Category: Latest Updates

UK vehicle output tumbled in March according to the latest report by trade association SMMT monitored by Kallanish.

British car production fell by -37.6% in March as the coronavirus crisis shut factories. Output for both UK and overseas markets was down, by -36.8% and -37.8% respectively.

A new independent outlook by Auto Analysis has revealed at least an £8.2 billion ($10.2 billion) cost to the industry if car factories remain closed until mid-May.

British commercial vehicle (CV)output fell by -41.8% in March, as coronavirus lockdown measures cause plant closures nationwide.

Production fell for both domestic and overseas markets, down -43.4% and -40.6% respectively.

A new SMMT survey reveals that 42.1% of CV manufacturers think recovery from the crisis will take at least 12 months. The association also says that production figures for March incorporate estimates for a very small proportion of plants where final data is not yet available.

The European Commission will bring forward its exceptional review of steel imports safeguards as EU steel producers struggle amid declining order books and a surplus of low-priced steel on world markets, market sources told S&P Global Platts Friday.

The commission said it would be investigating whether the current safeguard measures on steel imports would need to be modified due to the effects of the coronavirus on the European market, and announced a strict deadline of May 7 for any interested parties to submit their concerns regarding the pandemic’s impact on the quotas for review.

A representative of the European Commission was not immediately available for comment.

One source said it was possible the EU could impose emergency GATT (General Agreement on Tariffs and Trade) rules to restrict steel imports, with a revision likely to be implemented after the current import safeguard quota concludes at the end of the second quarter.

According to Article 21 of GATT, a World Trade Organization member will not be penalized for taking actions it considers crucial to the protection of its “essential security interests”, allowing the EU to exercise all measures of precaution, so long as actions are taken during a time of “emergency.”

The possibility of emergency import restrictions would be a welcomed decision from European steel mills eager to mitigate the effects of weakening demand on falling flat and long products prices.

The European Steel Association (Eurofer) and the European Steel Tube Association (ESTA) already announced their request for a 75% reduction in import quotas for Q2-Q3 of 2020 as added pressure from Chinese, Iranian and Russian steel exports mounts due to weak domestic markets.

Although a reduction in import quotas is a probable outcome of the decision, the cuts are not likely to amount to the 75% reduction requested by Eurofer, sources said.

A Benelux service center source was optimistic that the review outcome would deter import buyers and “prop up” domestic prices in the short term depending on the cuts made, although he remained skeptical of the likelihood of a 75% reduction.

“75% from Eurofer seems like a lot, maybe it’s [more] 25-50% but it’s speculation. The step is necessary, as some mills are really suffering. Situation could be compared with problem in oil – the capacity cuts are smaller than the drop in demand,” he said.

A German steel service center source, however, said a 50-75% reduction in the import quota was a reasonable possibility, considering the European market has declined by approximately 50% as a result of the coronavirus.

Further declines in European steel production are expected as mills’ new order bookings have declined by nearly 75%, Eurofer told Platts last month.

An Italian mill source also said that the European Commission’s imminent review of the quotas would mean “imports will not have any big chances in the near future.”

One European plate mill said it was unrealistic to achieve the 75% quota reduction, but said the quotas should be reduced to be in line with the drop in demand of “15-20% at the moment.”

“The main thing is to eliminate the annual increase in the quota and the redistribution of the residual quota to the countries who have exhausted theirs. Due to the last two points, Ukrainian producers increased their export of plate by 20% and their share in the Polish market has grown to nearly 50% while demand has fallen. I think this is unacceptable because everyone knows Ukraine is dumping due to low cost of natural gas, [less burden of] environmental protection [compared with the EU] and cheap labor,” the mill source said.

A UK-based trader also held a more critical perspective of the import restrictions and said there were parties on both the domestic and import side of the issue with strong arguments, making it difficult to predict any outcome on the market.

“I suppose the market has shrunk so it’s not unreasonable to reduce import quotas a bit, but I doubt a 100% ban or even 75% reduction is reasonable,” he said.

The trader also expected the spread between import and domestic prices to widen as buyers and sellers factor the quota risk into their pricing.

A North European mill source praised the European Commission’s decision to fast-track the review, and said the lobby from the steel industry has been “very strong” given the damaging effects of the coronavirus on the wider market.

Although countries such as Korea and Japan were less disruptive as they sold “quality product at market prices,” it was Vietnam, Russia, Turkey and China “massively damaging” the market.

“We should see people now choosing not to buy imports due to the quota risk for July, and this will push up the backwardated price structure over spot [prices] to 3-4 months. I expect June-July prices to be Eur20-30/mt higher as a result of limitations on imports” the mill source said.

While the imminent review of the European Commission will weigh heavily on the market in the coming days, domestic suppliers remain confident in their ability to provide quality material for their customers on a short-term delivery basis.

“The request to reduce quotas will help of course – but there is optimism for domestic material with shorter lead times. There are already some gaps in inventories, so customers are more interested in quick delivery than in price, they just want to know if we have it, so the pressure on price is not so high,” a German distribution source said.

— Amanda Flint, Wojtek Laskowski, Len Griffin

European steel association Eurofer has asked the European Commission to “meaningfully” reduce 30pc country caps on major exporters, in addition to the 75pc cut in tariff-rate quota volumes it has requested for the second and third quarters of this year,.

As it stands, for some products individual countries can be no more than 30pc of the European Union import market. But Eurofer wants this reduced as exports could increase from countries that are seeing a drop in domestic demand caused by Covid-19.

Eurofer also wants the commission to amend the safeguard so that any unused quota cannot be rolled over into the next period.

In a letter dated 30 April to the commission, the association said all quotas should also be made quarterly. It said its analyses showed demand from major steel use sectors would be down 58pc, justifying the measures.

The tightening could be reviewed for the fourth quarter and 2021 later in the year, it said, adding that the rate of duty could be relaxed from 25pc to 22pc.

The commission confirmed yesterday that it would be bringing the impact of Covid-19 into the scope of its safeguard review, meaning some reduction in quotas is very likely. Interested parties have until 7 May to comment.

Sources suggested that the European Union is unlikely to use Article XXI of the General Agreement on Tariffs and Trade to implement [emergency restrictions](direct.argusmedia.com/newsandanalysis/article/2101615) on imports, though this has been suggested. Instead, it could be used to allow a larger reduction in quota volumes than would otherwise have been possible.

By Colin Richardson

Steelmaker Thyssenkrupp is in talks with German authorities about receiving financial support in response to the impact of the coronavirus pandemic, it told S&P Global Platts Thursday.

However, a Thyssenkrupp representative declined to comment on local media reports the German company would receive Eur1 billion ($1.09 billion) from state-owned bank KfW as a bridge until the time funds from its elevator business sale were transferred.

“How the impact of the crisis and financial consequences are going to affect Thyssenkrupp, is — as it is for other companies — from today’s point-of-view not possible to estimate yet. We are having precautionary talks — like other companies — if and which of the available public financial support options can be considered for Thyssenkrupp,” said the representative.

A press officer for KfW also declined to comment.

Thyssenkrupp struck a Eur17.2 billion deal to sell its elevator business to a financial consortium comprising Advent, Cinven and RAG Foundation in February, but sources cast doubt at the time on whether the deal would provide enough funds to turn the company’s steel business around after allocations to pension liabilities and paring down its debt pile were made.

With the pandemic hitting Europe’s steel industry hard, steelmakers such as Thyssenkrupp are cutting production in order to compensate for weak order books after one of their main customers, the auto industry, temporarily halted production.

According to sources close to the situation, Thyssenkrupp saw a drop in demand in April in particular due to the auto shutdowns and will be cutting further production in May.

The steelmaker produced 11.3 million mt of crude steel in the business year 2018/2019.

“The production dip is [going to] be visible next month, but looking at the entire year there’s hope for a slight recovery,” one source said.

During the past month, the flat steel producer has been producing more material than usual that is now in storage, especially slabs, as shipments to customers fell at the height of the lockdown across Europe.

“A shutdown happens fast, but ramping up takes [a long time]. To idle a blast furnace should be the last step. Hot-dipped galvanized and cold-rolled lines are easier to halt,” the source said.

Sources said they are hoping for a recovery in orders this year, but most expect demand growth from the car industry from 2021 onward.

Prices for Northwest European hot-rolled coil steel dropped Eur6/mt day on day Thursday to Eur442/mt ex-works Ruhr, according to Platts data, as mills are having to lower offer prices amid competitive import offers and weak demand.

— Laura Varriale

Turkish mills’ have been trying to keep their domestic and export sheet offer prices stable in recent days, although slow demand and competitive import offers have been putting pressure on their quotes.

Turkish producers have been offering hot-rolled coil to the domestic market generally at $405-$415/mt in recent days, as their price hike attempts have faced buyer resistance. Although mills’ export offers were generally around $10-$15/mt lower on an FOB basis, for sizable bookings, its was still too far away to match export buyers’ lower counter bids, sources said.

Confirming the above price levels in the market, a sales executive of a Turkish HRC producer told Platts that in this sentiment their HRC export sales volumes remained low. “Domestic demand, however, has begun to show some recovery signs,” he noted.

A trade source said the latest deals in Turkish mills’ HRC export sales were as low as $390/mt FOB in the previous week, but he didn’t hear any export bookings so far this week, he noted.

Competitive import offers were also pressuring Turkish mills’ quotations, sources said. Some Turkish buyers booked some HRC tonnages from the CIS region, especially from Russia, in mid-April, in the range of $375-$385/mt CFR, as Platts has reported. Turkish buyers have remained generally silent in recent days, preferring to study market direction.

Confirming that local HRC prices are currently at $405-$415/mt ex-works and imported HRC offers to Turkey from the CIS region are at $380-$385/mt CFR, a Turkish pipe producer said they didn’t yet make any bookings in that price range.

“April was very slow, and I am not expecting May will be much better. HRC prices could even decline a further $10-$15/mt in a sluggish market, as scrap prices will probably fall further. We could then make some bookings in that new price range,” he said.

After declining by $15/mt on day, domestic ship scrap prices in Turkey fell by a further $5/mt on Thursday to as low as $225/mt, which is expected to be reflected in imported scrap prices.

Turkish mills’ cold-rolled and coated coil prices have also continued to be effected negatively from the bearish market sentiment.

A service center manager said, a major coated coil producer organized a campaign at the end of last week and sold 3 mm thick HDG at as low as $485-$490/mt ex-works, which was even below the current CRC prices in the market.

“I have received a CRC offer from a major mill at $505/mt ex-works this week, but lower prices are still available from some coated coil producers,” he said, adding that he is expecting a gradual recovery in demand and prices in mid-May, amid the ease of the virus outbreak.

A coated coil producer also confirmed that CRC prices stood at $500-$510/mt ex-works this week, “Our current list price is higher, but you can also find DX51D with 50-70 grams/square meter zinc coating, 0.50 mm HDG at as low as at $550-$560/mt ex-works in the market,” he said.

Activities in the Turkish flats market, meanwhile, are expected to remain slow in the coming days, as the Turkish government declared another three-day curfew as of May 1 due to the COVID-19 outbreak.

— Cenk Can

Turkish long steel producers had a very quiet week in terms of demand and have been forced to further decrease their rebar and wire rod prices in both domestic and export markets.

Turkish mills’ rebar offers, which previously stood at $410-420/tonne fob actual weight, have decreased mostly to $400-410/t fob Turkey actual weight this week. Offers at $415/t are still available from some producers. For wire rod, offer prices mostly stand at $415-430/t fob, down from $425-440/t fob a week ago.

Customer bids, however, though very limited, stand at $20-25/t below offers for both products.

A Turkish long steel producer tells Kallanish: “The situation is awful. No calls, no e-mails, nothing during the week. Some inquire just to check the market and declare price levels that are impossible to accept.”

A Turkish mill in the Aegean region is heard to have sold rebar to Israel at $390/t fob Turkey. Asia is closed due to lockdowns in ports. Buyers in Singapore are asking for delays to their previous purchases. Demand in the USA is also weak as US buyers have low price expectations from Turkey.

Another Turkish producer says: “I can’t decide which one is worse between rebar and wire rod. Last week we sold 6,000 tonnes of wire rod to South America at $430/t fob. This was our last sale.”

Besides the negative effects of the coronavirus, the fall in scrap prices has also caused the limited number of buyers to back off and decrease their price expectations. Buyers think Turkish rebar export offer prices should be at $390/t fob levels, as they are in the Turkish domestic market.

Another Turkish producer says: “Buyers are bidding too low, even for small quantities. We are ready to decrease our prices if we can find satisfactory quantities. But with these volumes, it is becoming harder.”

Rebar prices in the Turkish domestic market have also decreased since last week. Domestic demand remains low as a result of falling scrap prices, coronavirus measures and Ramadan. Prices have fallen to TRY 3,230-3,250 /t ex-works, including VAT, depending on the region, from TRY 3,300-3,370/t a week ago. With the lira at 6.98 per dollar on Thursday, these prices translate to $392-394/t ex-works, excluding VAT, down from $400-408/t on 22 April.

European Commission has decided today to exceptionally re-open the written procedure in the on-going review investigation of the safeguard measures on steel imports in order to assess whether these measures will have to be modified in view of the covid pandemic, shared this morning the International Trade Law, Compliance and Policy specialist, Yuriy Rudyuk.

A very tight deadline (by 7 May) for interested parties to file their comments on such a crucial issue. European Steel Association (EUROFER) and ESTA already set out their demands aiming for, inter alia, a 75% reduction in the volume of the tariff quotas available for imports during Q2 and Q3 of 2020.

#safeguards #steelindustry

The EU is considering imposing emergency restrictions on imports of steel products.

The ban, using article 21 of the General Agreement on Tariffs and Trade (GATT), will possibly take place after the end of the current import safeguard quota that is currently being reviewed by the European Commission. The current safeguard period ends at the end of this second quarter.

The commission has also confirmed the impact of Covid-19 will now be in the scope of its safeguard review. This means a reduction in import quotas is almost certain, although not as much as the 75pc cut requested by European steel association Eurofer.

The commission has given interested parties until just 7 May to file comments on the inclusion of the coronavirus’ impact in its review.

Article 21 of GATT states that no Word Trade Organisation member will be prevented from “taking any action which it considers necessary for the protection of its essential security interests”. The EU can take action provided it is necessary to protect an “essential security interest” and is taken in time of an “emergency”.

Emergency import restrictions brought on the impact Covid-19 could be the event needed by steel mills to stem the fall in prices, particularly of flat products.

By Colin Richardson

En el siguiente enlace pueden acceder a la edición de Abril de nuestra revista: Infoacero

A continuación destacamos algunos de sus contenidos:

1. Opinión – D. Jose Sánchez –Junta Directiva de  la UAHE. 
2. Evolución del Índice de Precios de Productos Siderúrgicos – UAHE.
3. Ayudas y Subvenciones: ayudas al teletrabajo.
4. Sector Siderúrgico: Declaración sobre la situación del sector- World Steel Association
5. Colaboración ASCEM: “Nueva Normalidad con Covid”- D. Jordi Romañá – Presidente ASCEM

According to documents from the Anyang Municipal Government in Henan, 11 steel companies in the Chinese city will be consolidated into four in 2020, with the proportion of special steel reaching more than 30%. Shagang Group’s Anyang Yongxing Steel and the Anyang government held talks this week on company integration, Kallanish notes.

Of the 11 steel companies in Anyang, there are 6 integrated plants. These are Anyang Iron & Steel, Shagang Yongxing, Fengbao Iron & Steel, Yaxin Iron & Steel, Xinpu Iron & Steel, and Huixin Iron & Steel. Independent ironmaking companies are Bosheng Steel, Xinyuan Steel and Lin Steel. The only electric arc furnace steelmaker is Boxin Steel and Linzhou Hexin Casting Industry uses electric furnaces to produce pig iron. The main finished products from the city are high-strength wire rod for construction, high-quality steel for machinery, pipe, hot-rolled coil and cold-rolled sheet.

The local government is negotiating an integration plan for these companies. Anyang expects the resulting four steelmakers will have only blast furnaces over 1,200 cubic-metre in volume, converters over 120-tonne and electric arc furnaces over 100-t by 2025.

Eleven steelmakers in Anyang produced 14.69 million tonnes of iron, 14.86mt of crude steel and 15.09mt of finished steel in 2019, up by 5%, 3.7% and 0.6% year-on-year.