Category: Latest Updates

The UK government is confident the purchase of British Steel by Chinese steelmaker Jingye will go ahead but officials are meeting other parties interested in the company, a spokesman for the Department for Business, Energy and Industrial Strategy said Wednesday.

The statement comes after the Guardian newspaper reported that the UK government had also started to talk with Turkish conglomerate Cengiz Holdings as a backup.

Cengiz Holding did not immediately respond to a request for comment.

“Officials have met and continue to meet all parties interested in acquiring British Steel as the government is not party to the exclusivity agreement signed by the bidder and the official receiver. The government believes the Jingye transaction will complete in the coming weeks,” the BEIS spokesman said.

British Steel has production capacity of 3 million mt a year at sites in the UK, France and the Netherlands.

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

After the exclusive acquisition talks between the Official Receiver of British Steel and the preferred bidder, Turkey’s OYAK, failed in October last year, Jingye started takeover negotiations.

The Official Receiver said Wednesday that if discussions were taking place with Cengiz or any other third party, it did not involve them.

The Official Receiver also said that Jingye was currently engaging with EU regulators to secure the necessary approvals to complete the purchase of British Steel. The process would take some time “and it is not possible to put a specific timeframe on it.”

Although the UK is set to leave the EU on January 31, the merger requires approval from a number of European regulators, both at the national level and by the EU.

Some market sources are skeptical about the deal with Jingye, saying they believe the UK government is too and that this is why it is in touch with other parties. They said Jingye was mainly interested in the Redcar Bulk terminal rather than the steel plant. The port is half owned by British Steel and half owned by the UK government. It is only one of four UK ports capable of handling Capesize vessels.

Market sources said the government is very committed to finding a solution for British Steel, the UK’s second largest steel producer, particularly after Scunthorpe, where the company is based, returned a lawmaker from the ruling Conservative Party for the first time in decades in the recent parliamentary election.

“The French government’s approval is also required for the sale of British Steel’s Hayange plant, and it is interesting to note that the French government is skeptical about it,” a source close to the deal said. But he is also underscored that the French government would never act against the UK government. “The French government met the Chinese group too to seek assurances from Jingye, but it also has a plan B.”

The French government put Hayange up for sale separately as a contingency plan in case the deal with Jingye does not go through. According to the source close to the deal, the deadline for bids has been moved to end of February to not create any obstacles to the talks with Jingye.

Jingye did not respond to a request for comment, but sources said it was committed to closing the deal by the end of the first quarter.

— Annalisa Villa, Cenk Can

The Dusseldorf-based e-commerce platform for ferroalloys Metalshub, generated €100 million ($111m) of legally binding contracts concluded over the platform in 2019. This is around five times the volume traded in 2018, Kallanish learns from the company.

Metalshub was founded in late-2016 by former Anglo American executives Frank Jackel and Sebastian Kreft. In December last year, it completed therefore 24 months of platform operations. According to the company, more than 650 companies from 66 countries are using Metalshub to buy and sell 17 product categories, such as molybdenum, manganese or chrome. The company also expanded its staff from ten to twenty-four during 2019.

While the majority of the 369 companies using the platform are European, the share of Asian companies has grown considerably to 150. In 2018, Chromo Invest and Point Nine along with a number of business angels had invested €3m in Metalshub’s seed financing round.

Indian steelmaker Essar Steel will no longer offer its products to European markets, sources close to the matter said.

The decision comes after the producer was acquired on 16 December by Luxembourg-based steelmaker ArcelorMittal and Japanese producer Nippon Steel. The new company has been renamed ArcelorMittal Nippon Steel India.

Market participants said the move was expected, given the company’s position in European markets. ArcelorMittal declined to comment.

The company operates a number of plants across Europe and has been locked in fierce competition with imported flat steel in the past few years.

The decision will likely see Europe’s steel imports from India drop, with some market participants suggesting Essar was supplying 30,000-40,000 t/month to Europe. The EU’s imports of Indian hot-rolled coil, cold-rolled coil and galvanised steel declined from January-November 2019, data from European steel industry association Eurofer show, but the country remains one of the key flat steel suppliers to the bloc.

Where this material will be diverted remains to be seen, but Vietnam and Turkey are potential new markets, as both countries import volumes from India. With Indian domestic demand expected to rise, the cargoes could also be supplied to the local market, especially since prices have been rising, increasing this month by $56-70/t from last month.

Essar Steel produces a range of flat steel products, including hot-rolled, cold-rolled, galvanised and coated products, plates and pipes.

By Lora Stoyanova

Celsa, the Spanish-headquartered long steel supplier, is currently seeing its European operations impacted by a number of uncertain elements, company ceo Francesc Rubiralta told local press.

The company’s exports have been impacted by the strikes in France seen since mid-December in protest against the government’s proposed pension reform. The demonstrations have continued during the first weeks of January, strongly impacting the transportation system, with blockades also staged at ports.

Celsa exports finished products to France from its Spanish mills. The company is also currently setting up finishing lines at its billet plant in southern France to further grow its presence in the French and Benelux markets.

On the other side of the channel, the company is also facing the uncertainty of Brexit. Celsa produces long products through its EAF-based mill in Wales.

In the reports monitored by Kallanish, Rubiralta said the main concern is the possibility that after Brexit the European safeguard system could be removed in the UK. This would drastically limit the protection given to local producers. He nevertheless believes the country is preparing for a relatively soft Brexit, with a few years of preparation until the complete withdrawal is done.

Many European coil buyers, while welcoming the current surge in prices, believe the uptrend is facilitated by an artificial shortage and says little about demand in the market.

“Restrictions on production capacities to achieve a better balance between supply and demand in the European market are beginning to have an apparent effect,” a Dutch manager observes. “After all, the delivery times for material from new production have increased considerably, which has made a number of buyers a little restless,” he tells Kallanish.

A buyer at a German processor also states that lead times at German and Austrian mills are stretching into April. Another processor’s manager flatly attributes the recovery to the mill production cuts and little else.

Price targets of up to €500/tonne ($556), as given by some mills, are therefore considered unrealistic. “The market cannot and will not swallow that,” a German trader says. He attributes the current surge to regulatory measures and to production cutbacks. “The way I know our friends [at the mills], as soon as prices are back to profitable, they will reheat their blast furnaces,” he says. “That’s how it used to be. One will start and the others will follow.”

He believes the price for hot rolled coil will even out at €440/t ex-works; others are less sceptical and are preparing for prices to exceed €450/t.

The US Department of Commerce has preliminarily decided to exclude two Turkish exporters of rebar to the US from countervailing duties following an administrative review, Kallanish reports. 

In the review of the period stretching from 1 January through 31 December, 2017, the department found de minimis subsidy margins for Icdas Celik Enerji Tersane ve Ulasim Sanayi A.S.and Kaptan Demir Celik Endustrisi ve Ticaret A.S. and Kaptan Metal Dis Ticaret Ve Nakliyat A.S., operating jointly as Kaptan. 

As a result, the two companies are excluded from the countervailing duties affecting 15 other Turkish exporters. The duties range from 1.82-2.29%. 

Interested parties have 30 days to comment on the department’s preliminary results. A final determination will be made within 120 days.

At the start of 2019, we highlighted a number of issues to watch in the global automotive industry. Key among them were the market slowdown in China, trade frictions and Brexit. While concerns related to these issues have changed, they have not gone away.

China did, indeed, see the slowdown intensify in the early months of 2019, but the local Light Vehicle market has since stabilised. This year, we do not expect the market to either grow or shrink in any significant way.

On trade and tariffs, specifically with respect to vehicle imports to the US, agreement appears to have been reached between the US, Canada and Mexico. Korea has also secured safety from potential US tariffs, while Japanese vehicle imports, as numerous as they are, look to be avoiding too much attention. The threat of tariffs for European OEMs, however, remains.

“another deadline looms, with parallels to the 2019 ‘no-deal’ scenario, at the end of 2020, if the UK and EU do not have agreements in place for a post-Brexit status quo”

Brexit did not happen in a disorderly fashion, as sometimes appeared likely during a politically fractious 2019. The newly elected UK government will now take the UK out of the EU at the end of January and into a 2020 of little change. But another deadline looms, with parallels to the 2019 ‘no-deal’ scenario, at the end of 2020, if the UK and EU do not have agreements in place for a post-Brexit status quo. The direction of the negotiations throughout this year will have important consequences for the future of the UK and European automotive sector.

Vehicle electrification was big news in 2019, as expected, even though sales continued to be modest. But the formal start of CO₂-reduction targets in 2020 in the EU is likely to see a lot more electrification across vehicle powertrains, with significant jumps in sales of pure battery vehicles, conventional and plug-in hybrids, and 48V mild hybrids. The targets only get tougher in 2021. The PSA-FCA tie-up, which was, in part, driven by these kinds of regulatory directives, may not be the last.

A new issue to consider is the resilience of the large mature markets in the US and Europe. Last year’s global decline mainly impacted non-mature markets, some of which (i.e. Turkey or India) may come back a little in 2020. But can the industry rely on the US and Europe for stability? The answer is most likely yes, although with some fragility remaining, it will be worth keeping a close eye on developments.

ArcelorMittal has declared force majeure on shipments from its Fos-sur-Mer plant in France because of strike action at the Port of Marseilles.

Workers at the port are striking against proposed pension reforms, alongside many others.

In a note sent to customers, the chief market officer for industry at ArcelorMittal Flat Europe, Antoine Van Schooten, said: “Pursuant to article 9 of our ArcelorMittal FCE General conditions of sales, we shall thus notably be entitled to additional time to perform our contractual undertaking as may be reasonably necessary, and shall have the right to apportion our production among our customers in such manner as we may deem equitable.”

The letter was sent on 20 January and could support European coil prices, as the vast majority of mills push their offers up substantially. Most offers in northwest Europe are €480-500/t ex-works, and it is likely that they will increase for second-quarter production and deliveries.

ArcelorMittal also started telling customers yesterday that it will be relining blast furnace B at its Ghent works in Belgium, as reported by Argus.

By Colin Richardson

Germany’s Lotter Gruppe, a steel distribution group specialising in rebar, has opened a bending shop in the port of Frankfurt, Kallanish learns.

The site is located in the Westhafen district, has a size of 8,000m², and will give the group access to the Rhine-Main region, it says in a statement. Apart from regular bending and cutting services for rebar and mesh, the site also offers Lotter-specific services and products like Bamtec, a carpet-like rollout system for laying rebar.

The Lotter group is headquartered in Ludwigsburg and also sells products for building services, flooring, steel doors and gates, liquefied gas, and sanitary equipment. It has 1,600 employees and in the last financial year generated sales of more than €500 million ($556m). It operates ten locations for rebar in the southwest of Germany.

In a market outlook, its sales subsidiary Lotter Kummetat states that prices for rebar and mesh have surged noticeably in the wake of scrap prices that rose into January. In the case of sort E3, old heavy scrap, the surge was €14/tonne, to €233/t ($259) on average in January’s contracts. Meanwhile, the scrap price surge has flattened, but Lotter Kummetat believes that prices for rebar will keep going up.

Italian plate prices remain steady compared to last week after producers asked for a €40/tonne ($44/t) increase compared to December in spot prices and contracts, Kallanish learns from distributors and re-rollers in the country.

Transaction prices for the lower quality S275 material from mills remain stable on last week at €500-510/t ex-works for delivery in March. A premium of €20-25/t is being paid for the higher grade S355. The heavy plate market is also climbing quickly in France where producers have already raised prices twice for the first quarter (see Kallanish 16 January). Italian plate prices are expected to increase accordingly and to attain a transaction level of €520-530/t for S275 in the coming days.

A high number of enquiries and high prices for imported slabs are making the market lively, several sources suggest. Meanwhile, ArcelorMittal Italia’s former Ilva plant in Taranto is going to restart its plate mill from 10 February producing 30,000 tonnes of plates over 20 shifts, a union representative tells Kallanish. However, after the first 4 weeks of work, the mill will be idled again for 2 weeks.