Category: Latest Updates

ArcelorMittal says the demand slowdown is beginning to stabilise and the supportive inventory environment will help apparent steel consumption (ASC) in core markets grow in 2020.

The steelmaker saw steel shipments fall -2.5% on-year in the fourth quarter of 2019 to 19.7 million tonnes, while iron ore shipped at market price fell -4% to 9.6mt. Revenue dropped -15% to $15.51 billion and the firm turned to a net loss of $1.88 billion versus a profit a year earlier of $1.19 billion.

Brazil, especially, is expected to see ASC rebound 4-5% this year following the pronounced destocking of flat products in 2019 and expected growth in construction activity.

Chinese demand is seen growing 0-1%. “Absent a degradation of the situation and/or a further extension of the holiday period, we believe the effect of the Coronavirus will likely have a short-term negative demand impact in China and to a lesser degree elsewhere,” ArcelorMittal says in a report seen by Kallanish. “Our current view is that the vast majority of the impact on 1Q 2020 demand is expected to be recovered throughout the remainder of the year.”

Q4 shipments also fell -2.5% on-quarter due to a -4.2% deliveries drop in Europe, -2.1% in NAFTA and -3.3% in Brazil. The on-year revenue drop was down to the reduced deliveries, a -16.2% drop in sales prices and -3.2% decline in lower market-priced iron ore shipments. This was offset partly by a 24.3% rise in higher seaborne iron ore reference prices.

Exceptional items for Q4 of $828 million primarily include inventory related charges in NAFTA and Europe following a period of exceptionally weak steel pricing.

Steel shipments in full-year 2019 rose 1% on-year to 84.5mt, but iron ore shipped at market price inched down -1% to 37.1mt. Revenue fell -7% to $70.6 billion and the firm sunk to a net loss of $2.45 billion versus a profit in 2018 of $5.15 billion.

“2019 was a very tough year, clearly reflected in our significantly reduced profitability,” ArcelorMittal chairman Lakshmi Mittal says. Nevertheless, net debt was reduced to its lowest-ever level, with further deleveraging expected this year, he adds.

“Although market conditions remain challenging, there are encouraging early signs of improvement particularly in our core markets of US, Europe and Brazil,” Mittal continues. “With inventory levels having reached a very low level following a period of de-stocking, we are seeing customers return to the market, supporting an improved pricing environment.”

Finnish stainless steel producer Outokumpu saw “… a significant reduction in debt” in 2019, the company says in a results summary sent to Kallanish. In a tough market however, most financial indicators fell sharply compared to 2018.

In his comments on the results, ceo Roland Baan says “In 2019, the European steel industry continued to suffer from the surge of imports and unprecedented price pressure caused by the US steel tariffs. It is evident that the EU needs to implement stronger safeguards and other trade defence measures to ensure a level playing field for all market participants. In this harsh market environment, we kept our focus on enhancing our operational efficiency and securing our competitiveness. Our ongoing operational excellence efforts delivered a 4% productivity improvement in 2019. Furthermore, we were able to release almost €220 million ($242m) from net working capital, and most importantly we reduced our net debt to €1,155m.”

In its outlook Outokumpu says that the stainless steel market is expected to strengthen during the first quarter, supported by typical seasonality. It expects its stainless steel deliveries to increase from Q4 2019 in all business areas. Adjusted Ebitda in Q1 2020 is expected to be higher than €73m generated in Q4 2019.

The group’s stainless steel deliveries dipped in 2019 to 2.196 million tonnes from 2.428mt in 2018.

Financially, sales also fell back y-o-y by -6.8% compared to 2018, to €6.403 billion. Ebitda tumbled by -46.3% y-o-y to €266m. The net result was a loss of €75m versus a profit of €130m in the year-before period.

French stainless steel producer Aperam expects the economic environment to remain challenging and high competitive pressures to persist in 2020, Kallanish learns from the company 2019 financial statement.

This year Aperam intends to intensify its efforts to increase efficiency and competitiveness. It will also continue in its efforts to encourage the European Commission to establish a level playing field for the stainless market in Europe. “In the fourth quarter of 2019 Aperam has faced the most difficult market conditions since its inception. This was due to unprecedented pricing pressure combined with a strong volume contraction from trade war induced extremely high import volumes. This was amplified by weak economic conditions in both Europe and Brazil,” ceo Timoteo Di Maulo says in the report.

In 2019 the company saw “… the worst stainless market environment since inception of Aperam”, it says. The company registered steel shipments of 1,786,000 tonnes, -9.4% lower than shipments of 1,972,000t in 2018.

The Stainless & Electrical Steel segment posted Ebitda of €275 million ($303m) of which €150m was generated in Europe and €125m in South America. This result compares with €422m for the year 2018. In Q4 2019 the weak economic environment in Europe and further destocking only allowed for a soft seasonal recovery post the summer effects. The seasonal volume decline in Brazil meanwhile was supplemented by the weak economy. Average steel selling prices for the Stainless & Electrical Steel segment fell slightly by -1% compared to the previous quarter.

In 2019 group total sales fell by -9.3%, to €4,240m compared to €4,677m in 2018, mainly due to lower shipments. Group Ebitda fell to €357m for the year compared to €504m in 2018.

Finland’s Outokumpu tells Kallanish that it has initiated what it calls a strategic review of its business area Long Products.

This is being done as part of the stainless steel specialist’s process to determine “… optimal long-term business mix for the company” it says in a statement.

The steelmaker will investigate multiple options regarding the business area’s future including opportunities for consolidation within the stainless long products markets. The strategic review is expected to be finalised during 2020.

The long products business area covers bars, wire-rod, wire, rebar and semi-finished products in a broad range of tailored grades (100+) covering all stainless and some other alloys. There are production facilities in three countries, including two in Sheffield in the UK where the steelmaker operates a meltshop. There are also two plants in Sweden in Degefors and Fagersta and one in the US in Richburg, South Carolina.

The Long Products business area had net sales of €642 million ($707m) in 2019 and generated negative adjusted Ebitda of €7m, the company confirms.

German steelmaker Thyssenkrupp’s trading arm Material Services is to open a new metals logistics center in Rotenburg, Germany, the company said Wednesday.

The center will be part of the distribution unit Thyssenkrupp Schulte and open mid-2021.

The trading hub is planned to handle 20,000 mt of aluminum, stainless steel and steel and will primarily serve customers in northern Germany.

Thyssenkrupp’s Materials Services suffered from lower volumes in Europe and margin pressure last year. Steel service centers catering for the auto industry have been affected particularly following the slowdown of the German car industry.

The unit saw a 4% year on year decline in orders to Eur8.78 million in the business year 2018/2019.

Thyssenkrupp expects the current quarter to remain in challenging conditions with “limited visibility” for the auto industry.

The company said in the shareholder meeting last week that the industrial group will go under heavy restructuring with more details to come in May.

— Laura Varriale

thyssenkrupp Materials Services laid the foundation stone for the construction of the new logistics centre in Rotenburg, Lower Saxony on 4 February.

The new hub is scheduled to start operations in mid-2021and will cost around €60 million ($66m), Kallanish learns from the company. Around 70 employees will be working in Rotenburg from the middle of next year.

With the new location, thyssenkrupp Schulte, a subsidiary of tk Materials Services, is introducing an industry-wide new logistics concept into the company. In future, goods will be transported to the truck, which can be loaded and unloaded via loading bays. Up to now trucks have had to stop at various stations in the workshops. “With the ‘goods-to-truck’ concept we are taking a completely new approach in our industry,” says Tobias Hegmanns, chief operating officer of thyssenkrupp Schulte. “We expect a significant increase in productivity through the optimised logistics processes.”

According to the company, the improved material flow and the use of driverless transport systems ensure faster and more efficient loading and unloading, and bring a significant reduction in downtime. thyssenkrupp says that the concept offers the greatest possible health and safety protection for employees, as there is no more cross-traffic in the storage and processing area.

European wire rod processor Van Merksteijn has filed a request to the Belgian and German competition authorities to complete its purchase of the remaining half of Belgium-based reroller Intersig, group commercial director Kris van Ginderdeuren confirmed to S&P Global Platts Tuesday.

In 2004, Van Merksteijn acquired 50% of Intersig’s shares, while the other 50% were held by Roeland Van Maercke, whose core business is in the real estate sector.

The Intersig acquisition is being driven to create economies of scale and synergies, van Ginderdeuren said, while declining to comment on the price of the acquisition.

Intersig is a reroller that can produce around 200,000 mt/year of long products, with rebar in coils its main business.

The Van Merksteijn group, which produces reinforcing steel products, has a design capacity of 2.5 million mt/year of long steel products.

The Van Merksteijn group is one of the largest independent European rerollers, and has been very vocal on the EU imposition of import safeguard quotas on wire rod and rebar. The annual Turkish-origin non-alloy wire rod quota, which runs from July 2019 to June 2020, has only 4,461 mt remaining as of February 3, while the Russian-origin quota for the same product still has 125,467 mt remaining, and the Belarussian-origin quota has 85,426 mt remaining.

— Annalisa Villa, Viral Shah

Steelmaker ArcelorMittal from its plant in Fos-sur-Mer steel plant in southern France has re-started to ship its products as the strikes in France against the government’s proposed pension reforms are easing, market sources say.

Buyers said that they hadn’t received an official letter revoking the force majeure yet but most of them were receiving products little by little. ArcelorMittal did not respond to a request for comment.

According to the French newspapers and market sources based in France the situation in France has although is likely that another day of strikes will be called again this week. The pension reform bill be discussed in the French parliament on February 17.

In a letter dated January 20 sent to its customers ArcelorMittal declared force majeure due to the “paralysis of the port of Marseille and the Fos operations.”

Fos-sur-Mer produces 4 million mt a year of steel and is one of France’s largest producers of flat steel products.

In addition to current capacity cuts in the European coils market, the disruption in France tightened the market primarily in southern France and Spain, supporting prices. In general coils prices in Europe have risen due to the lack of competition from imports. Buyers, however, continued mainly hand-to-mouth purchasing as end-users still need to accept higher prices. Restocking has been minimal even though stocks were low toward the end of the year.

“No one’s bought anything for a long time and now people need to, and capacity cuts are welcome for mills. I’m surprised that the price is going up further because it is fairly quiet. But the outages at ArcelorMittal are helping,” a stockholder said. Over the past month, the daily Platts TSI index for northern European HRC has moved up Eur32 to Eur468.50/mt EXW Ruhr, while the southern European Platts TSI index rose Eur23.50 over the past month to Eur453/mt EXW S.EU.

On Monday ArcelorMittal Poland announced it would restart an idled blast furnace and steel plant in Krakow mid-March, in an early sign that the European steel market could be rising.

— Annalisa Villa, Laura Varriale

The elimination of emissions leading to clean steel production were the key themes at the annual ‘Zukunft Stahl’ conference In Germany this week. This was organised by business daily Handelsblatt and events specialist Euroforum in Düsseldorf and was attended by Kallanish.

The heads of thyssenkrupp Steel, Salzgitter and Saarland/Dillinger discussed the challenging role of the European Union as a global model now that it has decided on the ‘Green Deal’. This is where the steel industry can flex its muscles, said Tim Hartmann, joint ceo of Saarland mills Saarstahl and Dillinger. The quality of steel as a material cannot be denied, plus this is a field in which trendsetting innovations take place, he said. “We are helping politics to be credible,” Hartmann claimed, and stated, “in the Green Deal, it will show if we in the EU are a model region – or a climate failure.”

As Europe is losing share against production building up elsewhere, the problem, in Hartmann’s words, “… is that the overcapacities are made up of dirty steel that pushes away green steel.“ Along the same lines, Salzgitter ceo Heinz Jörg Fuhrmann said that the EU’s efforts for de-carbonisation must not lead to de-industrialisation.  

Premal Desai, ceo of thyssenkrupp Steel, pointed out that, unlike the coal industry, steel has an undisputed future. “There will be no ‘de-steelisation’,” he said. And, global ambitions for greener steel will require the active participation of European mills. “You need to hit many flies with one swat,” he said. “If Europe suffocates its own steel industry, we can hardly demand effective decarbonisation elsewhere.”

Italian Prime Minister, Giuseppe Conte, met ArcelorMittal global management in London again this week to discuss the future of the former steelmaker Ilva in Italy, Kallanish notes.

Conte confirmed after the meeting that the Italian state will be investing in the relaunch of Ilva and stressed that negotiations with ArcelorMittal over the new industrial plan are ongoing.

The meeting came as the deadline to reach an agreement between Italian authorities and ArcelorMittal is quickly approaching. On Friday 7 February the parties must meet in a local Italian court and have an agreement to present, otherwise the risk of ArcelorMittal exiting the agreement to acquire the company will become reality.

The main differences between the Italian authorities and ArcelorMittal revolve around the workforce at the former Ilva site of Taranto. Future production levels also need to be agreed. The likelihood is that an annual output of 5-6 million tonnes/year through the blast furnaces and an addition of an EAF at the Taranto site will be the outcome.