Category: Latest Updates

The European antitrust authority has given the green light to long steel producer Feralpi buying a 50% stake in Caleotto, a special wire rod re-roller producer based in Lecco, Italy, from Duferco Italia Holding.

Feralpi, which will own 100% of Caleotto, said Giovanni Pasini, executive director of Feralpi, was also President of Caleotto.

“Despite the delicate economic phase that we are living due to the global pandemic and a rather weak steel market, we full support the follow up on Caleotto’s multi-year development plan,” Giovanni Pasini said.

Pasini also said that the collaboration between Feralpi and Duferco will continue in order to expand the range of high quality steel.

“The Feralpi-Duferco synergy has in fact relaunched the plant from both a technical and commercial basis. In this period the priority is the health of our workers, but immediately afterwards there is the need to start again as soon as the condition will allow us,” he said.

At the moment, the Italian market was “frozen” as mills and re-rollers are not working, all production has been suspended with exception of the two largest Italian flat steel producers, AM Italia in Taranto and Arvedi, that never the less are working at their lower historical rate.

Feralpi, that has also companies outside Italy and that in total produces around over 2 million mt of steel a year, in Italy where it has its headquarter, is based in Lombardy as well as Caleotto. Lombardy is the heart of the Italian manufacturing production but also the worst hit region so far by the coronavirus. Half of the Italian 23 million steel production is produced in Lombardy.

Caleotto has a design capacity of 250,000 mt/year, and the plans are to expend productions and qualities. Caleotto produces rod for the automotive sectors. According to S&P Global Platts data, the Italian wire rod market is about 3.5 million mt/year, is second in size in Europe only to the German market. The target market for the product type of Caleotto is between 1.5 million mt and 1.8 million mt.

— Annalisa Villa

Spain’s main tube suppliers, Tubos Reunidos (TR) and Tubacex, have partially resumed operations, Kallanish notes. Both companies meet the criteria of essential economic activity in the government’s decree that allows the continuation of output.

The manufacturers have also taken advantage of their import and export activities to justify their exclusion from the new extreme measures to prevent the spread of Covid-19 in Spain, sources comment. The latest restrictive measures are in force until 9 April.

“We have been able to resume limited activity in our factories in Trapaga and Amurrio since 1 April with the commitment to guarantee the safety and health of all the employees involved,” TR explains. The seamless tube supplier hopes to gradually return to normal production levels throughout the month, as soon as circumstances allow, it confirms.

Tubacex, meanwhile, has also gradually restarted operations at its Llodio and Amurrio plants. The company has cancelled several orders in the last week due to the uncertain situation and production cuts. In this context, continuation of output is necessary to guarantee business sustainability, Tubacex says. “We resumed our activity gradually maintaining minimum levels that guarantee compliance with international supplies in the short and medium term,” Tubacex adds.

Suppliers have reduced offer prices in a bid to secure import deals for long products in East Asia, market participants say. Buying interest has about evaporated as regional economic activity has slowed down. There are also bearish expectations for longs pricing as scrap prices sink.

Offer prices for rebar are prevailing at $410-415/tonne cfr Singapore, theoretical-weight basis, a Singapore trader says. He believes traders are making offers for June shipment at this level for material from Russia, Ukraine and Turkey. The suppliers for Chinese rebar, meanwhile, could consider selling at $420-425/t cfr, down from their targeted $440/t cfr but “…nobody is bidding,” he notes. Last week, Turkish rebar offers were heard at $430/t cfr, and Chinese rebar at $445/t cfr Singapore.

Some traders heard Turkish rebar offered at $405/t cfr Singapore theoretical weight. “There is no demand anywhere,” a Singapore trader says. Construction projects will be delayed in Singapore so no one is in a hurry to fulfill order contracts, says another. Singapore authorities are tabling a bill to give a six-month reprieve to those who cannot meet contractual obligations because of the virus outbreak, he notes.

In Hong Kong, after Russian rebar for June shipment was booked at $425/t cfr actual weight last week, another Russian rebar deal closed lower at $410/t cfr. An importer heard the lower-priced deal is for delivery over three months in the third quarter.

On Thursday, Kallanish lowered its weekly BS4449 500B 10-40mm diameter rebar price to $400-410/t cfr Singapore theoretical weight, down $27.5 on-week.

Similarly, wire rod demand is weak. Chinese wire rod offers are prevailing at about $445-450/t cfr Southeast Asia, a Chinese trader reports. There are also offers at $440/t cfr Southeast Asia but no buying interest, he says. In Thailand, Ukrainian wire rod is currently offered at $420/t cif Thailand, and Malaysian wire rod at $450/t cif Thailand. These offers are for 100% 5.5mm diameter wire rod, or combination 5.5/6.5mm diameter wire rod, a Thai trader says. But there is no buying, he adds.

There are no offers in the Manila market due to the Philippines’ lockdown. Kallanish lowered its SAE 1008 6.5mm diameter mesh-grade wire rod assessment to $430-440/t cfr Manila, down $20 on-week.

Celsa, the Spanish-headquartered long products supplier, is preparing to reduce output at its flagship electric arc furnace-based mill by -50%, Kallanish understands from sources close to the company.

This week, the Spanish government ordered most industrial activity to stop to further limit the spread of the coronavirus. However, it gave steelmakers and some other industrial producers the possibility to continue operating, provided safety measures are in place.

Celsa’s mill in Castellbisbal, near Barcelona, will operate at 50% capacity utilisation during the next two weeks. The other plants of the group in Spain will also continue operating, strictly following government regulations.

Celsa has three main steel complexes in Spain, one located near Barcelona and two in northern Spain. The group’s other plants are located in France, the UK, Norway and Poland.

Italian-headquartered long products supplier Feralpi has received clearance from anti-trust authorities to complete the acquisition of Duferco Italia Holding’s stake in the Caleotto wire rod mill. The holding owns a 50% shareholding in the northern Italian mill.

Feralpi has been sharing control of the mill with Duferco for the last five years on a 50:50 basis. Giovanni Pasini and Lorenzo Angelini will be president and ceo respectively of Caleotto’s new management board, Feralpi says in a note sent to Kallanish.

Feralpi intends to continue implementing the relaunch of the rolling mill by investing in technology, quality and widening the product range of high steel grades.

“This operation is a sign of business continuity with the past five years during which the Feralpi-Duferco synergy has effectively relaunched the plant both technically and commercially,” Feralpi president Giovanni Pasini says. “It is evident that, in this period marked by the global pandemic, the priority is health protection, but immediately afterwards, as soon as the health conditions allow, there will be a need to restart […production] immediately. This is also why we commit to offer Caleotto full support to continue its relaunch.”

Unions at ArcelorMittal’s integrated flat steelmaking site of Fos-sur-Mer, southern France, report that the company is planning to further reduce output in the short term.

Earlier in March the company confirmed that one of two blast furnaces at the site had been taken temporarily offline due to the coronavirus emergency. Now it appears the company is implementing a programme to stop crude steel production at the site completely in the coming weeks.

A representative from the unions at the plant says the lead time necessary to stop production completely at the mill could mean the facilities will be halted just as the epidemic peak passes. He is concerned the stoppage at the mill could therefore continue beyond the containment measures imposed in most European countries.

At the other French integrated site controlled by ArcelorMittal, in Dunkirk, the company earlier announced the stoppage of one of its three blast furnaces. It is understood to be preparing to stop a second one, according to trade unions, while the third and largest will continue operating.

Some of the rolling lines located in Florange were restarted last week, after a week-long stoppage.

Contacted by Kallanish, ArcelorMittal declined to give new details on the French closures. Earlier this week it said: “In response […to the coronavirus crisis] we are reducing production and temporarily idling steelmaking and finishing assets, adapted on a country by country basis in alignment with regional demand as well as government requirements.”

Eurofer has written to European Commission President Ursula von der Leyen, calling for a number of measures to support the steel sector in the current Covid-19 crisis.

The European steelmakers association asks authorities to immediately review existing safeguard measures. It proposes to reduce quotas by 75% for a period of six months, to align them to the difficult situation of the market. In return, tariff level beyond the quotas could be reduced below 25%, it adds.

Furthermore, the imposition of “…crisis and security-related steel import restrictions” could be taken into consideration.

In addition to reviewing the safeguard system and controlling imports, Eurofer calls for the EU to encourage regional and local governments to recognise steel as an “essential” sector to keep it operating during the crisis.

The association also suggests a series of measures to realign the EU Emissions Trading System to avoid carbon leakage, Kallanish notes.

“For steel, the difficult situation has become critical,” the association says in the letter. “We had already lost about 25% of our workforce and 20% of production volumes between 2009 and 2019 as a result of massive global steel excess capacity and trade distortions. The significant downturn in EU steel demand in 2019 rendered the otherwise welcomed EU steel safeguards ineffective for a large part of our industry, even before the Covid-19 pandemic.”

“Our industry is fighting for its survival. The impact of Covid-19 is emptying order books, forcing massive cuts in production, idling of entire facilities, and short-time working hours and temporary lay-offs of workers,” Eurofer concludes.

Lost vehicle production across the European Union due to plant closures as a result of the coronavirus pandemic already exceeds 1.2 million units, the European auto manufacturers’ association, ACEA, said Tuesday.

According to data compiled by ACEA, “EU-wide production losses due to factory shutdowns amount to at least 1,231,038 motor vehicles so far,” the group said, adding that the average shutdown duration is 16 working days at the moment.

“Production losses are obviously set to increase if shutdowns are extended or additional plants are brought to a halt,” ACEA added.

The jobs of at least 1,110,107 Europeans working in automobile manufacturing are affected by the factory shutdowns, the group said, adding: “This figure only refers to those people directly employed by car, truck, van and bus manufacturers — the impact on the wider automotive supply chain is even more critical.”

In total, 2.6 million direct manufacturing jobs are provided by the EU automotive industry, with vehicle makers operating 229 vehicle assembly and production plants across the region, ACEA said, with the wider auto sector providing indirect and direct jobs for 13.8 million people in the EU.

“Right now, the primary concern of ACEA and all its members is to manage the immediate crisis facing the auto industry, which has essentially come to an abrupt halt — something the sector has never experienced before,” Eric-Mark Huitema, ACEA’s director general, said in the statement.

Last week, ACEA, along with associations representing automotive suppliers, tire and rubber manufacturers and motor trade and repairs, sent a joint letter to Ursula von der Leyen, president of the European Commission, requesting discussions with the EC to assess the impact of the pandemic.

“We believe this could provide a good basis not only to assess what could be done to mitigate the impact on our sector in the short term, but also to prepare an exit strategy for when the worst of the health crisis is behind us,” they said in the letter.

As the industry focuses on dealing with short-term issues arising from the coronavirus crisis, “other activities inevitably suffer,” the letter said.

“No production, development, testing or homologation work occurs for the time being. This upsets the plans we had made to prepare ourselves for complying with existing and future EU laws and regulations within the applicable deadlines set in these regulations,” it said, adding: “We believe therefore that some adjustment would need to be made to the timing of these laws.”

The industry groups stressed, however, that “it is not our intention to question the laws as such nor the underlying objectives of road safety, climate change mitigation and protection of the environment.”

— Andy Blamey

UK manufacturing activity moved firmly downwards in March as Covid-19 began to take its toll, Kallanish learns from the latest sectoral survey by IHS Markit and the Chartered Institute of Purchasing and Supply (CIPS). The Purchasing Managers’ Index (PMI) fell by 4 full points, business optimism slumped to a record low and supply chain disruption intensified.

The seasonally adjusted IHS Markit/CIPS PMI fell to a three-month low of 47.8 in March, down from 51.7 in February and the flash estimate of 48.0.

Output fell to the greatest extent since July 2012 following a similarly severe reduction in intakes of new business. The impact was also felt in the labour market and through supply chains. Transport delays and shortages of raw materials led to the steepest increase in vendor lead times in the 28-year survey history, further disrupting production.

Vendor delivery times lengthened to the greatest extent in the 28-year survey history amid reports of input shortages, transport disruption and delays in receiving goods from overseas. International shipping and border delays were also mentioned.

Little more needs to be said. The UK government’s coronavirus-inspired social distancing policy will continue to seriously affect British manufacturing into the foreseeable future. The under-pressure steel sector meanwhile really did not need Covid-19 following the hit it took from Brexit.

Production volumes during the shutdown of Ferriera Valsider and Metinvest Trametal, both part of the Metinvest group, are forecast to decrease to 40,000 tonnes, Kallanish learns from a company note.

Last month the Metinvest Group halted the two rolling facilities in Italy due to the Covid-19 pandemic and the Italian government’s decision to suspend the operation of steel mills in the country.

The group is not excluding the fact that the Italian government may impose additional restrictions under which the shutdown at the two plants will be extended. “At the same time, the availability of semi-finished products inventory will allow to resume the normal pace of operation immediately after the release of quarantine, if there is a demand for steel products.” Metinvest says.

In the event of an extension of restrictions imposed on Italian plants and continued instability in the European market, Metinvest is also forecasting a decline in production at its Ukrainian plants (see separate article).

Italian coil output is at a minimum. Only ArcelorMittal Italia at its Taranto facility, Arvedi and Marcegaglia are producing at a heavily-reduced capacity and are only supplying those sectors that are considered as crucial during the pandemic.  

Ferriera Valsider is located in the province of Verona, in northern Italy, and its production capacities are 400,000 tonnes/year of plate and 600,000 t/y of hot rolled coil. Metinvest Trametal is a quarto plate re-roller located in San Giorgio di Nogaro, also in northern Italy, with a yearly capacity of 600,000/tonnes of quarto plates.