Category: Latest Updates

Following last year’s rocky road, the European flat steel industry should see an improving market environment in the second half of 2020, although headwinds are expected to linger until the middle of the year.

Margins at flat steel mills, stockholders and distributors were squeezed in 2019 following price drops of almost Eur100/mt for European flat products over the course of 2019. Import prices, which have risen to the same level as European domestic mills’ or even higher at times, have resulted in dire stretches for traders from the second half of 2019, while EU mills have not been able to lift prices substantially so far. At the same time, scrap and iron ore prices have increased.

Major customer groups such as the automotive and mechanical engineering industry softened following global trade disputes and Brexit uncertainty that resulted in investment delays. Further changes in combustion engine testing schemes have particularly hurt the German car industry, with implications for the entire supply chain.

While the automotive and mechanical engineering industries are not expected to have a bumper 2020 — with questions over structural changes within the car industry remaining — projections by trade associations as well as analysts are at least not forecasting further production decreases.

Automotive industry

ACEA, the European Automobile Manufacturers’ Association, said that from January to November 2019, new car registrations across the European Union were almost back at levels from one year ago, at a drop of 0.3%, because of a recovery in the last quarter of the year. However, four of the five major EU markets declined from January to November, according to ACEA, with Spain seeing a 5.7% decrease and the United Kingdom a 2.7% fall. Europe’s biggest market, Germany, was the only large market with an increase, rising 3.9%.

“The year hasn’t been great but we’re planning a 10% [volume] increase for 2020,” said a German supplier to the automotive industry.

Sources also highlighted that suppliers to the automotive sector are facing crunch meetings on long-term contract prices in Q1, squeezed between the automotives arguing for considerably lower prices than last year and EU mills not wanting to budge.

But also mills are going to face implications from the downturn in contract prices. “Until now we’ve been delivering on old price bases, now new ones are going to have an effect on balance sheets later this year,” a north European mill source said.

Mechanical engineering industry

German mechanical engineering association VDMA is expecting another production decrease of 2% this year following a 2% drop in 2019. However, the association said that the industry is expected to see production growth from the second half of this year in Germany as well as other European countries when delayed orders are set to be realized — if trade disputes between the US and China do not reignite.

“Our industry is not in crisis, but a lot of our customers are insecure and delay or stop their investments,” said VDMA president Carl Martin Welcker.

This view is being mirrored by flat steel market sources, who remain cautious on order situations from customer markets. In France particularly, ongoing strikes that have been hampering supply by rail since November are expected to continue into the first quarter of this year. “The anti-government protests and strikes are further factors to curb economic upturn,” said a German trading source.

Structural changes

Structurally, the flat steel industry has not seen the big changes it was expecting a year ago. The merger of the European steel operations of Thyssenkrupp and Tata Steel was called off mid-2019. Thyssenkrupp has since said it will undergo heavy restructuring, warning that “visibility” in 2020 would be limited for its trading arm and the steel division’s main customer, the auto industry.

Sources have also said that the failure of the Tata-Thyssenkrupp hook-up, which was expected to become a strong pricing power in the European market, fueled negative sentiment in the market and contributed to a drop in prices. The impending decision on the shutdown of Ilva’s blast furnace No.2 in Italy is further contributing to uncertainty at the beginning of this year.

On the back of strengthening Chinese steel prices and Turkey launching first steps towards an improving market environment, the question also remains if strengthening iron ore and scrap prices are more curse than blessing for mill margins in an environment that is lacking momentum.

Nevertheless, mill sources said that the order situation is not looking bad. “The beginning of the year is going to be bumpy, but real demand is not decreasing,” said a mill source.

— Laura Varriale

A Swiss distributor specialising in stainless steel and pipes, has begun to operate its new automated warehouse, Kallanish hears from the company. Hans Kohler AG is headquartered in Zurich.

The company also has three warehouses in nearby Dietikon, where the investment took place at its central hub. In recent years, Kohler has built several fully-automated high-bay warehouses. The biggest one, dedicated to bar and pipe, started operating at the end of 2019. It has a height of 20 metres and provides space for 4,000 cartridges. The company spent several million dollars on the modernisation, but has not disclosed the actual amount invested.

Kohler says that automation involving mobile data detection devices and bar scanners has been a must to operate in a market that is ruled by a just-in-time philosophy. The company has been cooperating with Outokumpu and its Scandinavian predecessor companies Nyby Uddeholm and Avesta for 80 years, it says.

Its owner, Hans R. Kohler, is also the chairman of VSEMH, the association of Swiss stainless steel and metals distributors, whose members sold around 95,000 tonnes of products in 2018.

Although Turkey’s steel consumption may have turned a corner after a rebound in domestic demand as of the fourth quarter, as Turkish mills’ exports fell sharply in recent months amid a sluggish market sentiment, the pressure on Turkish mills’ output and pricing continues.

According to the latest Turkish Steel Producers Association (TCUD) data published Thursday, domestic steel consumption continued to recover for the second consecutive month in November, after a significant 34% rise seen in local consumption in October.

Turkey’s overall steel consumption in the first eleven months was, however, still 17.6% lower than the same period the previous year at 23.9 million mt.

Turkey’s flats consumption declined by 4.5% on year in January-November to 13.8 million mt, while longs consumption slumped by 30.7% to 10.1 million mt, amid a construction sector crisis, the latest data showed.

Turkey’s overall finished steel output was also down in this sentiment by 14.5% year on year to 30.5 million mt in the eleven-month period. Turkey’s longs production declined by 20.5% to 18.3 million mt, while mills’ flats output fell by 4.5% to 13.8 million mt in the same comparison.

Although Turkish mills focused more on exports and managed to increase their overall steel export volumes by 1.3% year on year to 20.1 million mt in the first eleven months, as export volumes slumped in November the pressure on mill quotations rose.

Turkish mills’ steel exports slumped by 34% on year to 1.6 million mt in November, while the revenue generated from these exports fell more sharply, by 35.1%, to $1.2 billion.

Turkish mills’ longs exports declined by 23.5% on year to 776,000 mt in that month, while flat steel exports slumped by 45.1% to 417,000 mt. Turkish mills’ semi-finished product exports fell more sharply in November by 86% to 40,000 mt, the latest TCUD data showed.

Although Turkish mills, which reduced their capacity usage notably in previous months, have started to ramp up activity in recent months, leading to stronger domestic market sentiment and higher steel prices, the slowdown in export volumes may force them to adjust their capacity usages again, if a notable recovery in export demand doesn’t emerge.

— Cenk Can

Swiss-headquartered longs’ specialist Schmolz+Bickenbach has successfully concluded a share offering in the context of its announced capital increase. Slightly more than 1 billion shares were sold and are to be issued in the capital increase, which translates to proceeds of CHF 325 million ($334m). Following the completion of the international offering, the offer price was set at CHF 0.30 per share.

Upon completion of the capital increase, the total number of shares issued by the company will amount to slightly more than 2 billion shares. Swiss investor Martin Haefner and his company Big Point will own approximately 44.9% of the share capital and voting rights in the company. Russian entrepreneur Viktor Vekselberg’s Liwet will own 25.0%.

A prerequisite for the capital increase was that the Swiss Financial Market Supervisory Authority FINMA relieved Haefner from the condition of making an offer for all outstanding shares (see Kallanish passim).  This is normally due when shareholding rises above 33.3%. However, the exemption is only temporarily valid until 2024.

Meanwhile, the original German owner families have reportedly filed a suit against the capital increase as it proceeded. Through their joint holding, Schmolz+Bickenbach Beteiligungs GmbH, they own around 10% in the SBQ steel producer.

UK passenger car manufacturing output fell significantly again year-on-year in November as political and Brexit uncertainties continued to take their toll. Commercial vehicle (CV) output rose however, but production year-to-date remains down according to the latest data from SMMT monitored by Kallanish.

UK car production fell by -16.5% y-o-y in November with 107,753 units produced.

Output for both home and overseas markets both fell, by -26.6% and -14.2% respectively. Y-t-d car production dropped by -14.5%, and has now declined during 17 of the last 18 months, SMMT confirms.

UK CV production did rise by 9.8% in November, with 8,768 units built. Output for the overseas market grew by a significant 43.5%, but production for home consumption fell by -21.7%.

Year-to-date performance has fallen by -9.3% during a turbulent year for the sector, SMMT adds.

Following the installation of its new wide strip mill, Germany’s Bilstein Group has launched a product family of flat products with electromagnetic properties.

The German cold-rolling company reportedly invested some €50 million ($56m) at its Hagen main site for a new CR mill for widths up to 1,350mm, which started operation in October (see Kallanish passim). The company subsequently has launched three proprietary product lines with electromagnetic properties which it says can be adjusted to customers’ individual requirements.

Electromagnetic components and actuators are increasingly in demand on the market, especially as the trend towards electric mobility continues to gather momentum, the company notes. The fields of application for its new product groups range from magnetic pressure valves for automatic transmissions in hybrid cars to magnetic relays in electrically operated trains, Bilstein explains.

The products are manufactured in such a way that annealing is not required. They are weldable and suitable for wet and powder coatings, as well as electrolytically applied metallic coatings.

As part of the new rolling mill, German plant logistics technology supplier Vollert has installed a cantilever high bay warehouse with storage and retrieval equipment, including the rails and safety fences of the fully automated area.  For direct access, the coils are stored hanging from cantilevers.

Bilstein Group makes 600,000 tonnes/year of CR strip with 1,500 employees at plants in several countries, and achieves annual revenues of €650m.

Imports of both flat and long steel reduced during the first ten months of 2019 but became increasingly more volatile on a monthly basis, Kallanish learns from the latest data published by Eurofer.

The reduction in imports was caused mainly by the putting in place of the safeguard system, coupled with a slowdown in demand. According to the data on Eurofer website, overall imports during the January-October period lowered by 3 million tonnes year-on-year to 22.2mt.

Longs’ imports reduced by 1.3mt y-o-y to 4.9mt, while flats’ imports did likewise by some 1.5mt to 17.2mt.

Apart from reducing the overall volumes, the safeguard system nevertheless increased the volatility of the monthly volumes. In July 2019, for example, as new quotas became available, flat imports more than doubled compared with June, to over 2.5mt. Long imports in July marked a historical monthly record at over 1.1mt, above the previous record of 1mt witnessed in July 2007.

The slowdown in imports began mainly during the second half of 2019. August, September and October import figures for both flat and long products all registered a reduction y-o-y following the boom in July. November and December imports are also expected to continue to show signs of weakness compared with last year as demand has failed to pick up significantly in Europe, Kallanish notes.

Im zu Ende gehenden Jahr 2019 hat der überraschend heftige Nachfrageeinbruch das Geschehen am deutschen Stahlmarkt geprägt. Entsprechend sind am Spotmarkt die Preise quer durch die Erzeugnisse deutlich gefallen. Der Ausblick auf das kommende Jahr zeigt, dass auf der Nachfrageseite nicht unbedingt eine schnelle Wende zu erwarten ist. Dennoch dürfte der Markt zu einem ausgewogeneren Verhältnis zwischen Angebot und Nachfrage finden. Sowohl die Rohstoffkosten als auch die Stahlpreise werden voraussichtlich im Jahresmittel niedriger als 2019 liegen. Statt einem klaren Preistrend sind eher unterjährige Zyklen von kurzer Dauer zu erwarten. Abseits der reinen Marktentwicklung sind alle Akteure entlang der Wertschöpfungskette Stahl gut beraten, sich rechtzeitig mit den unternehmerischen und politischen Konsequenzen der extrem ehrgeizigen De-Carbonisierungsziele der EU zu beschäftigen.

Wenn der Stahlmarkt der vergangenen Jahre eines gezeigt hat, dann ist es, dass Unerwartetes jederzeit geschehen kann. Mit dieser ausdrücklichen Vorbemerkung werden dies aus meiner Sicht die TOP-Trends des Stahljahres 2020 sein:

Ausgewogenere Angebots-Nachfrage-Balance

Nach dem scharfen Einbruch in diesem Jahr wird der tatsächliche Stahlbedarf im kommenden Jahr nicht weiter fallen, aber auch kaum zulegen. Wahrscheinlich ist eine Stabilisierung auf erniedrigtem Niveau. Allerdings wird der zusätzlich stark bremsende Effekt des Lagerabbaus an Gewicht verlieren, der nun zu einem großen Teil vollzogen sein dürfte. Mittlerweile ist das Angebot besser an die gesunkene Nachfrage angepasst worden, so dass eine ausgewogenere Balance zwischen den beiden Marktseiten zu erwarten ist. Dennoch wird der Wettbewerb um die verfügbaren Mengen intensiv bleiben. Die Zukunft des früheren Ilva-Werkes in Italien, die weitere Entwicklung der weltweiten Handelskonflikte und der Ausgang der Brexit-Verhandlungen sind Faktoren, die die Stahlnachfrage in beide Richtungen beeinflussen können. 

Weltmarkt-Wettbewerb bleibt intensiv

Am Weltmarkt wird unverändert ein Überangebot bestehen, das zu einem intensiven Wettbewerb führen wird. Dieser wird nicht mehr nur maßgeblich von China, sondern von einer Vielzahl von Ländern geprägt werden. Der in den vergangenen beiden Jahren starke Preisdruck von Lieferungen aus der Türkei wird nachlassen. Zum einen, weil sich der dortige Stahlmarkt graduell zu erholen scheint. Zum anderen, weil die angepassten „Schutzmaßnahmen“ der EU vor allem türkische Hersteller treffen. Insgesamt halten die EU-Maßnahmen die Weltmarkteinflüsse nicht fern, sorgen aber auf der individuellen Ebene in vielen Fällen für ein hohes Zoll-Risiko. Drittlandimporte bleiben mit hohem bürokratischem Aufwand verbunden.

Rohstoffkosten im Jahresmittel niedriger

Sofern extreme Wetterphänomene ausbleiben, werden die Rohstoffkosten nicht mehr das Niveau des ersten Halbjahres 2019 erreichen. Nach der scharfen Korrektur der letzten Monate ist das weitere Abwärtspotenzial bei Eisenerz und Kokskohle begrenzt. Im Jahresmittel 2020 könnten die Rohstoffkosten der Hochofenroute um ca. 30,- €/t unter dem Niveau des Jahres 2019 liegen. Lagerzyklische und saisonale Einflüsse sowie die tagesaktuelle Nachrichtenlage werden immer wieder für Schwankungen sorgen. Dies ist aktuell am Schrottmarkt zu beobachten, der voraussichtlich weiterhin von hoher Volatilität geprägt sein wird.

Stahlpreise mit kurzen Zyklen statt klarem Trend

Aus heutiger Sicht ist nicht zu erwarten, dass sich ein klarer, den gesamten Jahresverlauf beherrschender Preistrend einstellen wird. Eher sind von der Rohstoffseite und von Bestandseffekten getriebene kürzere Preiszyklen zu erwarten. Dabei werden die Stahlpreise wahrscheinlich im ersten Halbjahr höher als im zweiten Halbjahr liegen. Nach den Rückgängen der vergangenen Monate dürfte es im ersten Quartal 2020 zu einer begrenzten Gegenbewegung kommen. Im Jahresmittel werden die Spotmarktpreise niedriger als 2019 sein. Aufgrund der besseren Nachfragesituation dürften sich die Preise baunaher Langprodukte relativ stärker entwickeln als die für Flachprodukte und Spezial-Langprodukte. Am Rostfrei-Markt wetteifern voraussichtlich steigende Nickelkurse und anhaltender Importdruck um die Oberhand. 

Klimaschutz wird in der Supply-Chain Stahl zum Mega-Thema

Nicht nur gesamtgesellschaftlich, sondern auch bezogen auf die Stahlerzeugung hat das Thema Klimaschutz enorm an Fahrt aufgenommen. Als CO₂-intensive Industrie ist die Stahlindustrie von den politisch vorgegebenen De-Karbonisierungszielen stark betroffen. Insbesondere die bei Flachstahl vorherrschende Erzeugung über die Hochofenroute ist einem großen Veränderungsdruck ausgesetzt. Gleichzeitig steigt entlang der Supply Chain vor dem Hintergrund unternehmenseigener Klimaziele der Bedarf nach Informationen zum CO₂-Fußabdruck. Die technologischen, politischen und wirtschaftlichen Rahmenbedingungen der Wertschöpfungskette Stahl werden daher in nicht allzu ferner Zukunft große Umwälzungen erfahren. Die Frage ist, mit welchen Technologien, zu welchen Kosten und mit welchen Auswirkungen auf die internationale Wettbewerbsposition künftig in Europa noch Stahl produziert wird. Stahlverarbeiter sind gut beraten, sich rechtzeitig mit diesen Themen auseinanderzusetzen.

Der Beitrag stammt vom Leverkusener Stahlmarkt-Berater Andreas Schneider, StahlmarktConsult.

Foto: StahlmarktConsult, Fotolia

Der Gastkommentar spiegelt die Meinung des Autors wider, nicht notwendigerweise die der Redaktion von marketSTEEL.

Danieli Automation has announced completion of the upgrade of the EAF of the Italian steelmakers Acciaierie Fonderie Cividale (AFC), the technology supplier tells Kallanish. Danieli has installed the second-ever Q-ONE system at the mill, a digital solution to control electricity use and efficiency at the furnace.

“Thanks to the newly-installed technology, arc stability was improved considerably, generating improvements in the overall melting process that, though preliminary, showed an initial saving of 5-10% energy consumption and up to 25% power-on time reduction,” Danieli said. “The expected 20% electrode consumption reduction will require more heats to be confirmed.”

The first Q-ONE system was launched earlier this year at ABS Sisak in Croatia. The system digitally controls and secures stability and efficiency of energy supply. Danieli executives from calculate that the new system could save €8-15/tonne ($9-17/t) of production cost for EAF steelmakers.

Italian Prime Minister, Giuseppe Conte, visited workers at the former Ilva plant in Taranto during the Christmas festivities. The aim of the visit was to confirm that the authorities are working with ArcelorMittal toward a solution for the future of the steelmaker, Kallanish notes.

Before the holidays, ArcelorMittal and the Italian government announced that they had signed a memorandum of understanding to finalise a new industrial plan for the former Ilva before the end of January 2020. This relieved any immediate pressure on the situation, but some uncertainty remains as ArcelorMittal had previously highlighted the need to slash almost 4,700 jobs at the Ilva plant. This is not acceptable to the Italian authorities.

Whilst positions may become clearer in January, Conte confirmed that there will be direct involvement by the Italian state in the future of Ilva. A public entity will participate in some investments and will secure the control of the road to the relaunch of Ilva and its reduction in environmental impact by internal intervention, he added.

Both ArcelorMittal and the Italian authorities agree on the fact that Taranto will need to transform part of its steelmaking production by using EAF or DRI systems. They are nevertheless still very much out of step on the outlook for the total output of the company going forward. ArcelorMittal envisages an output of 6 million tonnes/year whilst the Italian government is looking at a volume of 8m t/y.