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EU construction output growth is forecast to slow to 0.8% on-year each in 2020 and 2021, after expected growth of 3.8% in 2019, according to European steelmakers’ association Eurofer.

The expected slowdown in 2020 is mainly due to demand-related factors such as weakening economic fundamentals and a general cooling of market dynamics after several years of strong growth. The construction industry will nevertheless continue to outperform other steel-using sectors, Eurofer observes.

In some countries, improving real wages and cheap mortgage financing will continue to stimulate demand for residential housing. In other EU countries demand is expected to weaken considerably in 2020 as the residential construction cycle has already peaked in 2017. The persisting labour shortage in the construction sector in many EU countries is putting a brake on the completion of construction projects.

The current downturn in the manufacturing industry in Europe is expected to soften during 2020 but will most likely continue to somewhat delay non-residential investment decisions.

“By contrast, civil engineering is expected to continue to play a key-role in construction sector growth over the forecast period, as it will continue to record higher growth rates than both residential and non-residential construction,” Eurofer says in a report seen by Kallanish.

“Improving investment in infrastructure projects – thanks to more room for public investment due to better budgetary conditions in many Member States, as well as lower public debt servicing and higher efficiency in project implementation are expected to be supportive of public construction spending,” the association continues.

EU construction sector output grew 3.4% on-year in the third quarter of 2019 versus 4.6% and 6.4% in Q1 and Q2 respectively. Growth was particularly pronounced in Hungary, the Netherlands, Poland and Spain.

Gross fixed investment in construction grew in real terms in Q3 by 3.7% on-year and 0.5% on-quarter.

On 4 February 2020, EU Trade Commissioner Phil Hogan gave a keynote address at the Centre for European Reform’s third annual Conference on ‘Europe and the rest of the world’ in Brussels. During his speech, the Commissioner set out his vision for trade policy under the Von Der Leyen Commission, as well as outlined his views on key trade issues.

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marketSTEEL im Interview mit Hans Jürgen Kerkhoff, Präsident der Wirtschaftsvereinigung Stahl

marketSTEEL: Wie entwickelt sich nach Ihrer heutigen Beobachtung die deutsche Stahlindustrie?

Wir befinden uns zu Beginn des neuen Jahrzehnts in einer Phase, in der die Stahlindustrie in Deutschland, wie selten zuvor, mit zahlreichen komplexen politischen Themen konfrontiert ist. Zum einen verzerrt unfairer Handel und ein wachsender Protektionismus den internationalen Wettbewerb. Nach wie vor existieren weltweit Überkapazitäten in einer Größenordnung von mehreren hundert Millionen Tonnen. Zum anderen befindet sich die Branche in einem außerordentlich herausfordernden konjunkturellen Umfeld, das sich auch 2020 nicht durchgreifend verbessern wird. Vor diesem Hintergrund findet nun eine Debatte statt, wie die Wirtschaft bis 2050 klimaneutral aufgestellt werden kann. 

marketSTEEL: Wird sich diese Entwicklung in den nächsten 5 Jahren gravierend aus Ihrer Sicht verändern? Und gegebenenfalls wie?

Wie sich die Stahlindustrie in Deutschland in den kommenden Jahren entwickeln wird, ist in hohem Maße von politischen Rahmenbedingungen abhängig. Dies gilt sowohl mit Blick auf die Handelspolitik als auch für Energie- und Klimapolitik. Es muss unter anderem die Frage beantwortet werden, wie der EU-Stahlmarkt wirkungsvoll vor Handelsumlenkungen als Folge des US-Protektionismus im Stahlbereich geschützt werden kann. Die von der EU bereitgestellten Schutzklauselmaßnahmen, die sogenannten Safeguards, gewähren bisher keinen ausreichenden Schutz. Daher muss es dringend eine erneute Revision geben. Es muss auch eine Lösung für die Zeit nach dem Auslaufen der Maßnahmen Mitte 2021 geben. Die Safeguards können dann nicht mehr verlängert werden.

Eine andere zentrale Frage, die beantwortet werden muss, ist, wie eine Abwanderung der industriellen Wertschöpfungsketten in andere Regionen der Welt mit einer weniger restriktiven Energie- und Klimapolitik verhindert werden kann. Dies ist eine Grundvoraussetzung, damit der Weg in die CO₂-neutrale Stahlproduktion gelingt. Es kann weder politisch noch gesellschaftlich gewollt sein, dass die Dekarbonisierung Europas dadurch erreicht wird, dass die inländische Produktion durch Importe ersetzt werden, die mit einer deutlich höheren CO₂-Belastung verbunden sind. Abhilfe schaffen können hier zuvorderst eine ausreichende Ausstattung mit CO₂-Zertifikaten der Stahlunternehmen und eine vollumfassende Strompreiskompensation im Rahmen des EU-Emissionsrechtehandels. Zudem darf auf nationaler Ebene der Kohleausstieg nicht zu Mehrkosten für die Verbraucher führen. Daher setzen wir uns für eine verbindliche Regelung im Kohleausstiegsgesetz ein. Eine solche fehlt bisher. Generell müssen die Maßnahmen der Energie- und Klimapolitik so ausgestaltet sein, dass sie nicht die Wettbewerbsfähigkeit der Stahlindustrie gefährden.

marketSTEEL: Die Stahlindustrie in Deutschland steht vor gravierenden Veränderungen. Welche politischen Rahmenbedingungen würden Sie sich wünschen? / Stichwort CO2-arme Stahlproduktion. Schaffen dies die Stahlunternehmen alleine?

Die Stahlindustrie steht für rund 58 Mio. t CO₂-Ausstoß im Jahr, das sind 30 Prozent der gesamten Emissionen der Industrie in Deutschland. Die Unternehmen sind sich der Verantwortung, die damit einhergeht, bewusst. Daher haben sie bereits vielfältige Konzepte für Wege in eine klimaneutrale Stahlproduktion entwickelt. Sie können diese aber nicht alleine umsetzen. Es braucht einen begleitenden, kohärenten politischen Rahmen.  Notwendig sind vor allem gezielte Anreize für eine Transformation der Produktion. Dies umfasst etwa die Frage, wie ein Markt für CO₂-armen Primärstahl, der mit signifikant höheren Betriebskosten verbunden ist, ohne sich chemisch von herkömmlichem Stahl zu unterscheiden, geschaffen werden kann. Darüber hinaus müssen Themen wie Investitionsförderung, die Schaffung eines energiewirtschaftlichen Rahmens und die Sicherung der internationalen Wettbewerbsfähigkeit adressiert werden. Zudem müssen die Vorteile des Werkstoffs Stahl als Schlüsselwerkstoff der Circular Economy viel stärker genutzt werden, etwa durch eine verstärkte Ausrichtung der öffentlichen Beschaffung auf kreislauforientierte und klimaneutrale Produkte.

marketSTEEL: Wie schätzen Sie die globale Entwicklung der Stahlindustrie für 2020 ein?

Weltweit erwarten wir keine große Dynamik. Denn die globalen Handelsstreitigkeiten sind weiter ungelöst und weltweit bestehen vielfältige Risiken für die Konjunktur. Dies alles drückt auf die Investitionsbereitschaft. Zudem schwächt sich auch die Stahlnachfrage in China, ausgehend vom Immobilienmarkt ab. Unter dem Strich aber wird wohl ein moderates Wachstum stehen.

mehr Informationen finden Sie unter stahl-online.de

Fotos: marketSTEEL

Tata Steel UK tells Kallanish that it has won three contracts to supply pipe to London-headquartered contracting company TechnipFMC for work in the UK North Sea.

The scope of work includes the provision of high frequency induction (HFI) line pipe for carrier applications and for both spool and pipe-in-pipe systems. The HFI line pipe will be manufactured in Tata Steel’s 20” pipe mill in Hartlepool, and will be installed by TechnipFMC. The value of the order has not been disclosed.

The three different projects span from the Northern North Sea to the Central North Sea. Two of the three will see Tata Steel provide more than 16km of 10” carrier pipes, with three-layer polypropylene coating for anti-corrosion and mechanical protection. These will include weld-on pads to allow fitting of sacrificial bracelet anodes. The third project requires several kilometres of 14” carrier pipes and 10” spool pipes, Tata Steel says.

Tata Steel has supplied more than one million tonnes of pipeline for oil and gas projects in the North Sea for more than 20 years, the steelmaker adds. This includes in excess of 500,000 metres of reel-installed pipe and more than £250 million ($326m) invested in subcontracts for North Sea projects.

China’s iron and steel exports remained subdued in December, keeping the total for the year below 65 million tonnes for the first time since 2013. Almost all major regions saw Chinese export volumes fall in 2019, except for South Korea, Sub-Saharan Africa and Russia, Kallanish notes.

In December, total iron and steel imports were up 2.4% month-on-month but down -15.6% year-on-year at 4.687 million tonnes, according to detailed Chinese customs data. That left exports over the full year down -6.32% y-o-y at 64.379mt.

South Korea cemented its place as the main destination for Chinese steel exports, with volumes over the year up 16.6% at 8.299mt. That remained well below the peak of 14.35mt in 2016 however. Elsewhere in Asia most large markets saw declines. Exports to Southeast Asia overall were down -9.88% in 2019 to 21.56mt, and down from a peak of 39.134mt in 2016. Within that however there were some growth markets. Exports to Indonesia were up 9% to 3.351mt, while exports to Thailand were up 9.59% to 3.774mt. Exports to China’s largest Southeast Asian market, Vietnam, fell -14.9% to 5.949mt, down from a peak of 11.704mt in 2016.

Exports to South Asia continued to fall sharply as competitive Indian exports added to difficulties from India’s import barriers. Exports to South Asia were down -17.8% to 4.447mt. Exports to the Middle East fell by just -2.2% to 6.252mt, while those to North Africa fell -11.6% to 1.29mt. The region with the largest contribution to higher volumes was from Sub-Saharan Africa, where volumes were up 4.97% y-o-y to 4.804mt.

Russia was one of the few other markets to see strong growth in shipments. Chinese exports there were up 26.5% y-o-y at 927,394t. Overall however, the market remains minor for China. Exports to the European Union (including the UK for now) were down -19.8% at 3.238mt. 

To the Americas meanwhile, volumes were mostly falling. Overall volumes were down 16.4% to 7.742mt. Of that, volumes to Nafta were down 29.7% to 1.705mt, while volumes to South America were down 9.82% to 4.676mt.

Production by Germany’s precision tool manufacturers fell by an average of -7% in 2019, according to preliminary figures from the nation’s mechanical engineering association VDMA. The German mechanical engineering sector, one of the biggest in the world and a mainstay of German industry, continues to underperform, affected by trade conflicts, Kallanish notes.

Initial signals from the automotive industry hinted that production could recover in the course of the year and stabilise the demand for tools. Companies in this segment however are preparing for a further drop in 2020, the VDMA says. The sector’s production value in 2019 was around €10.4 billion ($11.5 billion), according to initial calculations presented by Stefan Zecha, chairman of the Precision Tooling Association within VDMA.

Trade conflicts and the resulting economic slowdown did not leave the precision tool industry unaffected in 2019. With a drop in sales of around -4%, the manufacturers of cutting tools were the least affected by this development. Dies and moulds lost -8%, and sales of clamping devices fell by -9%. The declines would have been greater if not for the phenomenon that precision tools are particularly in demand in difficult economic times, since they provide productivity gains without major investment, Zecha explains.

The German and Chinese markets in particular had developed significantly slower than expected. Business in the USA also remained below the previous year’s level in total, even though sales of cutting tools and clamping tools improved slightly.

Spain’s Santander Coated Solutions (SCS) increased output in 2019, Kallanish learns from a statement by Spanish authorities.

The company produced 117,000 tonnes of finished products in 2019, up by 30,000t from the 2018 production levels. It is part of the Network Steel group and produces pre-painted coils.

The plant reached a turnover of almost €100 million ($110.6m) last year and is now preparing for its second phase of development.

SCS announced its intention to build new galvanizing and cold rolling lines at the site in 2018, with an annual production capacity of 360,000-400,000 tonnes. Now the local authorities have confirmed that the expansion is going forward, but it will no longer involve hot-dipped galvanized production.

SCS sells 85% of its output to international markets. The mill is part of a group of three Network Steel plants specialised in the production of coated products, with two of these located in Spain and one in Portugal.

The European Commission has approved Spanish steel service centre Bamesa Aceros and Japanese trader Sumitomo’s joint takeover of Steel Center Europe (SCE) in the Czech Republic, according to the EC’s merger case filings.

The EC said the acquisition would not raise any competition concerns based on the product variety and geographic activity of the companies involved.

SCE, based in Humpolec, in the southeast of the Czech Republic, distributes flat steel products, primarily in Czechia and has slitting, cut-to-length and blanking lines for processing on 60,000 square meters.

Prior to the transaction, Sumitomo was already a shareholder in SCE along with Japan’s Toyota Tsusho, having had a 50% stake. Following the takeover, Bamesa and Sumitomo will hold 50% each.

Bamesa Aceros’s main products are flat products with primary customer markets in France, Morocco, Portugal, Romania, Spain and Turkey.

Sumitomo trades a wide range of metals products across the world.

— Laura Varriale

UK rebar fabricators are concerned about the availability of Cares-approved material under the European steel safeguard, with Brexit potentially clouding the situation further once the transition period ends.

The UK has one sole domestic rebar producer, Celsa, which owns 40-50pc of the country’s downstream fabricators. In previous years, the independent fabricators not owned by Celsa could source Cares-approved material from 17 mills in China. But this supply-source was closed when the European Commission introduced anti-dumping duties of up to 22.5pc in 2016.

Rebar imports to the UK from China totalled 279,438t in 2014 and 395,412t in 2015 — almost half the market — but this dropped sharply after the duties were imposed to just 6,836t in 2016.

When the EU quota system came into force in June, UK rebar importers were further restricted in terms of sourcing, especially when Turkey exhausted its quota in October and Russian and Ukrainian allocations reached critical levels this month.

The requirement to buy Cares-approved rebar applies only to the UK and Ireland, while other EU buyers are not bound by these same restrictions. “The issue is not the quota system per se, but the quotas combined with UK safeguards and additional burdens such as Cares. The problem is that legislators don’t understand market nuances,” one UK rebar importer said.

“Our overarching focus at Cares is to support all our partners in the steel industry, and to work with them to achieve continuous improvement in the quality and sustainability performance of reinforcing steel products entering the supply chain,” Cares said, adding that the quota system was “a matter for the EU”.

The fabricators not owned by Celsa prefer to source elsewhere when possible, given the company is their largest competitor in the downstream market. A Spanish-headquartered producer is another major supply source, but its offers are currently around £400/t delivered, while Turkish material is £30/t lower.

A Belarusian mill, which is subject to 10.6pc duties imposed by the commission in mid-2017, also has Cares-approval. The producer reportedly sold out all allocated rebar volumes until June 2020, but has access to the other countries quotas.

Imports from Belarus to the UK surged from 39,190t in 2017 to 61,099t in 2018 and to 96,966t in the first 11 months of 2019.

With a limited number of mills from Turkey and CIS, the two remaining countries with individual quotas remaining are Bosnia and Herzegovina, which have no Cares-certified mills. Moldova has one mill that lacks the flexibility to produce lengths suitable for the UK market.

Similarly, several Middle Eastern mills are Cares approved but do not provide the correct lengths required for UK construction. “We could source from EU mills and one Algerian mill, but they prefer to satisfy domestic demand first, which means we cannot depend on them,” one UK importer said.

EU imports

British traders and fabricators are expected to return to new purchases soon, looking into material with March-April delivery.

There is still 175,000t available on the “other countries” rebar quota, with each country able to take a maximum of 30pc. This means that when the “other countries” quota opens up to those countries with individual quotas on 1 April, countries such as Turkey, Russia and Ukraine will be able to export around 40,700t of rebar each to the EU. But the Balkans region has recently purchased 40,700t of Turkish rebar ready to clear customs on 1 April, Turkey’s entire allowance. Should others also clear customs, they could be hit with the 25pc duty.

Industry association Eurofer has launched a campaign to have the 30pc allocation per country reduced to 20pc in the commission’s next review.

Turkish rebar exports to the Balkans have increased exponentially since 2015, going from 77,456t for the year to a high of 324,338t in 2018 and 271,602t in the first 11 months of 2019.

Transition period

Uncertainty surrounding Brexit and how the quota system will be applied to UK imports and exports is adding to sourcing issues.

The transition period for the UK will last until 31 December 2020, with an option to request an extension before 30 June 2020. All trade regulations will be revised gradually, and market participants believe some clarity with quota and tariffs system will be seen closer to the end of the summer period. This means the UK will be bound to the quota system until then, compounding rebar sourcing issues for importers.

Anticipating that quota issues with Turkish material will continue and prices may rise amid limited supply options, UK fabricators significantly replenished stocks at the end of last year up to March. In the meantime, cut and bent rebar surged by around £20/t over one month, to £495-500/t delivered, with construction activity remaining relatively stable.

Until the quotas renew on 1 July, it is unlikely any more rebar will be imported from either Turkey or Belarus aside from the bookings awaiting customs clearance on 1 April. This would lend support to European rebar prices because UK fabricators will have no other option but to buy from EU mills.

By Sara Warden and Elena Grebiniuk

US Steel Kosice (USSK) expects to ship 3.2 million net tons of steel products in 2020, says parent US Steel. This comes after sales in 2019 fell -19% on-year to 3.59mnt.

In the fourth quarter of 2019 alone the Slovakian mill’s shipments slumped -29% on-year to 757,000nt, with average realised price down -9% to $622/net ton.

Raw steel production fell -36% in the quarter to 773,000nt, with capacity utilisation sliding to 61% from 96% in Q4 2018. Net sales dropped -38% to $478 million, with Ebitda sliding to negative $7m versus positive $85m in the year-earlier quarter.

Profitability suffered in Q4 from lower sales prices and decreased volumes, as well as higher cost of iron ore. However, it benefited from cost control measures and fewer planned outages, as well as a CO2 tax refund and annual electricity cost compensation rebate.

Service centre destocking continued throughout Q4, with activity increasing in early Q1 2020, driven by price increase announcements.

Last year USSK idled blast furnace no.2 on account of the weak market (see Kallanish passim). It has two other blast furnaces that remain operational. The firm also recently postponed its dynamo steel strip investment in 2020.

Affecting the firm were EU car production which decreased -4.7% on-year in 2019 to 17.6 million units, while a -0.9% decline is projected for 2020. Car output in the Visegrad 4 countries rose 1.1% last year to 3.58m units, but is expected to fall -0.7% in 2020, US Steel says.

The bloc’s construction sector activity is expected to have grown 2.3% in 2019 and is foreseen growing 1.1% this year.

USSK’s full-year 2019 raw steel production slumped -22% on-year to 3.9mnt, with capacity utilisation down to 78% from 100% a year earlier. The firm sourced 424,000nt of iron ore from its parent company versus zero in 2018. Net sales fell -25% to $2.42 billion, and Ebitda slumped -92% to $35m. Capital expenditure rose 47% to $153m.