sales of 10%-30% in 2020, with the current order situation assessed as “poor” having been severely affected by the economic downturn caused by the coronavirus pandemic.

Sources in the steel industry said orders from the mechanical engineering sector fell significantly at the height of the pandemic in Europe, but by not as much as from the automotive industry.

Following construction and automotive, the mechanical engineering sector is the third largest customer group for the German steel industry.

The steel sector supplies about one-fifth of the input purchases for machine building and 12% of those for the automotive industry.

Most companies in the steel supply chain remain at reduced capacity throughout summer with short-time working in place.

“On the demand side, there is little reason for an all-clear: 45% of the companies report a noticeable drop in orders, another 34% even severe ones. This confirms the gloomy picture of recent weeks,” VDMA chief economist Ralph Wiechers said.

Particularly engineering businesses with automotive customers were still reporting sharp drops in orders.

The VDMA said that the current situation would not suggest return to 2019 production levels any time soon.

“Although numerous leading indicators are showing the first signs of things brightening up, this optimism is expectation-driven and therefore very fragile,” Wiechers said.

Most companies in the sector still have capacity cuts in place, with 68% using short-time working, meaning reduced shifts and government aid for workers’ pay, 62% have imposed a hiring freeze and 17% have initiated staff reductions.
— Laura Varriale

Suite à la réunion du 7 juillet entre la direction de PSA et les organisations syndicales, il a été décidé de tester le dispositif de télétravail à 70% du temps pour le personnel tertiaire des sites de Sochaux-Belchamp, Carrières-sous-Poissy, Poissy et Vélizy.

Auteur : Xavier Champagne

Dans le cadre de son projet “New Era for Agility”, le groupe PSA souhaite généraliser le télétravail de 3,5 et 4 jours par semaine pour ses 40.000 salariés administratifs, commerciaux et R&D, dont 18.000 en France (sur un total de 200.000 dans le monde).
La troisième réunion, organisée le 7 juillet dernier, entre la direction et les organisations syndicales, a débouché sur la mise en place d’un calendrier de déploiement, dans le cadre d’une “démarche progressive, sans passage en force en passant par une phase de test”, indique la CFE-CGC qui militait pour cette approche.

Ainsi, après la phase 1 actuelle qui se terminera en août et qui repose sur un télétravail exceptionnel lié au Covid, une seconde phase est prévue, en septembre et octobre “d’implémentation mondiale, avec des spécificités et dans une logique d’ajustements”, a déclaré jeudi à l’AFP Xavier Chéreau, DRH du groupe PSA. Pour les salariés concernés, l’organisation du travail sera “répartie entre 70% de travail à distance et 30% en présentiel, en tenant compte des spécificités individuelles“, précise-t-il.

En France, cette période de test concernera le personnel tertiaire des sites de Sochaux-Belchamp, Carrières-sous-Poissy, Poissy et Vélizy.
“Les modalités de cette expérimentation restent à définir entre les organisations syndicales et la direction dans les jours venir”, indique la CFE-CGC. “Le sujet du coût pour le télétravailleur devra notammentt être abordé pendant cette phase test”, souligne le syndicat qui demande des primes d’installation et mensuelles qui correspondent aux dépenses réelles du télétravailleur. “PSA devra aussi proposer des moyens pour mettre en place un poste de travail à domicile identique à celui sur site”, dit-il.

Une prochaine réunion aura lieu le 16 juillet, pour encore aborder des sujets cruciaux comme “les horaires du télétravailleur, les règles de déconnexion entre vie professionnelle et personnelle, le suivi des risques psycho-sociaux, le développement de nouveaux liens sociaux sur site et en télétravail et les nouveaux modes de management hiérarchique et transversal”, souligne le syndicat.

Spanish long steelmaker Megasa has made official a revised offer for the acquisition of Spanish steelmaker Gallardo Balboa, Kallanish notes. 

In a note to state-owned news agency EFE, Megasa says it is interested in all of Gallardo Balboa’s assets and plans to maintain the activity of all subsidiaries to give continuity to employees. It also plans to maintain the firm’s headquarters in the Extremadura region.

According to market analysts, Megasa is in this way matching the bid made last week for Gallardo Balboa by Spanish holding Grupo Industrial Cristian Lay (see Kallanish passim).

“We sent a new offer to US investment fund KKR (Kohlberg Kravis Roberts), the current owner of Gallardo Balboa, that includes the acquisition of 100% of the steelmaker’s shares,” Megasa says. “With this improvement the company aims to resolve the concerns shown by the institutions.”

The longs producer guarantees to settle all Gallardo Balboa’s commitments to creditors, as well as working capital for the normal development of the business and investments in revamping production lines. “The important industrial and commercial synergies that would be created with the merger will allow Megasa and Gallardo Balboa to be more competitive and consolidate in the European steel sector,” Megasa adds.

Grupo Gallardo Balboa declined to comment on the negotiation process. Earlier this week trade unions voiced their support for the bid presented by Cristian Lay as it included all assets of Gallardo Balboa. Following Megasa’s bid revision, though, the Spanish steelmaker could be considered the front-runner in the bidding race for Gallardo Balboa, since it is a major international steel sector player.

Throughput of iron and steel at the key Northwest European port of Antwerp had its best month of the year in June but was still down 33.1% for the first six months of 2020, the port said July 8.

“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 port said in a statement, without providing detailed figures.

Iron and steel is the most important freight group within the breakbulk sector.

Transshipment of coal was up in the first quarter, but came to a standstill in the second quarter, resulting in a 13.1% overall drop in dry bulk transshipment in January-June 2020 compared to the same period last year.

Total throughput at the port 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 transshipment of all 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.

“Port of Antwerp is a world port that follows the pace of the European and world economy. The impact of the shutdown of the global supply chain due to the coronavirus crisis has been felt from the second quarter onwards and will affect the total throughput of goods this year,” Port of Antwerp CEO Jacques Vandermeiren said.

— Annalisa Villa