Category: Latest Updates

Liberty Steel, part of the GFG Alliance, this week officially inaugurated seven steelworks and five major service centres in mainland Europe “… as part of the GFG family,” the company tells Kallanish. The sites were acquired from ArcelorMittal at the beginning of July in a €740 million ($816m) deal.

Liberty chairman Sanjeev Gupta also pledged to invest €400 million over five years to build Liberty Steel’s newly acquired European steelworks into “… a major force in the global steel industry.” Liberty has set a goal of expanding sales at the plants by 50% by 2022.

The steelworks are in Ostrava, in the Czech Republic, Galati in Romania, Piombino in Italy, Skopje in North Macedonia, Dudelange in Luxembourg and two plants near Liege, Belgium. Taken together, they employ 14,000 people and take the GFG Alliance’s global workforce to nearly 30,000 across 30 countries, the company says.

“The completion of the acquisition triggered the start of a 100-day review during which senior executives from Liberty Steel Continental Europe have been working with local management teams, trade unions, customers and suppliers, to launch a comprehensive analysis of the businesses. This has allowed them to explore investment opportunities and develop detailed plans to boost competitiveness, extend product ranges and support sales growth,” Liberty says.

The mainland European operations, now known as Liberty Steel Continental Europe, is led by Jon Bolton, who is also chairman of the UK Steel trade association. The new pan-European organisation is building an extensive manufacturing supply chain providing materials and components for industry across western Europe, Liberty Steel continues.

Liberty Steel Continental Europe intends to apply elements of GFG Alliance’s so-called Greensteel approach to the sites – including exploring opportunities for renewable energy, and for a reduction in waste, the company adds.

Steel is taking the lead as a key material for the future development of the electric cars production, ArcelorMittal explains in a note sent to Kallanish.

ArcelorMittal director for automotive product applications Bala Krishnan notes that advanced high-strength steels, for example, offer greater strength per unit than other competing materials. This is because electric vehicles require greater reinforcement to protect the battery and the passengers in the event of a crash.

In addition to that, steel remains cheaper than aluminium and other light-weighting products. As carmakers battle to make electric vehicles affordable for the public, steel is returning to be a material of choice.

“After building its first two luxury models with aluminium, Tesla recently shifted to a blend of steel and aluminium for the body and chassis of its mass-market Tesla Model 3. The shift is even also occurring among premium ICE vehicles, including the Audi A8. The vehicle is abandoning its heavy use of aluminium in favour of a mixed material approach, while Audi considers a fully electric version for the next generation of the model,” the steelmaker explains.

The entire automotive sector supply chain is increasingly interested in the emissions produced in vehicle manufacturing. Steel requires seven times less energy than aluminium to be produced. As greater emphasis shifts to the production of these vehicles, manufacturers must consider that the production of aluminium requires seven times more energy than steel, ArcelorMittal says.

“Offering the optimal balance of strength, performance and mass weight reduction with the least impact on the environment, steel is the material of choice for today’s vehicles and will be the OEM’s choice for the electric vehicles of tomorrow,” Krishnan concludes.

Nordic steel producer SSAB will implement temporary staff layoffs lasting two-three weeks over the rest of this year.

The SSAB Europe division, which has its largest sites at Raahe and Hameenlinna in Finland, employs almost 4,000 workers. Employees will not be paid during the layoffs. How the cuts will be allocated will be determined in the coming weeks, the company said.

SSAB will continue to apply the flexible “working-time bank” with production workers at its Sweden operations, and is in dialogue with trade union IF Metall regarding the measures. The working-time bank can be used when there are longer maintenance periods, or to accommodate periods of lower production.

SSAB is also planning flexible working arrangements with office staff in Sweden, which will be implemented during the fourth quarter.

As with other European mills, SSAB is battling with weaker steel demand and prices, increased competition from imports and higher costs.

Argus‘ headline northwest Europe hot-rolled coil index slipped from €535/t ex-works on 12 November 2018 to €457.75/t today. At the same time, iron ore has risen to $96.60/dmt from $76.25/dmt, resulting in a substantial margin squeeze for mills.

ArcelorMittal Poland (AMP) has finalised with Mostostal Zabrze the PLN 27 million ($7m) agreement to revamp blast furnace no.3 at its flagship Dabrowa Gornicza plant, Kallanish learns from the Polish construction company. Work is scheduled for completion by mid-2020.

The two firms signed in August a letter of intent for the revamp (see Kallanish passim).

AMP postponed its plan announced in May to idle the remaining operational Krakow blast furnace on account of reduced demand, and increased costs and imports. ArcelorMittal’s sales in Poland slumped -12% on-year in the first half of 2019 to $2.11 billion. Since ArcelorMittal’s sale to Liberty of its Ostrava and Galati mills, AMP has become the focal point of the steelmaker in Central and Eastern Europe.

Due to lower demand from the automotive industry in particular, Schmolz+Bickenbach (S+B) is reducing production at its plants in Switzerland and Germany.

In September, short working hours have been introduced at both its speciality bar-making subsidiaries Swiss Steel and Deutsche Edelstahlwerke (DEW), S+B tells Kallanish upon request. Swiss Steel will have two weeks of reduced working in September, following a similar two weeks in May. At DEW, short working hours will apply as from calendar week 38. For the German operations, the company did not specify the duration.

“If and for how long short hours will prevail afterwards depends on the future development of demand. For the other business units, reduced working hours are not envisaged,” S+B says in a statement.

At the end of the second quarter, the order backlog of the group stood at 480,000 tonnes, after having had 571,000t at the end of Q1, and 612,000t at the end of 2018. “We do expect a gradual recovery in order intake at the end of this year, given that the depletion of inventories in the automotive value chain has made progress,” S+B states.

A Swiss newspaper report notes that the company has reduced its intake of production materials, highlighting the purchase of graphite electrodes used at the EAF furnaces. Last week, S+B lowered its guidance for this year’s Ebit for the full year for the second time to a further revised figure of €70-100 million ($77-110m).

On last 13 September, EUROMETAL had invited to its second event having Digitalization as a main conference theme.

This major event, hosted by Swiss steel distribution federations SSHV/ASCA and VSEMH, noted a large success with professionals from the steel community attending the conference from all over Europe.

An outstanding speakers list was introduced by Daniel Guinabert, EUROMETAL Director General, and included Ruedi Noser, member of the Swiss Council of State, Reinhard Fromm, President of Fromm Packaging Systems, Ivica Kolaric from Fraunhofer IPA Institute, Felix Amberg from Swiss SCAUT organisation, Armin Stolzer, Managing Owner of KASTO Maschinenbau, Valentin Kaltenbach, CEO Kaltenbach Solutions, Christian Dyck, CEO kloeckner.i, Timo Rossi from Finnish JAKAMO, Amit Kumar from ArcelorMittal SSC West Europe, Stefan Grüll, Managing Director at Koenig Holding group and Tim Milde, COO XOM Materials.

The conference was concluded by an open forum animated by Andreas Steffes from SSHV/ASCA. Besides speakers the panel was completed by the participation of Norbert Thumfart, CEO Weyland, Christoph Weber, CEO Arthur Weber, President SSHV and Jan Moravec Executive Director Ferona.

Speakers and panelists outlined some of the challenges facing steel distribution and SSC in their pursuit of digital transformation.

Here are some key quotes from speakers or panelists: First of all analyse the problems of the customer, then design digital solutions and finally implement solutions.BIM is a highly interesting digital interface for steel suppliers.

Steel distribution is invited to establish digital catalogues of steel products to enter the BIM world, which opens new horizons for business models in steel distribution.

New combined ERP & Storage & Sawing digital solutions are now available from main processing equipment providersEcosystem economy will trigger the rise of vertical hollistic digital platforms as opposed to presently typical horizontal digital platforms Digital steel quality data will represent a new line of assets and new market opportunities.

Digital distribution of steel data might become as important as physical distribution of steel Digitalization is a tool to face missing skilled labor skills to run more and more digitalized equipment and will enable to cut lead time to fulfill customer demands Digital solutions will optimize the use of storage and processing capacities and reduce idle times Prominently for steel distribution, digitalization is considered to be an important tool to survive and to advantageously position steel distribution between producers and end users, Digitalization forces steel distribution to rethink and to improve internal material and information flows.

Importance to implicate company work force from the start in the digital transformation processDigitalization is sometimes considered to threaten personal contacts with customers.

On the other hand is was outlined that digitalization starts first with an in depth discussion with customers about their needs regarding products, services, communications, etc.

The conference was closed by conclusive remarks from Hans Kohler president of SWISS VSEMH association.

The European Commission’s latest proposal for the revision of safeguard measures specifically for hot rolled coil is set to impact trade from Turkey. This is because European buyers will need to further limit their intake from this supplier to meet the new, more stringent rules.

According to the proposal, expected to become effective from 1 October, no supplier will be able to use more than 30% of the available quota for any given period.

During the April-June 2019 period the assigned HRC import quotas were 2.8 million tonnes, of which only less than 50,000t remained unused at the end of period. While specific data on the allocation to each country of provenance are not yet available, Turkey appears to be the only HRC source to have surpassed the 30% market share for imports in recent years.

According to Eurofer data, in the first half of 2019 Turkey accounted for over 40% of total EU HRC imports. None of the other large suppliers, such as Russia, India, Serbia, South Korea and Taiwan, imported volumes accounting for more than 15% each of total imports.

The growing importance of Turkish HRC supply to Europe was visible already in 2018 when the country accounted for some 35% of total HRC imports into the continent. In 2017, on the other hand, Turkish HRC was just slightly more than 25% of total HRC imports.

From October onwards European importers will therefore need to limit somewhat their purchases of HRC from Turkey, potentially boosting imports from other large sources such as Russia, India, South Korea, Taiwan and Serbia, Kallanish notes.

ArcelorMittal is allegedly exploring a sale of downstream construction activities as it divests peripheral operations, according to a media report monitored by Kallanish.  

Bloomberg suggests that the steelmaker is apparently working with advisers to prepare an auction of the company’s downstream construction segment involved in the supply of steel building systems. The sale of these is estimated to fetch about €700-800 million ($776-887m) the report suggests, citing people familiar with the matter. An ArcelorMittal spokesman contacted by Kallanish said the company would not yet comment on the matter.  

A sale is likely to occur in the fourth quarter the report further suggests, and is likely to interest both building materials producers and private equity firms. It is intimated that the downstream construction activities are considered to be non-core assets of the group.   

The segment in question describes its programme as steel building systems & solutions and sandwich panels for roofing, cladding, composite floors, light gauge structures, and modular housing. It has activities in 18 European countries and in the West Indies.

Czech automotive output increased 1.48% on-year in January-July to 838,142 units, reversing from the -1.47% decline seen after six months, according to the latest Czech Automotive Industry Association (AIA) data seen by Kallanish.

The Czech Republic is Central and Eastern Europe (CEE)’s largest car manufacturer, sourcing automotive steel from US Steel Kosice (USSK) and ArcelorMittal among other suppliers, and producing most cars for export.

Production mainly consists of passenger and light commercial vehicles (M1+N1), whose output rose 1.44% in January-July to 834,247 vehicles. Skoda comprised 61.38% of output, Hyundai 22.51% and Toyota, Peugeot, Citroen (TPCA) 16.12%.

Passenger car exports returned to growth after slipping into negative territory after six months, rising 2% in January-July to 771,519 units, while local sales slumped -4.8% to 65,251 units.

Czech production of buses rose 7.6% in January-July to 2,971 units.

Eurofer said in July EU automotive production is forecast to fall by -1.4% on-year in 2019 and to rise by 2.2% in 2020 (see Kallanish passim).

USSK plans to idle one of its blast furnaces this year and lay off 2,500 workers by end-2021 due to increasing raw material costs and declining demand, coupled with elevated imports. ArcelorMittal said in May it was idling its Krakow steelworks’ hot-end from September due in part to reduced European automotive demand, but reversed this decision in July.

Germany’s stockholding distributors sold -4.5% less products this year from January through July than in the first seven months of 2018, according to their federation BDS. The total sales volume to end-July was 6.52 million tonnes. 

July turned out to be the best month of the year for sales, at 999,000t, Kallanish learns from BDS. However, chief economist Jörg Feger points out this was a balance effect after an “… unusually weak June”.  With a volume of 848,000t, June was the only month so far in 2019 with sales of less than 900,000t, partly due to holidays. Sales fell for most products with the exception of rebar, which saw higher volumes.  

Stockholders have become more cautious with regard to building inventories. At the end of July, these stood at 2.41mt, -6% lower than one year earlier. Stock based on days of sale came in at 72 in July, and 78 on average in the first seven months, slightly higher than in 2018.  

Prices have weakened since April, with the deterioration stronger for flat products and tubes than for long products, Feger notes.