Category: Latest Updates

Automobile parts supply disruptions in China are expected to hit the operations of car manufacturers globally, as Beijing battles to contain the coronavirus outbreak, further delaying restarts for some firms.

“Unless the virus is plugged very soon, I cannot help but think we could be shut in four to six weeks,” one UK-based aluminium alloy producer said. “Not because of anything we do, but because automakers will be shutting down on a lack of Chinese parts.”

Beijing extended the lunar new year holiday by three days to 2 February as the coronavirus outbreak escalated, but most local governments issued directives to delay the restart of operations to 10 February. Further delays are expected in Hubei province, the epicentre of the coronavirus outbreak, where the situation is being closely watched by the authorities.

Hubei is also a major hub for original equipment manufacturers (OEMs), which supply much of the world’s automobile parts.

German OEM Webasto, which builds roofing systems, air conditioning and heating for automobiles, also operates one of its largest plants by capacity in Hubei capital Wuhan. Eight staff members in Germany were tested positive for the coronavirus and Webasto’s headquarters in Stockdorf has just reopened today following a two-week shutdown. But the firm did not state when it will restart operations in Wuhan.

French OEMs Valeo and Faurecia also operate plants in Hubei. Chinese OEM Camel Group will restart operations on 14 February, as directed by the Hubei provincial government.

Many car manufacturers restarted operations in China on 10 February after the extended shutdown, but some firms have further delayed work resumption.

Japanese automotive manufacturer Toyota and South Korea’s second-largest manufacturer Kia will be restarting operations on 17 February, according to analysis by Guosheng Securities in China.

Chinese-Japanese joint-venture car manufacturer Nissan Dongfeng is headquartered in Wuhan. The firm has yet to decide on a restart date.

“The automotive supply chain is more complicated, and it is greatly impacted by logistics. Furthermore, the inventory level of vehicle parts held by car manufacturers is low, and this has affected the degree of resumption,” Guosheng Securities said.

Extensive travel restrictions have further compounded logistical challenges in China, which is already under severe strain.

“We’ve stopped offering to China because we don’t know if the logistics work yet. Some material is on the water but the ports are congested and you can’t move material,” one scrap supplier said.

“The main issue is how China gets the system started again. Most logistical supply chains have been cut. Ports are congested, highways are blocked. Ships are not coming back as expected and there’s a shortage of containers in Europe.”

Yoke Wong and Jethro Wookey

Buyers of Chinese steel are diversifying their supply sources as the coronavirus outbreak threatens to disrupt shipments.

Turkish flat steel producers are getting inquiries from atypical destinations over the past week, which they attribute to apprehension about the virus interfering with deliveries. One re-roller received demand from as far as southeast Asia. Some European trading companies were drawing interest from South America, while Chinese trading firms saw a drop in regional customer demand.

Some buyers there asked about prices, but were not willing to place bids. Buyers worldwide appear to be surveying the market, seeking a clearer price direction, while opening dialogue with potential suppliers to prevent any disruptions should the situation in China escalate. “There seems to be more curiosity from buyers, but the direction of the market is still not too clear, so it’s mostly price checking without bookings,” a trading firm said.

Buyers could be simply making enquiries to European or Turkish mills just in case Chinese cargoes fail to arrive on time, a trading outlet in Asia said. “Prices are under pressure and my buyers are hesitating to make any purchases,” a third one said.

But a European trading firm said one buyer already doubled its order on concern that Asian supply would be disrupted.

A third trading outfit said it is unable to get allocation of galvanised coil to Europe from certain mills in southeast Asia, as they are working to meet their own regional demand amid China’s prolonged absence following the lunar new year and also because of the perceived risk of purchasing from the country’s mills.

That risk for the past two weeks has seen trading companies short-selling cargoes of Chinese coil, while their European counterparts also looked to clear positions. Buyers last week pulled out of negotiations as Chinese prices kept slipping.

The market at large is watching for signs of how Chinese demand could be affected by the viral outbreak as they will have an effect on pricing. But the lack of desire to book from China, and trading firms’ short positions, are filtering into decreasing fob China values, which is weighing on sentiment.

How the viral epidemic affects vessel loading and mill deliveries and logistics is also of increasing concern. Should vessels fail to load or discharge, trade and the wider macroeconomic environment could be affected. And if mills cannot maintain smooth deliveries of steel, they might amass larger stocks than anticipated. A video seen by Argus today shows a huge stock of wire rod at one mill in northern China, as well as a logistics centre full of the material.

By Lora Stoyanova

ArcelorMittal confirmed to the French unions and to Kallanish this week that the Florange coke plant could close permanently from 2022-2023. As the group continues to invest in reducing CO₂ emissions, its need for coke could be reduced.

The Florange coke plant currently supplies the Dunkirk integrated site of the group. During the coming years, nevertheless, the Dunkirk plant could become self-sufficient in coke as its requirements fall in line with the planned decarbonisation of steelmaking.

ArcelorMittal in Florange now focuses mainly on finishing activities for coil, after the site mothballed its hot-end equipped with 2 blast furnaces in 2013. The coke plant was initially planned to continue operating until 2032, but it could now be closed sooner.

ArcelorMittal is currently investing significant amounts in Florange to increase the output of galvanised material for the auto sector (see Kallanish passim). The company explained this week that the increase in output at the recently-opened second HDG production line in Florange will proceed in line with developments in automotive demand in Europe.

Seaborne iron ore prices rebounded on Tuesday in expectation of a stronger government response to the coronavirus. In the near term however a stronger support for iron ore may be mills continuing need to restock.

The Kallanish KORE 62% Fe index recovered $3.72/tonne to $84.84/dry metric ton cfr Qingdao. On COREX, 120,000 tonnes of Carajas fines shipped on 31 January sold at $101.8/t. That was $5.35/t stronger than its low on 3 February, but still 10.55/t lower than the high for the year on 20 January. 

A combined cargo of 90,000t of Jimblebar and 80,000t of Yandi also sold at a floating price. On the Dalian Commodity Exchange May iron ore settled at CNY 600.5/t ($86/t), up CNY 20.5/t, while on the Singapore Exchange March 62% Fe futures settled up $3.91/t at $83.72/t.

Tuesday saw ferrous prices rebound after Xi Jinping visited a hospital and Beijing signalled it could support economic activity once the coronavirus is under control (see separate article). Iron ore has so far been hit less hard than some analysts had feared. That is in part because EAF remained in the front line in terms of costs. Most EAFs are no longer operating, whereas blast furnaces remain less flexible. Iron ore has also been supported by the earlier drawdown in port stocks and disruption to supply in the last week.

Ontario-based service centre chain Samuel, Son & Co has acquired the remaining shares of additive metal manufacturing firm Burloak Technologies, Kallanish learns from a company release. 

Burloak’s 3D printing technology is used for parts manufacturing in the space, aerospace, automotive and general industrial markets. 

Samuel did not disclose financial terms of the buy, but notes that it originally took a minority stake in Burloak in 2017. 

“Our early belief in the transformative potential of additive manufacturing is paying off,” says Samuel ceo Colin Osborne. “The rapid development of this team, its relationships with many of the world’s most innovative companies and the reputation it is developing as [additive manufacturing] experts reinforces the exciting future we see for additive manufacturing over the long term.”

Samuel has appointed its chief commercial officer Simon Walls as the company’s new president, replacing former president and co-founder Peter Adams. Adams will move into the role of chief innovation officer. 

Major UK steel stockholder Barrett Steel says that it intends to purchase a number of distribution centres currently being operated by troubled long products manufacturer British Steel.

This would happen immediately upon the sale of British Steel to Chinese steelmaker Jingye, Barret Steel says in a statement monitored by Kallanish.

The stockholder is hopeful of securing British Steel Metal Centre sites including those in Wolverhampton, Dartford, Newcastle and Scunthorpe, alongside offices in Cheadle and Edinburgh.

“We are currently awaiting the sale of British Steel to be finalised. Discussions are continuing, but we would like to clarify that the sale between Jingye and Barrett’s will only be completed once the sale between British Steel and Jingye is confirmed,” the statement reads.

The stockholder has been in business for 150 years and operates 27 sites across the UK. It stocks carbon steel flat, long and tubular products whilst also supplying a range of engineering steels including tool steels and alloy steels.

Europe’s largest merchant bar producer, Beltrame, is considering moving its steel sections rolling mill from its plant in Switzerland, Stahl Gerlafingen, to its mill in Vicenza, Northeast Italy, in order to avoid the 25% safeguard cap, sources close to the mill told S&P Global Platts Monday.

“We need to move the sections rolling mill as under the safeguard measures, as they are designed now, we can’t [sell] part of our sections production without buyers needing to pay the extra 25%. For example, we can’t still sell 18,000 mt [of] sections, while for rebar it’s not a problem as we sell the majority of our production into the domestic Swiss market,” a source explained, stressing that some of the blooms used to make the sections in Switzerland are from Italy. “…It is bizarre as most of the raw materials used for the sections arrive from Italy but nevertheless, the final product is considered non-EU,” he added.

Beltrame’s steel plant in Switzerland has an EAF (electric arc furnace) with a design capacity of 1 million mt of crude steel/year and two rolling mills. One rolling mill has a capacity of 800,000 mt and it transforms the crude steel into rebar, while the other processes sections. It has a capacity of 500,000 mt so it uses also blooms from Vicenza’s headquarters.

According to the EC website, only around 6,500 mt of the Swiss-origin quota remains for product category 17, which covers angles, shapes and sections of iron or non-alloy steel, for the 2019-2020 annual quota (code 098896).

On January 17, 2019, EU Member states approved the European Commission’s (EC’s) final safeguard measures on steel with implementation from February 2, 2019. For phase 2 from July 1, 2019, the quota levels increased by 5% across all product categories. The safeguards were strengthened on October 1, 2019, with individual countries limited to 30% of the residual quota, and the annual 5% relaxation in the quota size retroactively reduced to 3%.

EUROFER, the European steel Federation has been very vocal about all the safeguards process as they think that due to the overall decrease in the steel demand, the safeguard quotas and transfer mechanism of unused quarterly quota should change.

In Vicenza, where Beltrame has its headquarters, the company has an EAF with a design capacity of around 1.3 million mt of crude steel and two rolling mills for the production of merchant bar with a capacity of 800,000 mt. Part of Vicenza’s semis are transformed in Switzerland and Turin.

In Turin, Beltrame now has only two rolling mills with a combined capacity of 700,000 mt/year for the production of merchant bar. In the past it used to have a hot end, but it has been idled since May 2012.

The company also is very active in France, where it has a mill called Laminés Marchands Européens (LME), located in Trith Saint Léger, which has one EAF with a design capacity of 1 million mt of crude steel/year and two rolling mills with more then 700,000 mt of merchant bar capacity.

Currently, LME, like other France-based mills, is experiencing delivery problems due to the strikes that are happening across all of the country on the new pension reform. Local sources said the strikes are currently easing with the pension reform bill to be discussed in the French parliament on February 17.

Beltrame also has a rolling mill in Romania with a capacity of 250,000 mt of special bar quality steel, mainly for the automotive.

Beltrame declined to comment.

— Annalisa Villa, Viral Shah

Thyssenkrupp Steel Europe AG has appointed Bernhard Osburg to replace Premal Desai as the company’s new chairman of the executive board as it continues its steel segment restructuring, the company said Tuesday.

Desai reached an agreement with Thyssenkrupp to step down from the position effective February 29 due to differing views regarding the direction of the company’s steel business, according to a statement released by the company.

The change in management is part of Thyssenkrupp’s larger business development strategy announced in November to address financial losses caused by lower European steel demand and fundamental changes in the automotive sector. The company said the strategy would involve the elimination of several administrative and executive positions to reduce bureaucracy and cut costs.

At the time, Thyssenkrupp CEO Martina Merz said the company’s restructuring was expected to take two to three years. The company has already begun reviewing its heavy steel plate segment.

“The strategy developed by the Steel Executive Board last December remains the right one,” Klaus Keysberg, the company’s supervisory board chairman, said Tuesday. “This is particularly true against the background of the current business situation in a difficult economic environment which poses particular challenges for the steel business.”

Osburg previously managed Thyssenkrupp’s steel sales, and has served as the company’s chief commercial officer since 2019.

— Nick Lazzaro

Lithuanian reinforcement steel services company B Group will invest Eur2 million ($2.2 million) in further equipping its site in the Port of Moss, Norway, it said in a press release Tuesday.

The Norwegian market is showing strong demand for reinforcement material, said B GROUP.

Last year, it supplied 48,000 mt of reinforced steel to the Norwegian market and expects to grow shipments there by 10% this year.

To achieve this, its service centers will source additional material from Sweden and Lithuania [where it has steel processing plants], said B Group, adding that its actual capacity allows for a 5,000 mt/month increase in sales volumes in Norway.

Last year B GROUP processed over 70,000 mt in its service centers in Sweden, Finland, Norway and Lithuania and sold 150 000 mt of steel material in Northern Europe.

— Ekaterina Bouckley

Lithuanian Based B GROUP, operating reinforcement service centers and stocks in Northern Europe, announced second stage investment plans into Norwegian unit.

According company press release, the factory, which started its operations in 2017, and now operating in the Port of Moss, Norway, will reach additional 2 000 000 Euro investment into relocation and modernization of production area and new machinery that will be more based on production from straight reinforcing bars.

Last year we supplied over 48 000 tons into Norwegian market, and expect a raise of at least 10 percent in 2020. Our location of services centers, allows us to source material from Swedish and Lithuanian units, by additional capacity of 5000 tons monthly, into Norwegian market, allowing us to serve highest volume demand projects. We believe in Norwegian market, which is showing strong demand and good reinforcement material consumption.
There are numerous of new projects upcoming, with a strong demand of reinforcement, said Mr. Tadas Tkaciovas Chairman of the board of the group.

Last year B GROUP has transformed, over 70 000 of tons, in their service centers Located in Sweden, Finland, Norway and Lithuania. Reaching overall 150 000 tons of material delivered into Northern Europe, being the largest importer into Scandinavian region and according prelaminar not audited results with a turnover of 130 mln Euros.

Source: B GROUP