Category: Latest Updates

thyssenkrupp Steel will take until the end of the year to get a clear picture of the future of its plate mill at Duisburg-Hüttenheim, the company says.

Parent group thyssenkrupp AG at the presentation of 3rd quarter figures last month for the first time said explicitly that it “… will assess the potential” of its plate activities.  The business unit has been making losses for years, and the company does not expect much relief in the foreseeable future, given the difficult market environment. “Against this background we need to make investment decisions responsibly and in the interest of the overall steel activities,” the steelmaker says in a statement sent to Kallanish.

The company’s plate segment was already under review during the failed merger with Tata Steel Europe. A team of experts will now asses the options for the company’s plate activities, “… without prejudging the outcome,” the company says. “We definitely see opportunities for its further development, but not necessarily under the umbrella of thyssenkrupp,” thyssenkrupp AG Guido Kerkhoff says.

Such a process “… seems logical in view of the overall development at thyssenkrupp Steel,” a manager at a German stockholding company says, commenting on the company’s announcement. A Swiss-based manager says that he is not surprised, but wonders “… if you can find a buyer for it, which wouldn’t help the overcapacities we have in Europe.”

The proposal published by the European Commission in mid-August to revise the existing EU safeguard measures for steel was approved last week by the member states, Kallanish learns from sources. As a consequence, the changes to the system will become effective as from the beginning of October.

The revision includes the decision to reduce the annual increase of quotas from the planned 5% to 3%. As of the beginning of October the quotas available for the period July 2019-June 2020 will be revised downward to meet the new indications.

Another major change will be implemented for HRC imports. While the quota available will continue to remain global, no importing country will be allowed to use more than 30% of the available volumes in any given quarter.

A similar change will also be implemented in regard with rebar and wire rod imports. The system of country-specific quotas will remain in place but during the last quarter of each annual period no specific country will be allowed to use more than 30% of the residual quota available.

Finally, the quotas for large welded tube will be changes into a global one applied quarterly, cancelling the existing country-specific division due to changes in the product’s market flow.

German carmakers could make competitive gains in the industry’s transformation to electric vehicles over the coming few years, S&P Global Ratings said Monday.

“We think Germany’s premium car segments will be able to leverage their strengths of higher profitability and somewhat lower sensitivity to demand shocks than mass producers,” said S&P Global Ratings credit analyst Tobias Mock in a report entitled German Carmakers Can Still Win The Electrification Race – At A Cost.

But the heavy research and development costs for developing these cars, and extra investment in supply chain and technology developments, will weigh on profitability in the coming years, according to the report. “Disruptive industry trends and the deterioration of market conditions globally may also strain their profitability over a prolonged period and trigger rating transition,” said S&P Global Ratings credit analyst Vittoria Ferraris.

The three big premium automakers Volkswagen, BMW and Daimler held only 12.5% of the fully electric-car market in 2018. But plug-in hybrids and mild hybrids are also key in their strategy to meet increasingly more stringent emissions regulations, the analysts said. By the end of this year, the three automakers will offer at least one fully battery electric vehicle (BEV) and at least one plug-in hybrid electric vehicle (PHEV) in nearly all their existing models — totaling 38 electrified models. They plan to launch another 23 models next year, according to the report.

“While US automaker Tesla is currently the bestseller in the premium electric vehicle (EV) market, we expect German carmakers will exert a strong challenge by building on their brand reputation, ability to produce high-quality cars at scale, and consumer loyalty,” the analysts wrote in the report.

The report does not constitute a rating action, the analysts said.

— Diana Kinch

German rebar prices continue to dwindle despite construction being regarded as the only industry still performing in the country, and also in neighbouring north-west European markets.

Some market players argue that construction firms as well as rebar mills and distributors are all caught in a continuous rat race in which they sacrifice prices to snatch orders. Others dismiss this view as notorious whining.

An explanation offered by a manager from a rural stockholder in central Germany is that overcapacity at bending facilities may be behind the situation. “Distributors have built up quite a lot of bending capacities, over-proportionally to the demand volume from customers, and now we have an imbalance,” he tells Kallanish. According to him, the expansions have mainly occurred at big chains, which over the past five years have expanded bending capacity by 70%, he estimates.

Furthermore, he sees a gap between cities and countries. “There are hotspots where prices and volumes match well, like Stuttgart or Hamburg, where demand is keeping up,” he comments. And, of course, distributors from the outer rims are trying to snatch city jobs. “You have an advantage if you are close to a metropolitan area,” the manager adds.

A manger from an eastern DIY store from a metropolitan area is not quite sure if the arguments are accurate. “In this area, it’s the same bending facilities as there always were, and no expansions; not to my knowledge.”

Both nevertheless agree that base prices for rebar have come down to €230/tonne ($254), which, plus the size surcharge of €265, translates to a delivered price of €495.

ArcelorMittal Poland (AMP)’s steel exports declined -13% on-year in 2018 to 2.19 million tonnes, while coke exports fell -12% to 1.9mt, Kallanish learns from Poland’s largest steelmaker.

Crude steel output dropped -6% last year to 5.27mt (see Kallanish passim), while coke production was down -4% to 4.34mt.

Poland overall produced 10.2mt of crude steel in 2018 and consumed 14.9mt. The construction industry accounted for 43% of steel use. Polish steel sector sales reached PLN 35.7 billion ($9.1 billion), or 3% of industrial output, with exports accounting for half of this amount, AMP says in a report.

Among AMP’s investments in 2018 were the first stage of the Sosnowiec plant’s wire rod mill revamp (see Kallanish passim). Besides increasing production capacity from 700,000 tonnes/year to 800,000 t/y, this will increase product quality. The firm also added an organic coating section to galvanizing line no.2 at the Krakow plant’s cold rolling mill.

In July 2019 AMP postponed the idling it had announced in May of the hot-end at its Krakow steelworks in order to re-evaluate its position (see Kallanish passim).

ArcelorMittal’s sales in Poland slumped -12% on-year in the first half of 2019 to $2.11 billion. The country thus slipped to seventh place in the list of the world’s largest steelmaker’s highest-earning countries after leaping to fourth in full-year 2018 with a 21% on-year sales surge. However, 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.

French crude steel production decreased year-on-year in July. This follows a decline over January-May with the exception of a hike in March, but an increase in June, Kallanish learns from data released by the Federation Française de l’Acier (FFA).

Output fell by -1.9% to 1,313,000 tonnes last month, down from 1,339,000t in July 2018. Over the first seven months of the year, output also fell by -3.5% on-year to 1,285,000 tonnes/month. This was down from 1,331,000 t/month over January-July 2018.

In 2018 average crude steel production fell by -0.8% to 1,282,000 t/month, down from 1,292,000 t/month in the same period of 2017, FFA says.

The UK manufacturing sector weakened noticeably in August on fears of a no-deal Brexit according to the latest survey by manufacturers’ umbrella federation, Make UK. The gradual erosion in the total balance of orders placed in the sector has eroded sharply since the first quarter of 2019. Make UK considers that this indicator could turn from positive to negative in Q4, it says in a note sent to Kallanish.

All survey indicators weakened significantly, the survey shows, while domestic orders turned negative. Export orders were also down despite prices having fallen showing that the cheaper pound sterling is of no benefit, the federation says.

“According to the survey, the total order balance, whilst still just in positive territory, fell to +2% in Q3 (down from +8% in Q2 and +16% in Q1) indicating the significant rate of weakening which has taken place since the start of the year. At current trend, according to Make UK this will almost certainly turn negative in the final quarter of the year barring a remarkable turnaround in the economy,” Make UK adds.

There is also no evidence that stockpiling of goods has begun ahead of a ‘no-deal’ Brexit.   Investment intentions have also turned negative for the first time since the EU referendum. The manufacturing forecast has therefore been cut to just 0.1% in 2019 and 0.2% in 2020, Make UK confirms.

The survey results reflect those found in the IHS Markit/Chartered Institute of Purchasing and Supply survey released earlier. At 47.4 in August, down from 48.0 in July, the headline seasonally adjusted IHS Markit/CIPS Purchasing Managers’ Index (PMI) fell to its lowest level since July 2012. The downward movement in the headline index was centred on an accelerated contraction in new work, which decreased to the greatest extent in 85 months.

ArcelorMittal Italia says it will continue to manage the Taranto plant protected by the latest decree law published by the Italian government this week. The new law amends the so-called ‘Crescita’ decree law which had removed legal protection pending the implementation of the environmental plan for the Taranto site.

Following its publication, the decree law comes into immediate force, although its permanence is subject to ratification by the Italian Parliament within 60 days. As a result of this development, ArcelorMittal Italia will continue operations at the site beyond 6 September. It will continue meanwhile to monitor legal, regulatory and operational developments in relation to the Taranto plant closely in view of its continued viability, the company says.

“The new decree means that, at least for the moment, we are able to continue to manage the Taranto plant beyond 6 September. However, we continue to evaluate its potential impact. Now we have to face the court order for the shut down of blast furnace number 2. The Extraordinary Commissioners of Ilva who are responsible for the matter have presented a new appeal to the Court of Taranto. I hope a solution will be reached that allows us to continue to operate the three blast furnaces that are essential for the long-term sustainability of the Taranto plant”, ArcelorMittal Italia ceo Matthieu Jehl says in a company note sent to Kallanish.

ArcelorMittal said it will continue operations at ArcelorMittal Italia beyond September 6 while continuing to monitor legal, regulatory and operational issues following the publication Wednesday of a decree adopted by the new Italian government concerning environmental liabilities.

The amendment to the so-called Crescita decree, which had removed legal protection pending the implementation of the environmental plan for the Taranto plant, was published in the Italian Official Journal.

Following its publication, the decree came into immediate force, although its permanence is subject to ratification by the Italian Parliament within 60 days.

As previously reported, ArcelorMittal threatened to shut down its plant in Taranto unless legal immunity from the environmental problems of the former owner, which ends September 6, was extended.

— Annalisa Villa

EU governments on Wednesday approved a proposed increase in EU steel import quotas to 3% across all product categories, as suggested by the European Commission in its August review, down from the previously planned 5% increase, according to a news agency report citing diplomats.

The EU has not yet formally published the results of its review and EC representatives did not respond to a request for comment Wednesday afternoon. Market sources confirmed the vote was due Wednesday, and the expectations were for no changes on the EC review document released in August.

EU governments approved the revised measures limiting any one country to a 30% share of quarterly imports by specific products, according to the news agency report and other sources.

The revised safeguard measure is expected to enter into force on October 1, according to sources.

Sources said four countries — Ireland, the Netherlands, Sweden and Lithuania — voted against the proposal, which they said was too restrictive. Four other countries abstained, including Finland. The group asked the commission to closely monitor the markets to further ease the restrictions if needed.

— Annalisa Villa