Category: Latest Updates

ArcelorMittal Italia is to restart its 600,000 mt/year plate rolling mill in Tarantoon February 10, union sources told S&P Global Platts Thursday, with production of around 30,000 mt in total targeted for a period of four weeks initially.

The facility, in southern Italy, was shut down in September.

ArcelorMittal Italia currently has three blast furnaces in operation at the site — BF1, BF2 and BF4 — with a combined production target of 4.5-5.00 million mt/year of crude steel, although the company remains in discussions with the Italian government on the future of the facility, previously known as Ilva, over the latter’s production and ownership.

The company declined to comment on the matter when contacted Thursday by S&P Global Platts.

On December 20, ArcelorMittal signed a non-binding agreement with the government to continue negotiations on a new industrial plan for ArcelorMittal Italia, after saying on November 4 that it wanted to withdraw from the Ilva purchase. An agreement is set to be reached by January 31, according to the company.

The government has said that it wants the plant to produce at 8 million mt/year with no job cuts, although ArcelorMittal has submitted plans for the plant to produce 4.5 million mt this year, ramping up to 6 million mt/year by 2023, with around 6,000 job cuts, something that has been rejected by Italian Prime Minister Giuseppe Conte.

Union and market sources said Thursday that ArcelorMittal and the government “are working flat out” to find a solution in the coming days.

— Annalisa Villa

Germany’s construction industry is expecting revenues to rise in 2020, Kallanish hears from the main industry associations Hauptverband der Deutschen Bauindustrie and Zentralverband Deutsches Baugewerbe.

Revenues are anticipated to grow by 8.5% to €137 billion ($145 billion), following an estimated increase of 11% in 2019. Given that prices increased by 5.5% last year, the adjusted, or real, growth in revenue was 3%.

At a joint press conference in Berlin, the associations said that residential construction is likely to maintain a level of around 300,000 new apartments this year. For commercial construction, they predict varied development. While (building) permits for factory and workshop buildings have been declining for three months, permits for warehouse and commercial buildings as well as office and administration buildings are showing an upward trend.

In commercial civil engineering, monthly incoming orders have remained steady year-to-date showing a year-on-year increase of 10% since the end of the first quarter of 2019. “We attribute this above all to the investments for railway lines, bridge and tunnel construction by Deutsche Bahn. The federal budget provides for a further increase in investment grants of €1.1 billion to €6.6 billion (+18%) for the coming year,” the representatives say (see separate article).
 
This is one of the reasons why the associations representing the commercial construction segment are forecasting total revenues of approx. €51 billion for 2020. This would mean an on-year increase of 5.5%.

The new European trade commissioner Phil Hogan has received a letter signed by a range of members of the European parliament (MEPs) about the EU safeguard system for steel imports. The MEPs are requesting a review of the system.

In the letter, seen by Kallanish, the MEPs note that the review carried out in 2019 “… corrected certain aspects, but the situation has since deteriorated further.” According to the officials who signed the letter, this change in circumstances has triggered the need for a further review of the system.

“Whilst import volumes have decreased during 2019 due to the weakening market, the import market share did not follow this trend, illustrating that imports are still having a destabilising effect on the EU market,” the letter says. “When demand picks up in 2020, as expected, there will be an accumulation of available quota volumes at a level massively above that of traditional imports.”

The first signatory on the letter is Inmaculada Rodriguez-Pinero, a Spanish member of the socialist group in Europe. It also includes support by members of other political factions such as Massimilano Salini from the European People’s Party and Helmut Scholz from the Nordic Green Left.

The European steelmakers’ association Eurofer has been asking for a further review of the EU safeguard system for steel imports since last year.

Duty-free quotas for rebar shipments into the EU from Russia and Ukraine are getting close to critical levels, according to data published by the European Commission on its website.

However, the remaining quota levels — mainly for rebar — together with extended mill stoppages over the holiday period and a rebound in apparent consumption could help European steel producers achieve higher asking prices for the first quarter, market, sources said.

European mills are currently offering rebar at around Eur495-Eur500/mt delivered, and pushing for further increases, after European monthly ferrous scrap settlements rose for the second consecutive month in January. The spread between Platts TSI Northwest Europe Rebar EXW assessment and Platts Northern European shredded ferrous scrap assessment was at Eur215/mt on January 10, up marginally from Eur210/mt on December 6.

According to the latest data, there is only 5,885 mt remaining in rebar quotas for delivery from Russia, with 8,596 mt from Ukraine. At the beginning of the current period on July 1, Russia had an original allocation of 241,998 mt of rebar and Ukraine had 160,848 mt.

CIS rebar exports into the EU only started to ramp up since the end of October, after Turkey finished its 301,537 mt of free quotas as of October 11.

On October 1, the European Commission retroactively reduced the planned increase in tariff-free steel quotas to 3%, down from 5% across all product categories for the annual quota period July 2019-June 2020.

Once Russia and Ukraine exhaust their quotas, the only option for rebar importers will be to buy rebar from Bosnia — which at present has about 65,471 mt remaining of its original July allocation of 101,229 mt — and Moldova — with 26,689 mt remaining of its original 72,752 mt total allocation.

Turkey’s wire rod quota has also reached a critical level, with just 13,557 mt remaining out of a total of 312,081 mt for the rest of the period. For rod, there are still lots of other quotas open, although Russian quotas have halved to 139,908 mt from 316,074 mt at the beginning of the period.

For both rebar and wire rod, the other countries’ quota will be renewed for the April-June quarter on April 1, when Turkey is able to sell its products again, although it will be limited to 30% of its quota.

— Annalisa Villa, Viral Shah

Turkish automotive production rose 10.3% on-year in December to 135,775 vehicles, driven by a 15.5% rebound in passenger car production to 94,991 cars, Kallanish learns from the Turkish Automotive Manufacturers’ Association (OSD). Commercial vehicle production, however, fell -0.1% to 40,784 units.

Demand for Turkish cars soared in December, with domestic passenger car sales up 16% on-year to 70,829 units, and exports up 10.5% to 71,937. Overall automotive exports increased 6.7% to 106,349 units.

Turkish automotive exports generated $2.5 billion in December, up 3.2% on-year.

In full-year 2019 Turkish automotive production still fell -6.5% on-year to 1.48 million units, with passenger car output down -4.3% to 982,642 units. Turkish domestically-produced passenger car sales fell -3.8% to 157,178 cars. Overall (domestic and imported) passenger car sales declined -20.4% to 387,256 cars. Automotive exports fell -5% to 1.25 million units.

Although it has shown signs of improvement in recent months, demand for cars has reduced significantly due to Turkey’s slowing economy since mid-2018.

The former Ilva plant in Taranto is expected to benefit significantly from the newly presented European Green Deal, a roadmap for making Europe sustainable through investments.

In a recent interview, David Sassoli, the Italian president of the European Parliament, confirmed that Italy will have the opportunity to claim as much as €4 billion through the new deal. The funds would go to support the transition of large industries, including Ilva, towards fossil-free production.

The support could further accelerate the investment of the Italian state in the company, in partnership with ArcelorMittal. Italian authorities have until the end of the current month to negotiate a new deal and industrial plan for Ilva with ArcelorMittal (see Kallanish passim).

Both ArcelorMittal and Italian authorities agree on the fact that Taranto will need to transform part of its steelmaking production by using EAF or DRI systems. This will be to start the transition towards fossil-free steelmaking.

Germany’s biggest steelmakers, thyssenkrupp and Salzgitter AG, have denied they are in active merger talks after rumours to that effect resurfaced last weekend.

Weekly Der Spiegel wrote it had been informed about an upcoming meeting between new thyssenkrupp ceo Martina Merz and Salzgitter chief Hans Jörg Fuhrmann, “…which could be used to test the waters.”
 
Salzgitter responded by saying Merz and Fuhrmann knew one another personally before Merz turned ceo of tk group. “Both met last year, too, so this is hardly spectacular,” the company says in a response to a Kallanish query, adding that another meeting is not on the agenda. The reply confirms Fuhrmann’s earlier comments that “…I have not seen a scheme for a merger with a competitor that contains an advantage for us.” Fuhrmann notes, however, that he would not rule out the possibility.

Thyssenkrupp reiterated that it favours consolidation among European steelmakers in principle. Apart from that, it refrained from giving any comment on Salzgitter but maintained that “…the steel strategy announced in December has priority.” The strategy is currently under discussion between the management and workforce, with tangible decisions expected to come in the following weeks.

Tata Steel Europe’s management has assured local unions that job cuts at the Ijmuiden site will not be implemented for the time being, according to Dutch media reports. The company announced last year the intention to cut 3,000 jobs in Europe, of which 1,600 are in the Netherlands.

According to a letter seen by Dutch media, Tata Steel management says it will adhere to the previous agreement signed with unions, meaning jobs will not be slashed until October 2021.

Despite the postponement of the cuts, it is understood the plan to reduce the workforce will go ahead in order to make the company more competitive in the current market environment.

Tata Steel Europe did not respond before deadline to Kallanish requests for comment.

Trade representatives from the US, European Union and Japan Tuesday agreed to extend cooperation on excess steel capacity following China’s exit from the Global Forum on Steel Excess Capacity, or GFSEC, late 2019.

United States Trade Representative Robert Lighthizer, European commissioner for trade Phil Hogan, and Kajiyama Hiroshi, minister of economy, trade and industry for Japan, met in Washington Tuesday to discuss a number of trade issues, including industrial subsidies and ways to strengthen existing World Trade Organization rules on subsidies, according to a statement from the USTR’s office.

The future of the GFSEC has been clouded since China decided in October 2019 to end its participation.

The GFSEC was established in late 2016 at the instruction of leaders from the G20 group of wealthiest nations. The forum aims to gather information and report on the evolution of steel supply and demand conditions, steel production capacity, and government policies that lead to global overcapacity, including subsidies.

Global steel industry groups in the Americas, Europe, Africa and Asia in late October called on governments of steelmaking economies to step up efforts to effectively tackle persistent global excess capacity and to extend the forum.

In addition to the GFSEC, the US, EU and Japan have also agreed to continue to cooperate on reforming the World Trade Organization, including increasing WTO member’s compliance with existing WTO notification obligations and pressing advanced WTO members claiming developing country status to undertake full commitments in ongoing and future WTO negotiations, the USTR’s office said.

— Justine Coyne

Austrian distribution company EHG Stahl und Metall has lined up €30 million ($33m) for an all-new and expanded infrastructure at its headquarters in Dornbirn.

The company is building two new high-bay warehouses and an automated sawing shop, and is expanding its logistics for incoming and outgoing materials. The measures will expand its operating area by some 17,000 square metres and will create some 80 new jobs, according to managing directors Markus Lutz and Stefan Girardi.

The company employs a staff of 360 at its ten sites. Early last year, it acquired to firms in Germany in the state of North Rhine Westphalia, (see Kallanish passim). It has also locations in Switzerland and Romania. EHG’s range of products places an emphasis on speciality steel long products such as engineering steels and bright bar, but also offers sections, sheets and stainless products. According to its latest figures, it has a storage capacity of 45,000 tonnes, daily despatches of 600t and achieved a revenue of €215m in its last fiscal year.