Category: Latest Updates

Italian prime minister Conte is to meet with Lakshmi Mittal before an upcoming 7 February deadline for ArcelorMittal Italia, according to sources close to the matter. That is when the Italian judiciary will rule on the right of ArcelorMittal to withdraw from its contract to run the former Italian steelmaker Ilva.

Trade unions at the site tell Kallanish that they have not yet been asked to be part of the negotiations regarding possible reductions in the workforce. Meanwhile, and following the swift change of ceo in autumn 2019, the company is implementing other management changes. It is replacing its chief operations officer Stefan Van Campe with Loris Pascucci and naming Domenico Ponzio as the new chief purchasing officer (see Kallanish 28 January). This action is seen by unions and the local press as another sign of retreat from Italy, also accelerated by the struggling market situation often highlighted by ArcelorMittal.

Italian Minister of Economy Roberto Gualtieri is rumoured to have met with Lakshmi Mittal on the sidelines of the World Economic Forum in Davos. Conte is said to havecalled an evening meeting in Rome after this, although details of both events remain unsubstantiated. Despite government officials working hard to conclude an agreement before 7 February, the main issue surrounds any job cuts. According to reports as yet unconfirmed by the company, ArcelorMittal would be willing to retain its interest in the steelmaker. This is on the proviso that it can cut 3000 jobs and that the Italian government also invests in the relaunch of the former Ilva operations, Kallanish hears.

Production of crude steel at Germany’s mills in 2019 was 39.667 million tonnes, representing a fall of -6.5% versus 2018, according to federation WV Stahl. 2018 had already seen a year-on-year fall of -2%, it notes.

Output in 2019 therefore was the lowest since 2009, the federation observes. It cites slackening demand from user industries as well as import pressure from the diversion of volumes caused by the US section 232 safeguard policy.

The y-o-y decline is fairly evenly reflected in the statistical categories of oxygen-route steelmaking, EAF-made steel, pig iron and hot-rolled products, all of which saw falls of around -6.5%, Kallanish notes. Over the course of the year, however, individual months stood out with trends of EAF-based and oxygen-route steelmaking diverging strongly.

In December, crude steel output dropped by nearly -12% against December 2018, totalling 2.843m tonnes. The steep drop is mainly attributable to the idling of blast furnaces in recent months. EAF-based production showed an even stronger change however, falling by -15%.

The latter example appears to go against the relatively good level of demand for typical EAF products such as rebar, which continued during the mild winter months as a result of steady construction activity. WV Stahl provides no explanations for such apparent contradictions however, although import substitution could be a possible reason in this case, Kallanish notes.

Italian headquartered longs supplier Feralpi has announced that it is in the process of acquiring 50% of the shares Duferco Italia Holding has in the Caleotto wire rod mill in northern Italy, Kallanish notes.

The companies are awaiting clearance from the authorities to complete the transaction. Feralpi has been sharing control of the mill with Duferco for the last five years on a 50:50 basis. “Five years after forming the equal joint venture that led Feralpi and Duferco to taking over and relaunching the major rolling mill in Lecco, situated in the centre of a well-established drawing mill district devoted to export, the share structure will change,” Feralpi says.

Feralpi is looking to increase its control over Caleotto by continuing to focus on the special steel sector. Duferco, meanwhile, has lately been focussing on investment in new rolling lines for beams at its Brescia unit, and therefore targeting its resources in that area.

“The operational partnership between the two companies will not end,” Feralpi stresses. Billets for the mill will continue to be supplied by Acciaierie di Calvisano (Feralpi) and the Duferco Group.

Caleotto supplies special wire rod to a number of markets, including the automotive sector, currently undergoing a period of weakness in demand, Feralpi adds.

A firm controlled by Polish industrial investor Sunningwell International Polska plans to acquire the assets of several Romanian steel companies currently in bankruptcy proceedings, according to Romanian press reports.

Recently-established Laminorul Danube Metallurgical Enterprise is 90% owned by the Polish firm. It plans to acquire Industria Sârmei Câmpia Turzii (ISCT), Combinatul de Oțeluri Speciale (COS) Târgoviște, Laminorul Brăila, and Ductil Steel Buzău. These firms were all in the past owned by Russian steelmaker Mechel.

ISCT is a cold drawn and bright wire producer, COS Târgoviște produces rebar, Laminorul Brăila makes sections and bulb flats, and Ductil Steel also produces wire and welded mesh. These firms all carried out public auctions throughout 2019 to sell assets.

Sunningwell International Polska declined to comment when contacted by Kallanish.

According to business publication Profit.ro, Laminorul Danube had a €38.3 million ($42.1m) bid for COS Târgoviște accepted by creditors in October, and Sunningwell said it plans to continue production rather than sell off assets.

Last September Sunningwell agreed to lease insolvent Huta Czestochowa for 12 months and restarted production at the Polish heavy plate producer in October (see Kallanish passim).

ArcelorMittal confirms to Kallanish that output from its hot-strip mill at its plant in Fos-sur-Mer has been reduced during recent weeks, due to the impact of strikes at the nearby port of Marseilles.

The company has been hit primarily by delays to shipments as the site delivers up to 65% of orders by sea and alternative shipment routes are not able to absorb the current delays.

“To date, we have had sufficient raw material stocks to allow us to cope with the slower rate of raw materials being unloaded in the port,” the company said. “But the yards where we store our finished products have almost reached their maximum capacity, so we have slowed the hot strip mill as a result.”

“Currently, there is no clear view on when the situation will be resolved, but we remain hopeful that the worst is behind us. Should the situation continue as it has been in recent weeks, we would continue to slow down production to accommodate the shipment delays,” ArcelorMittal says.

The American Iron and Steel Institute (AISI) estimated that some 27.9 million st of steel were imported into the US last year, down 17.3% from 2018.

Of that total about 21 million st were imported as finished steel. Imports of semi-finished steel like slabs and billets – imported by US steelmakers themselves – totaled around 8 million st. last year.

The finished steel imports, which were down 18.1% from 2018, took an estimated 19% of the US market last year, according to the AISI.

The US imported 1.55 million st of steel in December (including some 1.35 million st of finished steel), based on preliminary US Census Bureau data, roughly flat when compared to November import levels. Finished steel import market share was an estimated 15% in December.

The AISI said major finished steel products with significant import increases in December compared to November were plates in coils (up 41%), hot-rolled sheets (up 27%), cold-rolled sheets (up 22%) and cut plates (up 18%).

— Tom Balcerek

ArcelorMittal Italia has instigated a new round of changes in its senior management team, Kallanish notes. Most of the senior posts at the company are now held by Italian nationals.

Following the swift change of ceo in autumn 2019 (see Kallanish 16 October 2019), the company has replaced its chief operations officer Stefan Van Campe with Loris Pascucci. The company h s also named Domenico Ponzio as the new chief purchasing officer.

The changes have been seen by many in the Italian market as confirmation that the new ceo Lucia Morselli is trying to build up a team of executives more closely linked to the Italian market. Some sources are suggesting however that the changes could be a sign that ArcelorMittal is accelerating its retreat from Italy.

ArcelorMittal and the Italian government are still in negotiations to find a solution for the former Ilva operations in the coming days. It is understood the Italian government will take an important role in the future relaunch of the company, but a final agreement on the new organisation is taking longer than was originally expected.

Russian mining and steelmaker Severstal said that it hopes to expand its steel sales in a city where it has had no or little presence before, with the help of an independent distributor.

Several has invited steel distributor and processor Brok-Invest-Servis to join its online sales platform to target customers in Ryazan, west Russia.

The steel company’s clients will be able to see inventories for disposal from Brok-Invest, order it online and collect from the distributor’s warehouse in Ryazan, a stockholder representative told S&P Global Platts.

Severstal does not have its own warehouse in Ryazan, though Brok-Invest has been present there for a long time and has developed high volume of trade, the latter said.

Brok-Invest’s Ryazan-based inventory made visible on Severstal’s online platform comprises products of various mills. However, this may change in the future, should the scheme proves commercial success.

“It should experience both peak and off-peak sales before drawing a conclusion regarding its efficiency. The format is likely to take shape by the summer,” said the representative.

Severstal has not yet attached any conditions to the scheme. For now, Brok-Invest will accumulate all proceeds from the sales, while sourcing steel from a number of producers, including Severstal.

Going forward, if using Severstal’s online services yields Brok-Invest new clients or boosts its sales, the steelmaker may request a certain commission on sales or insist on its products comprising a larger proportion of the trader’s turnover, a source close to the matter said.

Brok-Invest turns 29 years this year. It manages four warehouses in Moscow and six regional warehouses in Ryazan, St Petersburg, Yaroslavl, Nizhniy Novgorod, Rostov-on-Don and Krasnodar. Its annual steel turnover averages at 850,000 mt, Brok-Invest has said.

This marks the third official announcement of a major Russian steelmaker giving distributors access to their online stores.

Since July 2019, Severstal has been running a similar experiment with distributor Evraz Metall Inprom in Tula and Kirov. Around the same time, NLMK signed an agreement with stockists Metallservis and SPK allowing them to sell their stocks through NLMK’s e-shop in exchange of giving the steel company access to their 70 warehouses.

The companies have invested heavily in developing online stores and platforms and are now inviting distributors to use this infrastructure to market their stocks.

Market sources said there have also been several other informal partnerships.

Distributors have been accommodating so far, having no budgets for creating similar online infrastructure comparable with those of producers.

“It is becoming so difficult to compete with them that developing synergies instead is becoming almost necessary to continue to co-exist,” one trading source said.

— Ekaterina Bouckley

Turkey’s Cengiz Holding broke its five-day silence about some news in the UK media last week that the UK government had also started talks with the Turkish conglomerate about a Cengiz takeover of British Steel as a backup to current plans. Cengiz confirmed this with a statement Sunday to UK media saying the company is ready to bid for British Steel.

“British Steel is an important asset and we are watching developments closely and are ready to make a bid for the whole of British Steel,” Cengiz Holding CEO Omer Mafa said in a statement. “The UK is one of our target countries that we want to invest in and are looking at a range of opportunities such as major infrastructure projects and industrial assets.”

Cengiz did not respond Platts request for comment Monday.

Turkey’s conglomerate Cengiz Holding has huge investments in construction, energy, mining, and tourism sectors in Turkey and its CEO Mehmet Cengiz has close relations with the current Turkish government.

After the exclusive talks between the Official Receiver of British Steel and preferred bidder, Turkey’s OYAK, over the sale of the UK-based steelmaker failed in October last year, Chinese steelmaker Jingye Group started the takeover negotiations with the UK government.

British Steel’s proposed sale to Jingye “is now firmly in sight” following the striking of a deal with unions on jobs and investment at the UK-based steelmaker which entered compulsory liquidation in May 2019, UK labor union GMB said Friday, as Platts has reported.

Jingye said the sale is expected to be completed in the current quarter.

— Cenk Can

Global crude steel production in 2019 increased by 3.4% year on year to 1.87 billion metric tons, according to data released Monday by the worldsteel association.

Crude steel production contracted in all regions in 2019 except in Asia and the Middle East. Steel-producing countries generally saw a contraction in their output against a backdrop of a slowing global economy in general.

Asia produced 1.34 billion mt of crude steel in 2019, an increase of 5.7% compared to 2018. China’s crude steel production in 2019 reached 996.3 million mt, up by 8.3% on 2018. China now accounts for 53.3% of global crude steel production, its largest share ever.

India’s crude steel production for 2019 was 111.2 million mt, up by 1.8% on 2018.

Japan produced 99.3 million mt in 2019, down 4.8% compared to 2018. South Korea produced 71.4 million mt of crude steel in 2019, a decrease of 1.4% compared to 2018.

The EU produced 159.4 million mt, a decrease of 4.9% compared to 2018. Europe’s largest steel producer, Germany, made 39.7 million mt of crude steel in 2019, a decrease of 6.5%. The second largest steel producer, Italy, produced 23.2 million mt in 2019, down by 5.2% on 2018. France produced 14.5 mt, off 6.1% and Spain produced 13.6 million mt of crude steel in 2019, a decrease of 5.2%.

Turkey’s crude steel production for 2019 was 33.7 million mt, down by 9.6% on 2018.

Crude steel production in North America was 120.0 million mt in 2019, 0.8% lower than in 2018. The US produced 87.9 million mt, up by 1.5% on 2018. Annual crude steel production for South America was 41.2 million mt in 2019, a decrease of 8.4% on 2018. Brazil produced 32.2 million mt in 2019, down by 9.0% compared to 2018

The CIS produced 100.4 million mt, a decrease of 0.5%. Russia produced 71.6 million mt, down by 0.7%. Ukraine produced 20.8 million mt of crude steel, a decrease of 1.2% compared to 2018.

The Middle East produced 45.3 million mt of crude steel in 2019, an increase of 19.2% on 2018. Africa produced 17.0 million mt in 2019, down 2.3% on 2018. Oceania produced 6.1 million mt, down 2.9% on 2018.

— Annalisa Villa