Category: Latest Updates

German steel producer Salzgitter is shutting its 600,000 t/yr blast furnace C until steel demand recovers, the company told Argus today.

It is still operating two furnaces at the Salzgitter, Lower Saxony site with a combined capacity of 4mn t/yr. Salzgitter is the latest in a long line of European steel mills reducing production given the depressed environment. Market participants expect others will follow, especially those budget planning for their next fiscal year.

Argus’ northwest Europe hot-rolled coil index has fallen from €535/t ex-works on 12 November 2018 to €418.75/t ex-works yesterday, a €116.25/t fall. Over the same period the price of iron ore has risen from $76.25/dry metric tonne (dmt) to $86.75/dmt yesterday, after peaking at $125.20/dmt in early July.

The world’s largest steel producer ArcelorMittal has led the way in terms of European output cuts. It has shut blast furnaces in Krakow in Poland, Asturias in Spain and Bremen in Germany, as well as reducing primary steel production in France’s Dunkirk and Germany’s Eisenhuttenstadt. The run rate of its Taranto plant in Italy has also been reduced.

SSAB announced earlier this week it was shutting another blast furnace, meaning it has now taken out 1.8mn t/yr of capacity from its Raahe and Oxelosund sites in Finland and Sweden. The company has a total capacity of 4.9mn t/yr.

US Steel Kosice said in June it would be idling blast furnace 2 at its site, and a whole host of downstream production cuts are under way. Liberty said yesterday it was extending the 20pc cut at its Ostrava site in the Czech Republic, which has crude steel capacity of 2.7mn t/yr and rolling capacity of around 3.4mn t/yr.

Italian steel producer Arvedi said earlier this week it was reducing output by 70pc across November and December for planned maintenance on its 3.4mn t/yr facilities.

French steel exports skyrocketed in July after having lowered in May and June, Kallanish learns from new data released by national steel association Fédération Française de l’Acier (FFA).

French exports of flat and long steel to countries outside the EU28 were up 38.6% year-on-year in July at 194,000 tonnes. Flats’ exports increased by 44% to 167,000t compared to 116,000t in July 2018. Longs’ exports also increased by 12.5% to 27,000t, compared to 24,000t in July 2018, the association reveals.

Over January-July this year French long and flat product exports to non-EU countries were stable on-year at 150,000 tonnes/month. Flats’ exports increased by 2.4% to 129,000 t/month, from 126,000 t/month in January-July 2018. Longs exports’ fell by -12.5% to 21,000 t/month, from 23,000 t/month over the same period.

Exports of longs and flats had also fallen by -21% on-year in full-year 2018, the FFA says.

Italian trade unions have started to issue a series of statements this week to warn ArcelorMittal Italiia and the Italian authorities of potential industrial action, Kallanish notes. They say that they will take such steps if the company is preparing job cuts and if the local government does not fully support the relaunch of activities at the former Ilva plant.

Unions note that they have been informed of the possibility that ArcelorMittal will plan to cut up to 5,000 jobs in Italy. They firmly opposed the potential cuts and note that an agreement was reached with the company in September 2018 to secure jobs during the relaunch of the unit.

Last week ArcelorMittal announced an unexpected change of ceo for its Italian operations. The company replaced Matthieu Jehl with Lucia Morselli. As ceo of Acciai Speciali Terni since 2014 Morselli restructured the company through significant job cuts, despite the firm opposition of trade unions at the plant.

Talks to complete the sale of British Steel to Turkey’s Ataer Holdings A.S. are to continue, the UK Official Receiver’s office tells Kallanish. The Official Receiver has now indicated a willingness to talk to other parties interested in acquiring the steelmaker, following the end of the period of exclusivity with the Ataer Group this week.

“While discussions with Ataer are continuing, discussions with other parties who have expressed continued and renewed interest in acquiring the whole British Steel business will now be possible. I have instructed the Special Managers to engage with these additional interested parties. Diligence team members from these parties are expected to visit the company’s sites over the coming days and weeks. Meanwhile Ataer remain very much interested in acquiring the business and we remain in detailed discussions with them to conclude a sale,” the Official Receiver says.

“I remain focussed on achieving a sale of the business and assets of British Steel as quickly as possible, to achieve the best possible outcome for the Company’s creditors. The conclusion of the exclusivity period allows us to consider all of the options available at this point in the process. I would like to thank the team at British Steel for their continued support and hard work during this period of uncertainty,” the Official Receiver adds.

Market chatter two weeks ago suggested that the Chinese steelmaker Jingye had thrown its cap into the bidding circle. One source with knowledge of the negotiations told Kallanish however that the Ataer deal was still on course for completion.

Trade union sources have this week signalled the possibility that Tata Steel Europe will cut up to 2,500 jobs at its units across the Netherlands, the UK, France and Belgium. The company has not confirmed the figures reported by the unions, but acknowledges that the transformation programme launched in June to strengthen the business could include a reduction of the workforce. 

“Like all European steelmakers, we continue to experience challenging market conditions, made worse by the use of Europe as a dumping ground for the world’s excess capacity,” a spokesperson from the company tells Kallanish. “We launched a transformation programme in June to strengthen our business. We are aiming to develop a simpler and leaner organisation, capable of sustainably financing high levels of investment which are essential to our long-term success,” the spokesperson continues.

Local sources note that the situation should become clearer as from November, when official negotiations with the unions will start.

“The programme is gathering pace to urgently improve our performance. Proposals are being developed to improve our supply chain, our manufacturing performance and raw materials usage, as well as efficiency gains through digitalisation. We expect these to include a reduction in our employment costs which would be subject to the full consultation process with employee representatives,” the Tata spokesperson adds.

SSAB’s operating profit for the third quarter totaled SEK 300 million ($31 million), down from SEK 1,600 million in Q3 2018.

Demand for SSAB Special Steels weakened during the quarter, primarily in Europe. Shipments declined and operating profit at SEK 358 million was down from SEK 536 million in Q3 2018.

Margins declined during the quarter mainly due to higher iron ore costs, the company said during its earnings presentation.

SSAB said European demand was seasonally lower and weaker business conditions meant that the decline was more pronounced. Iron ore prices decreased in late Q3, which will lead to lower raw material costs in Q4.

SSAB Americas Q3 operating profit decreased to SEK 522 million from SEK 790 million, primarily due to lower realized prices. Demand was relatively stable and shipments were up somewhat compared with Q2.

Heading towards the year-end, SSAB is expecting a more pronounced seasonal slowdown than normal.

In North America, demand for heavy plate is estimated to be relatively stable during Q4. In Europe, underlying demand is expected to be weaker, especially towards year-end. Global demand for high-strength steels is expected to be somewhat weaker during Q4, primarily related to Europe.

For SSAB Americas, Q4 shipments are expected to decrease from Q3, mainly as a result of a planned maintenance outage at its Mobile, Alabama mill. SSAB Europe shipments are expected to be flat, whereas shipments for SSAB Special Steels should decrease somewhat.

Prices realized by SSAB Americas and SSAB Europe during Q4 are expected to decline from Q3. Prices at SSAB Special Steels are expected to be somewhat lower.

In Europe, Q3 crude steel production was down 11% compared with Q3 2018 to 930,000 mt and down 17% compared with Q2. Rolling production was down 5% year on year to 980,000 mt and down 18% from Q2.

For the SSAB Group as a whole, Q3 steel production was down 1% compared with Q3 2018 to 1.9 million mt and down 9% compared with Q2. Rolling production was down 5% from Q3 2018 to 1.7 million mt and down 12% from Q2.

— Annalisa Villa

British Steel’s Official Receiver is preparing to open discussions with other bidders, as the period of exclusive talks with Ataer Holding come to an end.

The exclusivity period with Ataer — a subsidiary of Turkey’s Oyak — to complete the sale of British Steel and its subsidiaries (excluding TSP Projects Limited, which has been sold separately) ends this week.

“While discussions with Ataer are continuing, discussions with other parties who have expressed continued and renewed interest in acquiring the whole British Steel business will now be possible,” the Official Receiver said. “I have instructed the Special Managers to engage with these additional interested parties. Diligence team members from these parties are expected to visit the company’s sites over the coming days and weeks.

“Meanwhile Ataer remains very much interested in acquiring the business and we remain in detailed discussions with them to conclude a sale,” the Receiver said. “I remain focused on achieving a sale of the business and assets of British Steel as quickly as possible, to achieve the best possible outcome for the company’s creditors. The conclusion of the exclusivity period allows us to consider all of the options available at this point in the process.”

The latest development adds to the uncertainty over the future of the company.

Liberty House Group, part of holding company GFG Alliance, has in recent days held fresh talks about buying British Steel, while Chinese steelmaker Jingye Group also approached the UK government with a fresh offer.

“This latest news only adds to their ongoing uncertainty,” Teesside-based Materials Processing Institute CEO Chris McDonald said.

“British Steel is a vital component of the UK economy, which not only supports many more supply chain jobs, but is important to the defense sector and in the creation of a low-carbon economy,” McDonald said. “Without it, this country must depend on importing its steel from abroad, which is both less secure and more environmentally damaging.”

British Steel, which went into compulsory liquidation on May 22, has about 3 million mt/year of production capacity in the UK, France and the Netherlands.

— Annalisa Villa and Cenk Can

Swiss steelmaker Schmolz + Bickenbach said Wednesday it is planning a capital increase of up to CHF350 million ($354 million), while slashing its full-year earnings forecast due to poor demand.

“The weakness in the most important end markets, such as the automotive industry, which went beyond the usual cyclicality, led to a crisis in the steel industry that Schmolz + Bickenbach was unable to escape,” the company stated. “The rapid development as well as the depth and duration of this weak demand require measures to strengthen equity.”

Swiss car dealership billionaire Martin Haefner has pledged to contribute up to CHF325 million through BigPoint Holding, a company he controls. However, Haefner said he would only provide the money if he gets a stake of at least 37.5% in S + B, is freed from being required to submit a mandatory takeover offer, and is allowed to have two BigPoint Holding employees on the S + B board of directors.

S + B also lowered its earnings forecast for the 2019 financial year in light of business developments since the beginning of September. Adjusted EBITDA is now expected to be below the range of Eur70 million to Eur100 million issued in September.

“After the usual seasonal slowdown in the summer months, demand in September recovered from its lowest point in August, but at a much lower rate than expected. A noticeable recovery in order intake and order backlog also failed to materialize in the first weeks of the fourth quarter,” the company said.

— Annalisa Villa

Swedish steelmaker SSAB will idle another blast furnaces at its Raahe steelworks in Finland at the end of November to achieve further cost and capacity reductions, the company said during the presentation of its earnings.

The BF has 1.3 million mt of annual capacity and the stoppage will be for four to six weeks at least, with the company deciding when to restart based on market conditions, an SSAB spokesman told S&P Global Platts.

SSAB Raahe has another BF with capacity of 1.3 million mt/year that will continue to run, the company confirmed to Platts.

SSAB since mid-September has idled a small BF with capacity of 500,000 mt/year at its Swedish plant in Oxelosund. The spokesperson confirmed that a restart date for this BF is linked to market conditions as well. In Oxelosund the company is running a second BF that has a capacity of 1 million mt/year.

In Europe SSAB has five BFs in total, the biggest of which is in Sweden with a capacity of 2.5 million mt/year.

For the SSAB Group as a whole, crude steel production of 1.9 million mt during the third quarter was down 1% from Q3 2018 production, and down 9% compared with the second quarter of 2019.

— Annalisa Villa

Tata Steel Europe could slash up to 2,500 jobs at its units in the Netherlands, the UK, France and Belgium, Kallanish understands from sources and Dutch press reports.

This week the company’s Works Council sent a memo to workers explaining that cuts will be necessary to secure the cost savings planned by the company. In the memo, Tata Steel’s Ijmuiden plant in the Netherlands is mentioned as the one expected to be most affected by job cuts.

More information on the magnitude and distribution of the cuts is not expected until later this year. Tata Steel Europe did not respond to Kallanish requests for an official statement prior to press deadline.

Since the cancellation of the merger with thyssenkrupp in Europe earlier this year, the company confirmed its intention to significantly cut costs. Back in June the first rumours regarding job losses started circulating, but the current figure mentioned by the Works Council is believed to be above the initial expectations of the market. The June rumours were soon followed by Tata Steel Europe appointing a new ceo.