Category: Latest Updates

Italian re-roller Marcegaglia is amongst those interested in acquiring troubled stainless steel producer Acciai Speciali Terni (AST), ceo Antonio Marcegaglia confirms to Kallanish.

Minister of Economic Development Stefano Patuanelli has also indicated local steelmaker Arvedi as another possible suitor.  During a televised government meeting to discuss the current crisis of the Italian steel industry Patuanelli said there are also other international speciality steel producers interested in Terni. He added however that the option of Italian investors may represent a guarantee of longevity not necessarily available from foreign investors.

Meanwhile Terni trade unions are meeting authorities at the Ministry today, 28 May, to discuss the situation at AST. A union source says the plant needs significant investments that have not been implemented by thyssenkrupp and the commitment of a global steelmaker that will be able to see AST through the current crisis.

Last week thyssenkrupp announced that it is seeking either a partnership or a sale for its Italian subsidiary. Pursuing its restructuring strategy, the company is considering for certain assets “… the best prospects for the future – a place under the thyssenkrupp umbrella, in a partnership or outside the company. With this reassessment of the portfolio, we have taken some difficult decisions that were long overdue and will now implement them systematically. thyssenkrupp will emerge smaller but stronger from the transformation”, chief executive officer Martina Merz said in a note sent to Kallanish.

The downward trend in crude steel output at German mills has continued from March into April, when the volume was a massive -24% below that of April 2019, reaching 2.6 million tonnes. This was the lowest level since June 2009, Kallanish learns from the monthly statistics of steel federation WV Stahl.

Given that the automotive industry with its temporary full production stops is the customer group most affected, the fall at integrated mills was most pronounced, at -27%. Many EAF mills maintained a reasonably high production level if serving the construction industry. However, most speciality long products mills are dependent on automotive and mechanical engineering, so saw a drop of -16% in total.

For the first four months of the year, the overall output was -10% below the January-April period of 2019, totalling 12.4mt, compared with a fall of -6% in the first three months. Oxygen-route production in the first four months dropped -12%, while that of EAF mills fell by -5%.

Steel demand could rebound from the Covid-19 impact after the summer, ensuring sufficient sales to ramp up production, according to ISD Dunaferr corporate manager Evgeny Tankhilevich. The low level of orders has caused the producer difficulties in recent weeks, compounded by imports into Europe.

The executive also hopes the steelmaker finally secures a strategic investor following a period of searching that has included a number of due diligences. This investor should be an experienced steelmaking group with captive raw materials. “There should be of flurry of M&A activity this year, and I just hope that Dunaferr is on the wish-list of a good strong company,” Tankhilevich tells Kallanish.

“The German, Polish, Austrian, Czech, Italian and other key markets have restarted, but demand is rising only slowly,” Tankhilevich says in ISD Dunaferr’s latest newsletter. “The extremely low volume of orders is still causing significant difficulties. In addition, demand is being negatively affected by imports into Europe. I believe that the next three months will be extremely difficult; it will take that long for the market to fully recover and for the European Commission to take decisive action on import dumping.”

“In the short term, we are talking about survival,” Tankhilevich continues. “We are in the same situation as most vertically integrated steelmakers in Europe. But I’m optimistic; I think the pre-epidemic market situation could be restored by the end of the summer, and by then we can get enough revenue to sustain production.”

With lower production seemingly “… unavoidable” in summer, ISD Dunaferr will use the time to carry out all maintenance planned for 2020 on the blast furnace, continuous caster and hot rolling mill. The firm wants to be ready to resume output at full capacity from September.

The steelmaker plans to apply for government support to temporarily reduce working hours for workers not directly working in production. However, its face-to-face negotiations with authorities over longer-term strategic issues have been hampered by the pandemic.

ISD Dunaferr’s finished steel sales fell -11% on-year in 2019 to 1.46 million tonnes, with crude steel output down -15% to 1.42mt.

Turkey has informed the World Trade Organisation that it could impose additional import duties of 9-17% on imports from the EU of various products, in response to EU safeguard measures in place since 2019.

Turkey could impose a 9% duty on products under HS code 7208, 10% for HS code 7209, 14% for HS codes 7210 and 7215, 15% for HS codes 7211, 7212 and 7214, and 17% for HS code 7216.

The European Commission (EC) imposed the measures on 26 steel products from a host of countries from 2 February 2019 valid for three periods, Kallanish notes. In the following 15 months, the EU has ignored the Free Trade and Customs Union agreements between the EU and Turkey and continued to strengthen measures against Turkey, says the Turkish Steel Producers’ Association (TCUD).

In April 2019 “…Turkey and the EU notified… the WTO… [of an] extension of the 90-day period foreseen in Article 8.2 of the Agreement on Safeguards until 30 June 2021,” Turkey’s WTO delegation says in a note. “To date, no agreement has been reached so far with respect to adequate means of trade compensation for the adverse effects of the measures on Turkey’s trade.”

“Turkey reserves its right to apply the proposed suspension of concessions after 30 days following the date of publication of this notification,” the note continues. “Turkey reserves its right to modify, supplement, or replace the suspension of concessions or other obligations should the EU make adjustments to the safeguard measures which would render the measures more restrictive towards products originating in Turkey.”

“Turkey prefers to design the rebalancing measure to have proportionately less than the effect of the EU measures indicated in the table above, with a view to minimise the negative impacts on bilateral trade flows at this stage,” the note adds. Turkey’s proposed suspension of concessions will therefore affect $1.6 billion of trade.

Tariff-rate quota volumes are unlikely to be significantly changed by the European Commission in its steel safeguard review, but hot-rolled coil supply will be limited through some form of control mechanism.

It is not yet clear what that mechanism will be – a reduction of the 30pc individual country cap seems to be the most likely change, as it would materially reduce availability. The quota could also transition to a country-by-country basis, which would provide volume to countries that can no longer access Europe because of anti-dumping duties.

Even certain traders and end-users have supported a reduction in the hot-rolled coil quota, and some suggest this could also aid mills in other product categories, such as cold-rolled coil and hot-dip galvanised. The quota could also become quarterly, with unused volume rolled over.

The commission is likely to publish its proposal for the review in the coming days, as it needs to be studied and voted upon by member states for implementation on 1 July. European steel association Eurofer has convened an assembly for its members on 24 June, where the safeguard is likely to be on the agenda.

By Colin Richardson

The European Steel Association, or Eurofer, welcomed the EU’s recovery plan proposal to help rebuild a climate-neutral, digitalized and resilient EU economy after the coronavirus pandemic, but has also called for the immediate implementation of emergency measures to pull the steel industry “back from the brink.”

Eurofer director general Axel Eggert said May 26 that the association welcomes the EU’s plan to mitigate the pandemic’s impact on society, economy and business and its focus on green transition and digital transformation, but added that the steel industry needed help now to stabilize its downstream value chains.

He pointed out that the positive effects of the recovery plan would only materialize in the medium term, which could take one to five years.

“The economic challenge is very real today, with severe and immediate downturns in the main steel value chains, such as the automotive, construction and mechanical engineering sectors. The idling of EU steelmaking facilities and the collapse of steel prices on the EU market under pressure from third-country stockpiles of steel stemming from overcapacity in other regions has put the EU steel industry in an unprecedented precarious position,” said Eggert.

“Only by ensuring European industry is secured today can it contribute to the green transformation tomorrow,” he added.

Eggert said a step EU policymakers could take was to ensure an ongoing review of the steel safeguards quota fully reflected how the pandemic has collapsed the European steel market to be able to then offer immediate support to the sector.

“The tariff free import quota needs to be reduced significantly. This would help in the immediate term, whilst also providing a means of supporting the industry as we move into the recovery phase,” he said.

The German steel federation WV Stahl also welcomed the recovery plan and made demands from the ongoing safeguard quota review.

“In light of the deep crisis that the economy and steel industry is facing, there needs to be a sound measure plan. The goal needs to be stabilizing demand on one hand and relieve industry on the other as well as making investment incentives,” said WV Stahl president Hans Kerkhoff.

He highlighted that the European steel industry would struggle under an influx of imports if the EU did not tighten import restrictions under the current safeguard quota review.

Green steel industry

Eggert said the steel industry had an important part to play in reducing emissions and it had proposed a “Green Deal on Steel” and matching support measures for the steel industry and its value chains, such as automotive, construction and mechanical engineering sectors.

This would help keep the EU on track to meet climate and circular economy aims while securing global competitiveness, said Eggert.

“The European steel industry could be the spearhead of a decarbonized EU industry, providing green and perfectly circular steel to the EU’s and global manufacturing value chains,” said Eggert.

“With the right approach – and provided we can recover from the current crisis – our industry may be empowered to reduce its direct and indirect CO2 emissions by up to 30% by 2030 on top of around 25% emission reductions already achieved between 1990 and 2018,” he said.

“We have the ambition, under the right conditions, to reduce emissions by at least 80% to 95% by 2050, strengthening existing production and value chains, building and supporting new industrial eco-systems based on hydrogen, carbon feedstock and circularity,” he added.

Eggert noted that the steel industry’s work toward a greener future would require big investments in new technologies from 2021 to 2030, and thereafter.

He pointed out that the steel sector would have higher capital and operational costs due to its use of green energy and matching input materials, which would need to be balanced by a combination of financing support schemes and regulatory pull-and-push measures.

WV Stahl’s Kerkhoff said the EU’s recovery plan would help to achieve CO2 emissions reduction in steelmaking, but only if there were not any more burdens upon the industry in climate and energy policy changes, such as further limiting emissions trading.

— Jacqueline Holman, Laura Varriale

German crude steel production plunged 24% year on year to 2.6 million mt in April as mills witnessed orders dropping as the COVID-19 pandemic reached its peak in Europe, according to the latest data by German steel federation WV Stahl.

The association said May 25 that monthly volumes in April reached the lowest point since June 2009. The numbers are also much lower than industry body worldsteel’s estimation on May 22. when worldsteel said that Germany produced 3 million mt in April.

German mills started to cut production in March due to sluggish demand and shutdowns of key customer markets such as the automotive industry.

Crude steel produced at blast furnaces dropped 27% year-on-year to 1.7 million mt in April, while volumes at electric arc furnaces — where production rates can be adjusted faster than at the traditional blast furnace — fell 16% to 824,000 mt.

Further down the production process, hot-rolled steel volumes also decreased substantially in April by 27% on-year to 2.2 million mt.

Pig iron production fell 25% to 1.6 million mt.

Industry representatives told S&P Global Platts that production numbers might see even more falls as mills took out more production lines in May.

Mills such as Thyssenkrupp said that they do not expect a significant ramp-up before summer as a global recession looms with no uptake in demand in sight yet.

Industry sources are fearing however that the cuts are not going far enough and that production is still outpacing demand. Prices for hot-rolled coil dropped more than Eur50/mt since the pandemic unfolded, to Eur420.50/mt EXW Ruhr May 22, according to the daily Platts TSI index.

— Laura Varriale

The general European court has officially dismissed a request from Eurofer to review a decision by the European Commission (EC). The EC ruling was made in relation to the import of Serbian HRC into the EU. Kallanish learns from an official statement.

Eurofer lodged the request following the decision to exclude Serbian HRC from anti-dumping import measures in 2017. At that time, anti-dumping duties were imposed on Brazilian, Ukrainian, Russian and Iranian imports.

As a result, the court has ordered Eurofer to bear its own costs and to pay those incurred by the EC and HBIS Group Serbia Iron & Steel LLC Belgrade.

The construction of a new bridge crossing the Rhine river at Duisburg has been awarded, with the proviso that the steel for the project will be sourced in Germany.

The planning of the bridge for the A 40 autobahn crossing the Rhine at Neuenkamp has been linked with a dispute over a bridge further south from Cologne to Leverkusen. A discussion arose when two years ago it became public that the construction company awarded, Austria’s Porr, would source the steel segments from China, rather than from more local suppliers.

Only some weeks ago, that issue returned to prominence when inspectors dismissed the fabrication of the delivered segments – and not the actual steel material – as being inadequate. The contract then was withdrawn from Porr, and is being newly-tendered.

For the Duisburg bridge, the building consortium consists of Hochtief Infrastructure GmbH, MCE AT, MCE HU, MCE CZ, Zwickauer Sonderstahlbau GmbH, and Plauen Stahl Technologie GmbH. The 33,000 tonnes of steel for the bridge will be sourced in Germany, to be fabricated in Germany, Hungary and the Czech Republic, according to the official announcement seen by Kallanish.

According to the announcement, it will be Germany’s largest cable-stayed bridge, planned to be completed in late 2026, at a cost of €500 million ($548m). It will replace an existing bridge built at the site in 1970 for a traffic load of 30,000 vehicles/day, rather than the 100,000 crossing it today.

“ArcelorMittal wants to fully honor the commitments it made,” on 4 March, “even with the difficulties caused by COVID-19,” said Lucia Morselli to the ministers. “We are working on the plan, but the situation changes every 24 hours. We need about ten days,” she added. The CEO pointed out that the company in February and until March 10 doubled its daily production compared to last year. “Mittal’s intention to make this company great remains the same even now,” she reassured. For its part, the government said it was willing to co-invest with ArcelorMittal for a “strong, productive, market leading Ilva that has 10,700 employees and makes significant investments with state intervention,” said Gualtieri, defining “reasonable” the ten-day extension for the plan presentation. However, unions fear that that of ArcelorMittal is just another bluff. “Mittal will present an industrial plan that will not satisfy the unions nor the government, and will then be able to leave Italy, putting the blame on others,” commented Mirco Rota of Fiom.

“The reality is completely different from what was represented to us,” said the secretary general of Uilm Rocco Palombella, adding that “if we do not put our hands on the business plan we risk strong social tensions, which we are not in a position to control”. For the trade unionist it is “true that the market has weakened, but not such as to stop the plants”. According to CEO Morselli, the former Ilva will return to roll as soon as it can send its products, while now “only slabs can be made” as mechanical customers “are consuming their stocks”. Furthermore, Morselli said that in Taranto, despite a 60 percent of reduction in the ArcelorMittal Italia’s turnover in the past few months, blast furnaces were protected while elsewhere throughout Europe they were turned off. The production of the former Ilva currently stands at 7,000 mt of liquid cast iron per day, an all-time low.

The agreement of March 4 between the Italian government and the company provides that ArcelorMittal can leave the plant by the end of this year, paying €500 million if the new investment contract is not signed by November 30. The government, however, is aiming at getting a much higher compensation according to media sources.