Category: Latest Updates

Florian Geiger will take over effective 1 January 2020 as chief executive of Swiss bright steel producer Steeltec, a company of Schmolz+Bickenbach group. After 14 years at the helm, current ceo Gerd Münch has decided to step down, Kallanish learns from Steeltec.

Geiger worked for many years as a management consultant to numerous international companies where he specialised in corporate performance. In 2013, he moved to S+B where he became vice president of business development and was responsible for enterprise-wide strategic projects and for mergers and acquisitions.

Among other activities, he led negotiations for the creation of a joint venture in China and for the acquisition of Ascometal in France. He also implemented a range of projects designed to improve transparency and cooperative work practices within the group, Steeltec says in its announcement.

Alessandro Trivillin has resigned from his post of chief executive at (ABS), the special steelmaker arm of Danieli group.

Trivillin said he decided to leave his post for personal reasons and to take on a new professional challenge. The executive was part of the company for over 12 years; he will remain on ABS’s board of directors to guarantee continuity, an ABS spokesperson tells Kallanish.

ABS says it will close 2019 with revenue exceeding €1 billion ($1.11 billion) for the first time ever. Looking ahead, the company continues to invest. “In September 2020 there will be the set-up of a new wire rod mill allowing us to complete our range of products,” the firm says.

Germany-based specialty steelmaker Buderus Edelstahl will reduce its hot-rolled sheet production “significantly” at its Wetzlar site until summer 2020, according to a statement on the website of parent company Voestalpine.

Voestalpine cited the decrease in demand from the automotive industry as one of the main reasons for the production cut, as well as lackluster demand in the mechanical engineering and tool-making industries.

Buderus Edelstahl produced 347,000 mt of crude steel in the fiscal year 2016/17, according to the latest publicly available figures.

“The current cost burden at the Wetzlar site in combination with dropping demand and high price pressure in our product segments is forcing us to act swiftly,” said Franz Rotter, board member at Voestalpine and head of the High Performance division.

The hot-rolled sheet production cut will be used to improve production processes of other products, Voestalpine said.

The Austrian steelmaker published a second profit warning on Monday, announcing writedowns in its steel, auto and DRI assets amounting to non-recurrent impairments of Eur280 million ($312 million) in the current 2019/2020 business year.

Many European steel producers have been hit by the slowdown in the automotive industry, their main customer.

Germany is Europe’s biggest car market and production dropped 9% on the year from January to November this year to 4.39 million cars.

Mill sources told Platts that around 6 million mt/year of flat steel capacity has been taken out of production this year by European mills but most said that the cuts will not be enough to overcome general overcapacity and weaker demand.

Voestalpine did not respond to requests for further details on the production cut.

— Laura Varriale

ArcelorMittal has announced that AM InvestCo, its Italian subsidiary, has signed a non-binding agreement with the Italian government-appointed Ilva commissioners that forms a basis to continue negotiations on a new industrial plan for Ilva. This includes discussions on a substantial equity investment by a government-controlled entity, Kallanish learns from ArcelorMittal.

The new industrial plan would contemplate investments in green technology, including through a new company funded by public and private investors. Negotiations will continue into January. In the meantime, at the hearing today (20 December) the Ilva commissioners and AM InvestCo have requested a further postponement of the Ilva commissioners’ application for interim measures until the end of January.

The Italian government previously rejected the industrial plan submitted by ArcelorMittal Italia. The steelmaker said it would cut almost 4,700 jobs during the next three years. The first cuts would be in 2020 while the remainder would be in 2023 when the company proposed to idle blast furnace No. 2 and launch an EAF at the Taranto site.

Fitch’s outlook for Russian steelmakers is positive for 2020, supported by producers’ strong profitability and financial positions, as well as healthy domestic demand.

Fitch foresees Russian GDP growth expanding towards 1.9% in 2020 from an estimated 1.2% in 2019 on the back of higher government spending and looser Central Bank monetary policy. Healthy domestic demand coinciding with major maintenances at several mills has pushed domestic premiums to record high levels. However, margins have already started to normalise on higher imports and overhaul completions.

With large infrastructure projects spending to only start supporting the industry after 2020, Fitch has forecast low single-digit level domestic growth in 2020, the credit rating agency tells Kallanish.
 
Steelmakers are seen as retaining their robust performances in 2020. However, considering export trade barriers in many regions, competition in the export market is likely to intensify in trade-free jurisdictions. 

Exemption from safeguards for export of semi-finished products may not be enough in Europe, for instance, as the bloc is looking to introduce a carbon border adjustment tariff. This could potentially affect blast furnace-route-manufactured semis, Fitch notes.

ArcelorMittal has announced its plan to cut CO₂ emissions at its European plants by -30% by 2030 through a series of investments, Kallanish learns from a company statement.

The global steelmaker notes that this plan puts the company in line to reach its target of carbon neutrality in 2050.

The reduction in CO₂ emissions by 2030 will be supported by a series of investments. This includes the launch of a project at ArcelorMittal Ghent in 2020 to capture waste gases from a blast furnace to convert into bio-ethanol. It also comprises the development of a carbon capture system at the Dunkirk plant and an increase of use of hydrogen to reduce iron ore in Hamburg.

“Key to the success of the roadmap, and ArcelorMittal Europe’s ambition to be carbon neutral by 2050, will be supportive policy to ensure a global level playing field and so ArcelorMittal supports the European Commission’s Green Deal, and believes the right market mechanisms are a critical part of enabling the deployment of low-emissions steelmaking. This includes a carbon border adjustment complementary to the existing ETS and the Just Transition Fund, to invest in research, innovation and green technology,” the company says.

Newly-formed ArcelorMittal Nippon Steel India Limited (AMNSI) has appointed its board and management committee members to join chairman Aditya Mittal and chief executive Dilip Oommen.

Alain Legrix De La Salle has been appointed AMNSI director and vice president – sales & marketing. In his most recent role, he was head of business transformation and SSG&A programmes of ArcelorMittal Europe Flat Products.

Geert Verbeeck has been appointed director and vice president – operations. In his most recent role, he was ArcelorMittal Poland chief executive.

Takahiro Nagayoshi is appointed as director and vice president – finance.

Hiroyuki Nitta has been appointed director and vice president – technology.

AMNSI’s board will be composed of Aditya Mittal, Brian Aranha, Prabh Das and Hilde Van Grembergen, all nominated by ArcelorMittal. Also on the board will be Katsuhiro Miyamoto, Yoichi Furuta, Hideki Ogawa and Taisuke Nomura, all nominated by Nippon Steel.

Earlier this week ArcelorMittal completed its acquisition of Essar Steel after a more-than-year-long legal dispute with some of the bankrupt firm’s creditors (see Kallanish passim). It simultaneously established a joint venture with Nippon Steel – called ArcelorMittal Nippon Steel India Limited – to own and operate Essar Steel.

Turkey may soon impose tariffs on flat steel imports including hot-rolled coil (HRC) from the EU, according to sources familiar with the matter.

EU steel quotas and the US Section 232 tariff decisions have halved Turkish steel exports to these markets. In response, mills are negotiating with the Turkish Trade Ministry over potential action against the EU, based on the principle of reciprocity, with action expected soon, sources told S&P Global Platts.

“This action could be only against hot-rolled coil imports from EU region and could be imposed within December,” an executive with a Turkish producer told Platts.

A second executive from a major Turkish steelmaker confirmed the talks on tariffs to Platts.

Turkey’s steelmaking trade body, the Turkish Steel Producers Association (TCUD), has called on the government to impose tariffs on imports to help protect the domestic industry.

Platts reached out to the Turkish Trade Ministry, but the department was unable to provide a comment “due to our Minister’s intense working programme.”

According to Turkish Statistical Institute (TUIK) data sent to S&P Global Platts last Friday, HRC imports from some EU countries rose significantly year-on-year in the first three quarters.

For example, France supplied 304,000 mt of HRC to Turkey in that period, up 23% on year. Germany’s HRC exports to Turkey rose 35% on year.

The Turkish Economy Ministry, which launched a steel safeguard investigation into steel imports a year ago, ended the investigation at the beginning of May 2019, without taking any action.

— Cenk Can

The European Commission will next month remove the end-use procedure for hot-dip galvanised (HDG) material imported under the 4B section of its steel safeguard.

The procedure was only introduced under the review implemented on 1 October this year, to prevent 4A material being sold into 4B, which is designed solely for automotive grade material.

Since then, the commission has started a circumvention case into Chinese HDG, which was being imported into 4B to avoid duties that would be payable on 4A non-automotive grades.

The commission will also introduce a special adjustment for Korea after a meeting on 10 December. The regulation is designed to allow 4B material to be cleared under the 4A quota, and the tariff quota on the latter would be increased.

At the consultations between the commission and Korea, it was concluded that “certain amounts” of Korea’s country specific tariff-rate quota had to be imported under 4A because of the end-user requirement, cannibalising that quota — it has already gone critical, with just 17,800t left for importing by June 2020. The new regulation will see another 152,255t added to the quota next month, according to a commission note obtained by Argus.

By Colin Richardson

Moody’s outlook for global automotive manufacturers in 2020 is negative, driven by expectations of a continued decline in global light vehicle sales amid weakening economic growth in key markets.

The outlook is based on Moody’s forecast of a -0.9% decline in light vehicle sales in 2020, following a projected -3.8% decline in 2019.

US light vehicle sales will slip -0.6% in 2020 after falling by a projected -2.9% in 2019; however, low unemployment, healthy consumer sentiment and continued modest GDP growth will limit the decline. General Motors’ new contract with the United Auto Workers will “…provide adequate operating flexibility to contend with cyclical downturns and the transition to battery electric vehicles and autonomous driving technologies,” Moody’s says in a report sent to Kallanish.

Western European light vehicle sales will fall -3% in 2020, widening from a projected -2% contraction in 2019. Demand remains constrained by a weakening macroeconomic environment and continued Brexit uncertainty.

China’s overall auto sales should however rise 1% in 2020 thanks to supportive policy guidance announced during 2019.

Automakers face mounting environmental policy pressures, such as stricter emissions-reducing regulatory targets by 2021, with most not strongly positioned for the transition to a low-carbon future, Moody’s says. Toyota is already very close to meeting its targets, while German premium automakers are still 20%-30% short of their targets; Fiat Chrysler and Honda are furthest behind in meeting their targets, it adds.

The US administration, meanwhile, has delayed imposing up to 25% tariffs or other restrictive measures on imported autos and parts while negotiating with key trading partners.