Category: Latest Updates

During a three-hour meeting with Italian authorities in Rome on Wednesday, Lakshmi and Aditya Mittal discussed the need to cut the former Ilva’s workforce by 5,000. Also discussed was maintaining production at 4 million tonnes/year. ArcelorMittal Italia currently employs 10,351 workers.

Earlier this week ArcelorMittal told Italian authorities it will terminate its lease and subsequent purchase of Ilva.

Effective 3 November, the Italian parliament removed the legal protection necessary for the company to implement its environmental plan without the risk of criminal liability. This created the legal condition for withdrawal, according to ArcelorMittal.

Following the Rome meeting, Italian Prime Minister Giuseppe Conte said at a press conference his government has offered to reconsider the issue of criminal immunity. However, it will not accept ArcelorMittal’s withdrawal based on the failure of its industrial plan’s objectives. ArcelorMittal has refused the offer.

Conte said criminal immunity is not the real cause for the company’s withdrawal. He observed: “What clearly came up during the meeting, after the discussion we had in the presence of various ministers… is that the real issue is that the French-Indian company believes that (Ilva) cannot be sustainable and profitable with the current levels of production that are reduced to 4m t/y… It is therefore a strictly industrial issue… This is absolutely dramatic for us not only economically speaking but from a social standpoint… This is for us absolutely unacceptable.”

Conte also pointed out that following a public tender, the government’s requests of investment into Ilva became specific clauses of a contract with ArcelorMittal. “It is unacceptable that the company intends to withdraw from these clauses,” he commented. “Therefore, no responsibility for decisions made by the company can be given to the government.”

“The issue comes from an industrial plan that is not able to achieve its targets,” Conte continued. “It is not possible to say that the industrial plan is not sustainable after the tender was awarded on the basis of that very plan…. We invite the company to rethink its initiatives and we are determined to defend and guarantee with the utmost commitment the relaunch of Ilva and Taranto.”

The government is willing to keep negotiations open, he added, giving ArcelorMittal two days to respond.

ArcelorMittal declined to comment when approached by Kallanish.

Union representatives for ArcelorMittal Italia have received the official note from the company that it will terminate the purchase of Ilva, representing a step forward in the procedure of withdrawal. Unions representing the entire ArcelorMittal Italia have therefore announced a 24-hour strike starting at 19:00 local time on 8 November.

The former Ilva steelworks is losing €780 million ($864m) per year, economic development minister Stefano Patuanell said during the press conference.

ArcelorMittal has lowered its global apparent steel consumption growth guidance to 0.5-1% on-year for 2019 from the previous 0.5-1.5% forecast. At -3%, Europe will register the steepest contraction, but Russian and Chinese guidance has been revised up. ArcelorMittal’s shipments are consequently expected to remain stable this year compared to the previous forecast of growth.

ArcelorMittal’s steel shipments fell -1.7% on-year in the third quarter to 20.2 million tonnes. They also fell -11% on-quarter due to lower shipments in Europe owing to seasonality and weaker demand, Ukraine, Kazakhstan, South Africa, and NAFTA. Iron ore shipments at market price were flat at 8.4mt.

Compared to Q2, European shipments in Q3 were down -17.9% to 9.7mt due to seasonality and weaker demand driven by macro headwinds including declines in automobile production.

“As anticipated, we continued to face tough market conditions in the third quarter, characterized by low steel prices coupled with high raw material costs,” ArcelorMittal chairman and ceo Lakshmi Mittal says in a report seen by Kallanish. “We continue to expect a substantial working capital release in the fourth quarter which should enable us to further reduce net debt year on year.”

Consolidated sales fell -10% on-year in Q3 to $16.63 billion due to lower sales prices and steel shipments, offset partly by higher seaborne iron ore reference prices. The firm sunk to a net loss attributable to equity holders of the parent of $539 million versus a $899m profit a year earlier. This includes foreign exchange and other net financing losses of $524m.

“Demand in our core markets of Europe and the US has remained weak, reflecting depressed manufacturing activity and continued weakness in automotive, compounded by customer destocking,” ArcelorMittal says.

The significant spread compression observed in the first half 2019 continued in Q3, resulting in a further deterioration in operating results. “The current steel spread environment is both exceptional and unsustainable,” ArcelorMittal adds.

In the nine months through September ArcelorMittal’s consolidated steel shipments rose 2% on-year to 64.8mt, primarily due to a 6.9% increase in European shipments and the ArcelorMittal Italia consolidation effect. But iron ore shipments declined -1% to 27.5mt.

Nine-month revenue fell -5% to $55.1 billion and the firm turned to a $572m net loss versus a $3.96 billion net profit.

Sales of steel from stockpiles rose 4.69% in September as destocking from inventories accelerated, according to data published by German trade association BDS AG.

Sales from stockpiles increased across both long and flat products categories, while inventory balances continued to decline, indicating an acceleration in destocking.

In September, sales of long products from inventories increased by 19,520 mt to 296,706 mt, an increase of 7.04% month on month.

Flat product sales from inventories also increased, gaining 24,525 mt to 544,599 mt, an increase of 4.72% compared to August.

In contrast, other product sales softened by 1.95% to 98,424 mt month on month.

Inventory balances also declined as the destocking trend continued with total inventories dropping by 84,577 mt to 2.229 million mt, a decline of 3.65% month on month and the lowest stock position since December 2018.

Long steel stockpiles also declined to their lowest level since December 2018. Inventories fell 16,253 mt on the month, or 1.91% to 833,543 mt at the end of September, the data showed. They were about 4.09% lower compared to September 2018.

Flat steel stockpiles saw a stronger destocking rate, losing 5.15% month on month to 1.34 million mt, their lowest level in 3 years. They were 16.29% lower compared to September 2018.

BDS members include ArcelorMittal Distribution, Jepsen Stahl GmbH and Klöckner & Co Deutschland GmbH.

Insbesondere in Europa, wo die voestalpine rund zwei Drittel ihres Umsatzes generiert, wirkten sich die Abschwächung der exportorientierten Industrie infolge zunehmender globaler Handelsbeschränkungen, die verringerte Nachfrage aus der Automobilindustrie sowie reduzierte Investitionen auf alle Konzern-Divisionen aus. Aber auch in China und den USA schlugen sich die weltweiten Handelskonflikte in einer nachlassenden konjunkturellen Dynamik nieder. Im Stahlbereich wurden die Bedingungen zusätzlich durch massiv gestiegene Rohstoffkosten bei sinkenden Verkaufspreisen und unverändert hohen Stahlimporten nach Europa verschärft. Weiterhin belasten auch die finanziellen Aufwände für CO2-Zertifikate in der Europäischen Union sowie unternehmensintern die Hochlaufkosten beim Automotive-Werk in Cartersville, USA, die Ergebnismargen. 

Entwicklung von Umsatz und Ergebnisziffern 

Nach Jahren des Wachstums schwächte sich der Umsatz der voestalpine im 1. Halbjahr 2019/20 gegenüber der Vergleichsperiode 2018/19 um 2 % von 6,7 auf 6,5 Mrd. EUR ab. Deutlich stärker war der Rückgang auf Ergebnisseite spürbar: Das operative Ergebnis (EBITDA) verminderte sich um 23 % von 860 Mio. EUR im Vorjahr auf aktuell 666 Mio. EUR. Das EBIT ging im gleichen Zeitraum um mehr als die Hälfte von 480 auf 230 Mio. EUR zurück. Auf Basis eines Nettofinanzergebnisses von minus 67 Mio. EUR ergab sich für die aktuelle Berichtsperiode ein Ergebnis vor Steuern in Höhe von 163 Mio. EUR (Vorjahr: 422 Mio. EUR). Das Ergebnis nach Steuern fiel mit 115 Mio. EUR um 64 % geringer aus als im Vorjahr (320 Mio. EUR). 

Die Verschuldungskennzahl Gearing Ratio (Nettofinanzverschuldung im Verhältnis zum Eigenkapital) des voestalpine-Konzerns war im 1. Halbjahr 2019/20 neben der operativen Entwicklung und der Dividendenzahlung maßgeblich von bilanztechnischen Faktoren bestimmt. Zum einen vergrößerten sich die verzinslichen Passiva infolge einer Umstellung der internationalen Rechnungslegungsvorschriften (bilanzielle Miteinbeziehung der Leasingverhältnisse gemäß IFRS 16) gegenüber dem Bilanzstichtag (31.3.2019) um rund 437 Mio. EUR. Zum anderen wurde im Berichtszeitraum die im Jahr 2013 begebene Hybridanleihe mit einem Volumen von 500 Mio. EUR per 31. Oktober 2019 gekündigt und scheint damit per 30. September 2019 in der Bilanz nicht mehr in der Position Eigenkapital, sondern unter Finanzverbindlichkeiten auf. Auf Basis dieser Entwicklungen nahm die Nettofinanzverschuldung von 3,6 Mrd. EUR per 30. September 2018 auf 4,5 Mrd. EUR per 30. September 2019 zu. Im gleichen Zeitraum reduzierte sich das Eigenkapital infolge der Dividendenzahlung und der Hybrid-Kündigung von 6,6 auf 6 Mrd. EUR. Damit erhöhte sich die Gearing-Ratio in der Vergleichsperiode von 55 % auf 75 %. 

Investitionen und Mitarbeiter 

Nach den hohen Investitionen der vergangenen Jahre schraubt der voestalpine-Konzern seine Investitionstätigkeit vor dem Hintergrund der sich abschwächenden Wirtschaft in diesem Geschäftsjahr zurück. Dementsprechend reduzierte sich das Volumen im ersten Halbjahr um 29 % von 475 Mio. EUR im Vorjahr auf 338 Mio. EUR. Das größte laufende Investitionsvorhaben im Konzern, der Bau eines neuen High-Tech-Edelstahlwerkes um bis zu 350 Mio. EUR am Standort Kapfenberg, schreitet mit der Errichtung der Halle weiter planmäßig voran und soll 2021 seinen Betrieb aufnehmen. Per 30. September 2019 waren im voestalpine-Konzern 51.275 Mitarbeiter (FTE) beschäftigt, was einem leichten Rückgang von 1,3 % entspricht. 

Ausblick 

Die Einschätzung des Vorstandes zu Beginn des Geschäftsjahres 2019/20, dass das Vorjahresergebnis auf EBITDA-Basis wahrscheinlich im aktuellen Geschäftsjahr wieder erreichbar wäre, war an eine Reihe von Prämissen geknüpft. Die wesentlichsten Einflussgrößen auf Markt- und Kostenseite, die dieser Einschätzung zugrunde lagen, waren zu diesem Zeitpunkt eine Abkühlung der Konjunktur in den für voestalpine wesentlichen Märkten, aber kein Eintreten in Rezessions- oder Krisenszenarien, eine Abkühlung der Automobilkonjunktur ohne neuerliche dramatische Verwerfungen im Automobilmarkt durch den neuen Abgastest im September 2019 in Europa, keine über die erwartete Konjunkturabkühlung hinausgehende negative Effekte aus den globalen Handelskonflikten oder des BREXIT, eine Normalisierung des Eisenerzpreises im Verlauf des Geschäftsjahres sowie die positive Erledigung der unternehmensinternen Herausforderungen. 

Im Verlauf der ersten sechs Monate des Geschäftsjahres haben sich wesentliche Prämissen über weite Strecken nicht erfüllt. Zwar befinden sich die unternehmensinternen Herausforderungen in Aufarbeitung und daher werden auch weiterhin entsprechende Verbesserungen erwartet. Die Abkühlung der Automobilkonjunktur verlief jedoch intensiver und globaler als ursprünglich erwartet, auch wenn der neuerliche Abgastest im September nicht zu Verwerfungen wie vor einem Jahr führte. Der globale Handelskonflikt verbunden mit protektionistischen Maßnahmen hat die Investitionstätigkeit in weiten Teilen der Welt spürbar verlangsamt und damit insbesondere gegen Ende des ersten Halbjahres 2019/20 zu signifikanten Nachfragerückgängen in vielen für den voestalpine-Konzern wesentlichen Märkten geführt. Obwohl es über den Sommer zu einer Entspannung bei Preisen für Eisenerz kam, führte diese Entwicklung nicht zu der erwarteten Margenausweitung. Rekordimporte in die Europäische Union in Kombination mit der schwachen innereuropäischen Nachfrage führten zu Ende der Berichtsperiode zu weiter fallenden Stahlpreisen. 

Diesen negativen gesamtwirtschaftlichen Entwicklungen Rechnung tragend lässt sich das zu Beginn des Geschäftsjahres erwartete Szenario nicht mehr aufrechterhalten. Aus heutiger Sicht wird auch das dritte Geschäftsquartal in Bezug auf das Ergebnis zumindest ähnlich schwierig wie das zweite Quartal 2019/20. Im letzten Geschäftsquartal sollten positive Effekte sowohl aus Saisonalität als auch aus der Aufarbeitung der unternehmensinternen Themen sowie Ergebnisbeiträge aus den eingeleiteten Kostensenkungs- und Effizienzsteigerungsmaßnahmen wirksam werden. 

Der Fokus des Vorstandes liegt in diesem schwierigen Umfeld auf ergebnisstabilisierenden Maßnahmen sowie auf der Generierung von Free Cashflow. Neben kurzfristigen Maßnahmen werden in den nächsten Monaten auch die Auswirkungen der geänderten globalen ökonomischen Rahmenbedingungen auf die langfristige Positionierung von allen wesentlichen Geschäftsbereichen untersucht. 

„Aus heutiger Sicht erwartet der Vorstand der voestalpine AG daher für das Geschäftsjahr 2019/20 ein EBITDA in einer Größenordnung von in etwa 1,3 Milliarden Euro und liegt damit im Wesentlichen im Rahmen der Markterwartung“, so Eibensteiner. 

Quelle: voestalpine AG / Vorschaufoto: marketSTEEL

German steel producer ThyssenKrupp said it is not planning to idle any blast furnaces

Discussions at industry events in Turkey’s Istanbul and Germany’s Stuttgart over the past few days focused on the likelihood of an impending announcement from ThyssenKrupp about crude steel production cuts at its Duisburg site.

“There are currently no plans to idle one of our blast furnaces”, a company spokesperson told Argus. Senior executives at several other steel mills said ThyssenKrupp management were talking about the possibility of blast furnaces shutting, or crude steel production cuts.

The company has four blast furnaces at its Duisburg site, two larger and two smaller units, with a crude steel production capacity of around 13mn t/yr. Some market participants suggested it could reduce output across multiple furnaces rather than shutting one.

Many European mills, led by ArcelorMittal, have reduced crude production given the difficult market environment. ThyssenKrupp’s domestic competitor Salzgitter has already decided to shut a 600,000 t/yr furnace. Nordic steel producer SSAB has also shut two furnaces, equating to a reduction of 1.8mn t/yr, while not ruling out the possibility of closing a larger furnace and bringing back the smaller, should the market weaken further. SSAB has crude steel production capacity of 4.9mn t/yr.

Austrian steelmaker Voestalpine said Wednesday that the third quarter of its April-March business year is likely to be as difficult as Q2 in terms of earnings because of weak demand from the car sector, global trade conflicts and low steel prices.

“The slowdown in the momentum of the automotive industry has been both more intense and widespread than originally expected, even though the new emissions test that was introduced in September of this year did not trigger the distortions seen a year ago. The global trade war along with protectionist policies have clearly crimped investments in many parts of the world and thus have led, particularly toward the end of the first half of the 2019-20 business year, to significant demand declines in many markets that are key to the Voestalpine Group,” the company said.

“Although iron ore prices did ease over the summer, the expected margin growth did not materialize. Record imports into the European Union combined with weak intra-European demand continued to depress steel prices at the end of the current reporting period.”

For the Voestalpine Group, the first half of the business year 2019-20 was defined by a substantial dampening of sentiment in its economic environment. Particularly in Europe, where Voestalpine generates about two thirds of its revenue.

Having made large investments in recent years, the Voestalpine Group is cutting back in the current business year against the backdrop of the weakening economy. Accordingly, the investment volume in the first six months of the 2019-20 business year was down 29% on the year to Eur338 million ($375 million) in the reporting period. The group’s largest ongoing investment project — the construction of a new high-tech special steel plant at a cost of up to Eur350 million at its Kapfenberg, Austria, site — is proceeding as planned and is slated to become operational in 2021.

Voestalpine’s revenue was down 2% on the year in the first half of the business year at Eur6.5 billion. The fall in earnings was even greater: EBITDA dropped by 23% on the year to Eur666 million in the current business year. EBIT fell by more than one half to Eur230 million from Eur480 million.

In den ersten neun Monaten 2019 verbuchte der Salzgitter-Konzern nach jetzt vorliegenden, noch vorläufigen Zahlen 40,7 Mio. € Gewinn vor Steuern (9M 2018: 284,6 Mio. €) und übertrifft damit die aktuellen Markterwartungen. Das Resultat beinhaltet sowohl die zum 30. September 2019 um 141,0 Mio. € aufgestockte Risikovorsorge im Zusammenhang mit der angestrebten einvernehmlichen Beendigung von Ermittlungsverfahren zu mutmaßlichen Kartellabsprachen bei Grobblech und Flachstahlerzeugnissen als auch 48,8 Mio. € Rückstellungsauflösung in den Geschäftsbereichen Flachstahl und Grobblech / Profilstahl. 

Es umfasst zudem 78,1 Mio. € Beitrag des nach der Equity-Methode bilanzierten Engagements an der Aurubis AG (9M 2018: 29,2 Mio. €).  Der Außenumsatz des Salzgitter-Konzerns reduzierte sich vor allem erlösbedingt auf 6,6 Mrd. € (9M 2018: 6,9 Mrd. €).  Wir bestätigen unseren am 26. September angepassten Ergebnisausblick für das Geschäftsjahr 2019. Somit antizipieren wir vor dem Hintergrund noch zu bestimmender Restrukturierungsaufwendungen zur Implementierung des Ergebnisverbesserungsprogramms „FitStructure 2.0“ einen Verlust vor Steuern im mittleren zweistelligen Millionen-EuroBereich und gehen von einem gegenüber dem Vorjahr niedrigeren Außenumsatz unterhalb 9,0 Mrd. € aus. Weitere Details zum Abschluss der ersten neun Monate 2019 werden wie vorgesehen am 13. November 2019 veröffentlicht. 

Quelle und Vorschaufoto: Salzgitter AG 

The steel industry has problems encouraging the entry of younger candidates to become involved in its digitalisation. It had better educate its own engineers to become more aware of such technological developments, according to speakers at an evening talk at the Blechexpo 2019 fair in Stuttgart.

The steel industry does need people “… with a different mindset”, but is not really attractive to them, according to Tim Milde of Xom, a subsidiary of Klöckner & Co that offers digitalisation services. “The run for young talent has long begun, and they want to go to Facebook in Essen, not to Klöckner in Duisburg,” said Milde, who earlier this year presented at the Kallanish European conference in Amsterdam.

A solution was suggested by Menno van der Winden, general manager Advanced Analytics at Tata Steel Europe, himself a metallurgist who started to become involved in data analytics only two years ago. “I think all of you could do it, and you don’t need to be fifteen,” he told participants. The industry does not need digital experts for implementing data, but people who know the daily routine at a mill, he proposed.

To that end, Tata has started its own so-called Analytics Academy. “We have a whole community of users who have attended the academy,” he said. “You can make a metallurgist into a data analyst – but it won’t work the other way around.”

ArcelorMittal Italia has stopped accepting orders for December and January sales and has also stopped making quotations for steel coils sales, following Monday’s announcement that it will pull out of its lease and purchase agreement of the former Ilva works, market sources told S&P Global Platts Tuesday.

Unions told Platts that the company has organized a meeting this evening to discuss when the blast furnaces at Ilva’s major Taranto works are to be idled. AM Italia has 3 BFs running with a targeted annual production of 4.5 million mt crude steel by the end of 2019.

ArcelorMittal said Monday that it would hand back control of the former Ilva to the Italian authorities, following the removal of a legal protection designed to shield the company from prosecution while it undertakes planned environmental remedies at the Taranto site.

According to market sources, it is not possible at the moment to close deals with Italian mills as other local mills have also suspended quotations, meaning that prices could move up.

“Some market players are already concerned about material availability as the ILVA exit comes on top of already announced production reductions of main EU strip mill producers. In the meantime, traders are facing a rise in inquiries,” Eurometal, the European association of stockists, stated in a press note.

“There is also anticipation that mills and traders might use upcoming supply uncertainties to push for higher price levels. For steel distribution and SSC (steel service center) executives these supply disruptions will definitively have implications and consequences for their day-to-day business,” the association stressed. Other market sources have confirmed that large transactions are still stable but that now, for the first time for several months, there are bids at above Eur400/mt for hot rolled coil (HRC).

According to Platts’ south EU daily assessment, HRC South closed at Eur396/mt base ex-works on Monday, with sources saying that some large deals were closed at Eur390/mt base ex-works.

“There was sentiment for a rebound in prices at the end of Q1 or beginning of Q2 following the mills’ productions cuts as well as due to re-stocking, but now following AM Italian news this could accelerate the price increases,” a source from a large Italian stockist said.

“But then because it’s not so clear what will happen in the long run this situation can also push back prices down again. If for example, AM will in the end find an agreement with the Italian government keeping the control of the Italian mill this in the long run this could also lead to a decrease in the prices as the company could put prices down in order to regain market share,” he added.

The Italian government will meet AM Italia representatives Wednesday, government sources said. Any potential closure of the works could put at stake some 15,000 jobs and an estimated 1.4% of Italian GDP, measuring the impact on the entire supply chain. AM did not immediately respond to Platts’ requests for comments on the situation Tuesday afternoon.

ArcelorMittal is preparing to hot idle its Taranto plant in Italy and is not accepting any more orders at the facility, instead fulfilling them at other group mills in Germany and elsewhere, buyers said today.

The company notified the government yesterday of its intention to withdraw from the lease agreement for its ex-Ilva assets.

Opinion is increasingly split on whether the company is pursuing a negotiating tactic or getting ready to exit the loss-making operation. The firm has declined to comment.

With the mandated shutdown of blast furnace 2 at the site next month, ArcelorMittal would be unable to meet its industrial plan of producing 6mn t/yr. And the precedent set for that blast furnace could have implications for the other furnaces at the site, with many local stakeholders wanting a cessation of the hot-end at Taranto.

These, as well as the removal of legal safeguards, remain major issues for the company even if the government returns to the negotiating table.

With the recent disruption, buyers are having orders fulfilled from Bremen in Germany, Fos-sur-Mer in France and other plants.

Some suggest they are increasingly concerned over material availability given potential further production reductions in the depressed European market. Traders reported an uptick in enquiry levels in the past day.

There is a growing expectation in the marketplace that mills and traders will use these factors, alongside a recent uptick in import offers, to push for higher prices. There is already talk of one leading mill targeting increases of €30-40/t, but a source close to the producer denied such a move.

But local mill lead times are short and most seem to have availability for fairly prompt deliveries.