Category: Latest Updates

Eurofer has welcomed the launch by the European Commission this week of its hydrogen strategy for a climate-neutral Europe. The Commission set out a plan to integrate a hydrogen energy network by 2050, something that could be beneficial for steelmakers looking to cut carbon emissions through the use of hydrogen.

The association notes that steel produced using hydrogen and clean-energy based methods will be 80-95% less CO2 intensive by 2050 than steel output is today. Costs of production will nevertheless be significantly higher.

“Clean energy at competitive prices is key to achieving the steel industry’s low-carbon goals,” Eurofer director general Axel Eggert tells Kallanish. “The transition to carbon-lean steelmaking will require 400 terawatt hours of CO2-free electricity per year. Of this, nearly 250 terawatt hours is needed for the production of 5.5 million tonnes of hydrogen, which would be used in new processes to make ‘green’ steel. With this, around 5% of the EU’s total CO2 emissions could be avoided.”

Looking ahead, Eurofer notes that, together with the setting up of a hydrogen and green strategy, the European Commission will need to make sure the market recognises the value of low-Co2 steel.

“We need policymakers to ensure there is a market for ‘green steel’ and other such low-carbon industrial products,” says Eggert. “Only in making the low-carbon transition a success across the economy can we harness the EU’s leadership. The benefits to European society of this endeavour will be vast – if the whole transition can be tied together and invested in sustainably.”

Most European integrated steelmakers are likely to record negative Ebitda this year for the first time in ten years, according to Joerg Leib of the Steel Hub consultancy firm.

Speaking during a webinar this week attended by Kallanish, the analyst said Steel Hub created a model to calculate profitability of major integrated steelmakers in Europe. The model is based on the assumption that revenue will be down between -15% and -30% year-o-year in 2020, as a consequence of the coronavirus emergency and the fall in steel demand.

In the most positive scenario, with revenues moving down -15% y-o-y, all integrated steelmakers, except for Austria’s voestalpine, will record negative Ebitda. On the other hand, if a second wave of lockdowns occurs and revenues fall as much as -30% y-o-y, all firms’ Ebitda will drop significantly.

Leib also said spreads between raw material input costs and steel prices will remain stable compared to 2019, when they dropped significantly.

Based on current visibility, it is unlikely European integrated steelmakers will report a greater fall in Ebitda than -30% this year, Leib concluded.

The sheet industry fair Euroblech will be postponed to March 9-12, 2021, after major exhibitors pulled out of the event initially planned for October 2020, the event’s organizer Mac Brooks Exhibitions said July 7.

The biennial fair, located in Germany’s Hanover, is one of the most important fairs for the flat steel industry in Europe with around 56,000 visitors.

“The past months have been challenging, in particular for the sheet metal working industry and its related industry sectors. We have seen a decrease in orders of capital goods and many companies are telling us about their challenges in dealing with the impact of the COVID-19 pandemic. Although we have recently received authority approval for our Safety and Security concept to hold Euroblech in October this year, we have decided to postpone Euroblech to spring 2021,” according to Nicola Hamann, managing director of Mack Brooks Exhibitions.

There will be a virtual summit nevertheless October 27-30, providing a digital platform for exhibitors.

The Wire & Tube fair in Duesseldorf, a similarly important fair, will be going ahead however following the postponement from spring to December 7-11 this year.

Opinions are mixed in the steel market whether to attend a fair at all this year in light of the possibility of a second wave of the pandemic and travel restrictions that could be tightened on short notice.

Sources at major mills, which usually exhibit at the Tube & Wire and Euroblech, said before the official postponement of the Euroblech that many exhibitors chose one of the fairs as both were scheduled close to each other.

A European mill source said the date of the Tube & Wire in December would be a disadvantage for sales discussions as most would be usually winding down activities at that time. December is also usually the time when the German distribution sector is decreasing inventories and do not look for many buying opportunities compared with November.

— Laura Varriale

Italian stainless steel scrap prices are flat month-on-month in new July contracts depending on grade. Some grades are less sought after and therefore decreasing in price, merchants in the country tell Kallanish.

The unprecedented downturn in the domestic and European stainless steel sector is persisting. Prices for finished flat products and tubes continue to fall and both producers’ and distributors’ stocks are said to be high. Merchants in Italy are selling very small volumes for July, while some mills have put off their July scrap deliveries to September because of their high stocks. Demand also remains subdued due to Acciai Speciali Terni’s substantial production cut, with no change from last month.

Domestic grade 304 scrap is sold at €960-990/tonne ($1,085-1,119) delivered excluding blend, a less pure scrap quality that is mixed and processed by merchants with 304. The high point of the range is paid by larger mills.

Grade 316 prices are on a downward trend. Despite the short supply, mills are not requesting this grade. Prices for 316 are now at €1,430-1,440/t delivered on average, some €50/t less compared to last month, sources say.

Merchants say they consider July “…the worst month in the past ten years.”

The UK’s new car market began a “tentative restart” in June, with electric vehicles continuing to increase market share, but total registrations were still down by over a third from year-earlier levels, the Society of Motor Manufacturers and Traders said July 6.

New car registrations reached 145,377 units in June, down 35% from June 2019, “as the market began a tentative restart after more than two months of lockdown” as a result of the coronavirus pandemic, SMMT said.

The drop “was an improvement on May’s minus 89.0% wipeout but…this still represented a significant decline of 78,044 compared with June 2019, as dealerships in Wales and Scotland remained closed for much of the month,” the group said.

Registrations of diesel and gasoline vehicles fell by 60% and 40%, respectively, year on year, with EV registrations rising across the board over the same period.

In June, gasoline vehicles had a market share of 60.5%, down from 65.6% in June 2019, while diesel’s market share slumped to just 15.8% from 25.6%. In contrast, battery electric vehicles accounted for 6.1% of the market, up from 1.1% a year earlier, with hybrid EVs up to 7% from 3.8% and plug-in hybrids rising to 3.4% from 1%.

“While it’s welcome to see demand rise above the rock-bottom levels we saw during lockdown, this is not a recovery and barely a restart,” said Mike Hawes, SMMT’s chief executive.

“Many of June’s registrations could be attributed to customers finally being able to collect their pre-pandemic orders, and appetite for significant spending remains questionable,” he added.

With one in five car showrooms in England remaining shut throughout June, and those in Wales and Scotland unable to open until the end of the month, “there remains some uncertainty regarding the true level of demand,” SMMT said.

“The hoped-for release of pent-up sales has not yet occurred, with consumer confidence for big-ticket purchases looking weak meaning that automotive is likely to lag behind other retail sectors,” the group said.

For the first half of 2020 the market was almost 616,000 units, or 48.5%, behind the same period last year, with some 240,000 private sales lost since the lockdown took effect, according to SMMT figures.

Year-to-date registrations of 653,502 units represents the lowest level since 1971, the group said.

— Andy Blamey

Production at Tata Steel’s IJmuiden plant in the Netherlands was back to normal on July 6 after a three-week strike ended on July 3, the company confirmed to S&P Global Platts.

The strike ended after the company said there would be no compulsory layoffs under a planned reorganization of its Dutch operations.

During the strike, some production was disrupted both in the upstream and downstream units, a source close to the company said. Tata Steel declined to provide details on it when contacted. A source close to the mill said that although some output was affected, it was a low percentage.

According to a statement sent to Platts by the company, as part of the agreement, the company’s employment pact in the Netherlands will be extended by five years and there will be no compulsory redundancies from the company’s transformation program.

Tata Steel’s Dutch management team will continue to discuss the transformation program and the resulting job losses with the local works council following a consultation process. The company confirmed that the number of jobs cuts will continue to be 1,250 units.

Henrik Adam, the CEO of Tata Steel in Europe, said, “This agreement should give our employees the confidence that Tata Steel is fully committed to building a sustainable future for IJmuiden. We share an ambition with our employee representatives to restore IJmuiden’s position as the most competitive steel plant in Europe.”

Tata Steel’s plant in IJmuiden has a design capacity of 7 million mt of crude steel a year. Tata steel Europe in total operates at around a 70% capacity utilization level, according to the company’s latest consolidated results for the quarter and year ended March 31, released early July.

Tata Steel Europe’s crude steel production declined marginally to 10.26 million mt in fiscal year 2020.

Meanwhile in the UK, Tata steel UK, part of Tata steel Europe, is still in talks with the UK government to obtain a support package, the company’s spokesman told S&P Global Platts on July 6. Market sources think that an announcement is imminent.

Last week, the UK government announced it would provide an emergency loan for steelmaker Celsa, marking the first deal under a state scheme designed to bail out companies seen as strategically important, with Celsa UK’s loan package estimated at GBP30 million ($37.39 million).

Tata UK is the largest UK steel producer with the Port Talbot blast furnace site at its heart and with designed steelmaking capacity of 5 million mt/year, though it produces around 3.5 million mt/year. Tata UK employs around 8,000 people in the UK.

Tata steel UK has asked the UK government for a GBP500 million loan, Platts reported earlier. The company and a Department for Business, Energy and Industrial Strategy (BEIS) spokesman did not provide details on this when contacted by Platts.

— Annalisa Villa

Ex-Thyssenkrupp CEO Guido Kerkhoff will become head of German steel distributor Kloeckner in 2021, Kloeckner said July 6.

Kerkhoff will replace current CEO Gisbert Ruehl who will take over the position of Chairman of Kloeckner’s digital platforms segment, which is planned to become a separate company. Ruehl held the position as CEO since 2009.

Kerkhoff has also been selected to Kloeckner’s management board effective September 1.

Kerkhoff left Thyssenkrupp in September 2019, following a “mutual” termination of his mandate after roughly a year on the job as the German engineering-based conglomerate faced pressure to accelerate its turnaround after the collapse of the merger between Thyssenkrupp Steel and Tata Steel Europe.

Ties between Ruehl and Kerkhoff were reported to be close. German media said 2019 that Kloeckner was eyeing Thyssenkrupp’s distribution unit Materials Services following market chatter that Ruehl and Kerkhoff met regularly.

Claims of a link-up were however dismissed by Thyssenkrupp at the time.

Kloeckner said in the past that they were interested in growing buy acquisition, while Thyssenkrupp hinted on the possibility of finding a partner for the Materials unit.

— Laura Varriale

Global stainless steel meltshop production declined -8% on-year in the first quarter to 11.7 million tonnes, according to International Stainless Steel Forum (ISSF) figures.

Output declined in all regions, with the US recording the steepest fall of -10.9% to 627,000t. Europe saw output fall -6.3% to 1.78mt, while in China it declined -9% to 6.08mt and in Asia without China and South Korea by -3.8% to 1.89mt.

Compared to Q4 2019, global stainless output fell -6% in Q1. However, it rose 13.1% and 9.1% in Europe and the US respectively.

The Bureau of International Recycling (BIR)’s Stainless Steel & Special Alloys Division revealed in last month’s webinar that global stainless steel demand is expected to slump -12% on-year in Q2 to 11.9mt.

A dramatic slump in demand and the effects of the coronavirus pandemic saw passenger car production in Germany in the first half of 2020 fall to its lowest level in 45 years, says carmakers association VDA.

Amid disruption of supply chains and production stoppages, some 1.5 million vehicles were made at German locations from January to June, -40% less than in the same 2019 period, Kallanish hears from VDA. The association expects a slow recovery in the second half of the year, so that the drop for the full year is anticipated to be -25%, totalling 3.5 million units. Exports from Germany are expected to fall by -27% in 2020; in the first six months of the year they were down -40% to 1.1 million units.

VDA president Hildegard Müller highlighted the progress made by the industry in digitalisation and new e-mobility. VDA member companies are investing €50 billion ($55 billion) in new drive systems and a further €25 billion in digitalisation until 2024.

“We need an intelligent mix of offers: from battery electric cars to economical and low-emission vehicles with ultra-modern gasoline and diesel engines,” said Müller. The plug-in hybrid, in particular, offers enormous opportunities, Müller noted. “It combines the best of two worlds – emission-free driving on short and medium distances, with the necessary and efficient range, also on long distances.”

ArcelorMittal Italia is implementing a new logistics project for its Genova plant, using railway transport to deliver up to 2,000 tonnes of coils to its Italian customers, Kallanish learns from the company.

During the lockdown between March and May the company carried out a feasibility study and commenced a project of latest generation commercial trains for coils transport. The first train left on 21 May and delivered a cargo of 1,400t to Padua.

After initial trials, the trains are now running regularly every week with the target to expand the system and connect Genova with more cities and regions in northern Italy. “The idea is to add one more region per month so that by November the project may be completed and 74% of Genova shipping is carried out by railway,” the company says in a note sent to Kallanish.

The final objective is to redesign and modernise national distribution using efficient logistics models to offer clients an effective a door-to-door service, the firm explains. Using trains instead of trucks will also help cut CO2 emissions, it adds.