Category: Latest Updates

The European Commission (EC) has decided to initiate a second review of the imposed definitive safeguard measures on a range of products imported into the European Union (EU). This was signalled on 14 February 2020 in the Official Journal of the European Union, monitored by Kallanish.

The first review was concluded on 26 September 2019 following the imposition of the measures on 31 January 2019. The scope of the second review will mirror the framework of first one, the EC says. It will cover 27 separate categories of steel (see table).

There are five areas to be investigated by the review. The level and allocation of tariff-rate quota for a number of specific product categories and the crowding-out of international trade flows will comprise the first two areas. The potential detrimental effects in achieving the integration objectives pursued with preferential trading partners is the third one. There will also be an update of the list of developing WTO member countries excluded from the scope of the measures based on their most recent level of imports. And finally, other changes of circumstances that may require an adjustment to the level of allocation of the tariff-rate quota, will also be investigated.

The EC is inviting both submissions either in support of or in opposition to the measures within 15 days of 14 February 2020 and is also inviting comments on the submissions made. It intends to conclude the review by 30 June 2020.

ArcelorMittal and the Italian government agreed on 7 February to postpone the tribunal hearing over the ownership of the former Italian steelmaker Ilva, Kallanish learns from sources close to the matter.

Just a few hours before the hearing was due to take place last Friday, both parties submitted a draft agreement and asked the tribunal to put off the ruling. The hearing has therefore been postponed to 6 March.

ArcelorMittal’s lawyer, Ferdinando Emanuele, told local media that the company is asking to put off the hearing “… in order to reach an agreement and complete the negotiation”. He has also spoken of the “… serious intention of both parties to carry on with the negotiations,” local media report.

So far unconfirmed reports suggest meanwhile that the draft agreement contains a clause allowing the company to exit the arrangement as from 1 November upon payment of a €400 million penalty. The parties are also said to be negotiating a discount in the purchasing price, although this is once again unsubstantiated. ArcelorMittal declined to comment on the whole matter when approached by Kallanish.

ArcelorMittal Europe chief executive Aditya Mittal said during the group’s annual earnings conference on 6 February that the company remains committed to finding an agreement with Italian authorities. Progress on that has already been made, he added.

German steelmaker Thyssenkrupp will search for a joint owner or buyer of its heavy plate mill in Duisburg but consider shutting it down if no taker could be found, CFO Johannes Dietsch said Thursday.

Speaking during a press call on the company’s weak first quarter, running from October 1-December 31, which was hit by a soft auto sector and high raw material costs, Dietsch said the aim would be to find a partner for running the loss making mill. “But if that will not work, closing down is not being ruled out,” he added.

ThyssenKrupp had said previously that the plate business would be “under review.”

Adjusted EBIT for the heavy plate business dropped heavily from a loss of Eur12 million ($13 million) in Q1 2018/19 to a loss of Eur35 million in Q1 of the current financial quarter.

The European plate market is continuing to see excess overcapacity with no expected significant increase in demand. Plate prices saw considerable drops in the first quarter of the company’s 2019-20 financial year, with the weekly Platts TSI index for plate shedding Eur26.50/mt. However, a slow price recovery has be seen since the end of November.

A source close to another European plate producer told S&P Global Platts that it would be difficult to find a buyer for the Duisburg plant as there would not be sufficient synergies with other producers to make a move like this work.

Dietsch also said the company remained open for a merger of the entire steel unit, but would work on restructuring independently of that.

The sudden replacement of the steel unit’s CEO, Premal Desai, by Bernhard Osburg earlier this week resulted from differences over how to achieve the restructuring goals of the unit, Dietsch added.

The steel unit as a whole saw an adjusted EBIT loss of Eur164 million in Q1, down from a profit in the previous Q1 of Eur38 million.

Order intake and sales at the steel unit were down 10% and 13% respectively from the prior year in Q1.

Shipments of cold-rolled material fell 3.9% year on year to 1.48 million mt, while hot-rolled shipments dropped 11.2% to 759,000 mt.

Crude steel production at Steel Europe was stable at 2.17 million mt, while production at semis grew 3.5% to 674,000 mt.

— Laura Varriale

ArcelorMittal tells Kallanish that it has restored coke production at its Spanish plant in Gijón after it resolved a technical failure which halted the first new coke battery at the facility on 12 February.

The battery was stopped on 16 January, just two days after it had begun producing coke, due to a failure of tar generating equipment in the coal distillation process, the steelmaker says. The coke battery was in ‘hot idle’ mode during the repair work.

The second battery in Gijón is planned to begin production by the end of April 2020. The facility should be operating at full capacity in June.

The impact of the coronavirus (Covid19) outbreak on the steel market is expected to be only temporary, according to a European trading source. A change in sentiment could be seen as soon as from the end of February, says Mario Borsese, managing partner at the Swiss-based trading house DP Trade.

“The impact on the market so far of the virus has been important,” he said. “The recovery seen since the beginning of the year in Europe has frozen during recent weeks and a downturn in prices in Asia has been registered.”

Looking ahead, Borsese agrees with the positive view shared by many traders in the European market. “I believe the negative impact on the steel market is only temporary, I believe prices will rebound already by the end of February,” he says.

Overall the effects of Covid19 on Chinese demand and consumption could well be limited when we will look at the overall 2020 number. “I believe personally that consumption of steel in China will not slow down in 2020. The local government will stimulate the demand during the remainder of the year,” Borsese notes.

Specifically, in Europe the recovery in prices seen during recent months will continue as the market needs to recover margins after a very difficult 2019, the trader adds. “The reality is that in 2019 everyone destocked massively. The supply of steel (domestic + imports) decreased significantly but real consumption did not move as much compared to 2018,” he says.

According to Kallanish price series, after a recovery initiated in mid-October 2019 most HRC prices across the world have lost some ground in recent weeks due to the uncertainties created by the Coronavirus outbreak. Chinese, Black Sea and Turkish HRC export levels all moved down by around $10/tonne.

ArcelorMittal Poland (AMP) chief executive Marc De Pauw has also been appointed the company’s chairman. He replaces Geert Verbeeck who last month became chief operating officer of newly-formed ArcelorMittal Nippon Steel India.

De Pauw already replaced Verbeeck as AMP’s chief executive from 1 January (see Kallanish passim).

Additionally, Tomasz Plaskura, chief marketing officer East Europe – ArcelorMittal Europe Flat Products, has been appointed a member of AMP’s board of directors.

AMP said last month it plans to restart the hot-end at its Krakow steelworks in mid-March in order to supply slab for rolling at the group’s Gent works in Belgium (see Kallanish passim).

Toronto-based service centre chain Russel Metals saw its earnings drop sharply on-year in 2019, Kallanish reports. 

Russel earned CAD 77 million ($58.08m) on total sales of CAD 3.68 billion in 2019, down from earnings of CAD 219m on sales of CAD 4.17 billion in 2018. 

“During 2019, our operations turned in a solid performance, in what proved to be a challenging year where trade actions that had dramatically increased steel prices in 2018 were reversed in mid-2019 leading to selling prices that were lower than in 2017,” says ceo John Reid. “Certain of our operations had stellar years, particularly Wirth Steel, Comco Pipe and Color Steels who reported stronger results than 2018. During the year, we emphasised working capital management and generated CAD 250m in cash from operating activities.”

Reid adds that 2020 has thus far yielded “… a modest increase in pricing and consistent demand.”

German-based distributor of stainless long products Damstahl has formed a new company which it says will improve its digital competence.

Slize Digital will be established in Kiev, Ukraine, and headed by Brian Kobberøe Fink, who has years of experience both in the steel industry and in B2B business, Damstahl says. For the last eight years, he has been based in Ukraine, Kallanish learns from the company. The main aim of the investment the development of new solutions for Damstahl, but also to open up new possibilities to expand its business eastward.

“Specifically, we also want to target our new initiatives towards the entire sub-supplier industry where a lot of players want to ride along on the ‘digitisation wave’,“ Damstahl says.  Initially, Slize Digital will be staffed with local employees in Kiev, the German company notes.

The distributor has sales offices in Denmark, Sweden, Norway, the Netherlands, Slovenia, Finland, Belgium and France. Damstahl employs a workforce of more than 300, and in 2019 sold 72,000 tonnes of stainless steel.

The Chinese company Jingye is continuing to work toward closing its deal to purchase British Steel and is fully committed to close it by Q1, a spokesman for the company told to S&P Global Platts Wednesday. He also confirmed that Jingye has entered discussions with Barrett Steel, the largest steel stockholder in the UK, in order to sell four British Steel distribution centers to them, immediately upon the sale of British Steel to Jingye, pending the completion of the deal.

In an official statement, Barrett Steel said it is currently waiting for the sale of British Steel to be finalized. Barrett is hoping to secure British Steel Metal Centre sites including: Wolverhampton, Dartford, Newcastle and Scunthorpe, alongside offices in Cheadle and Edinburgh, according to the statement.

According to French unions, Jingye’s representatives are also trying to convince France’s government to back them and not block the sale of the British steel French unit, Hayange, in an effort to close the deal.

The spokesman for Jingye confirmed that company representatives visited the French mill and have pledged to invest Eur60 million over five years in Hayange. Among the investments being considered are a new line for finishing rails and an increase in the mill’s output capacity. Production would be increased from 330,000 mt to 500,000 mt of rail. Jingye pledged a total investment for all British steel of GBP1.2 bln, as previously reported.

As reported, the French government’s approval is also required for the sale of British Steel’s Hayange plant. Sources close to the deal said that although the French government would never act against the UK government, they have put Hayange up for sale separately as a contingency plan in case the deal with Jingye does not go through.

A source close to the deal said Wednesday that three bidders have submitted their proposal for Hayange, among them there are special steel producer Ascoval and Liberty Steel. Both companies when approached by Platts did not comment. The steelmaker Ascoval recently won a bid in order to supply 140,000 mt of blooms for the manufacture of rails for SNCF at the BSFR rolling mill plant in Hayange in northern France.