Category: Latest Updates

Production at German steel and metal processing companies in the first half of the year was down -2.4% on-year, Kallanish learns from steel users federation Wirtschaftsverband Stahl- und Metallverarbeitung (WSM).

Since April, the number of employees in the industry has also been declining, after years of increasing employment. WSM has therefore lowered its production forecast for 2019 from 2% growth to “…stable at best.” The federation does not completely exclude a change for the better. However, it cautions that any growth impulse requires political support, at least through the normalisation of international trade policies and the associated improvement in investment confidence.

At the national level, proposals to revive the taxation of wealth would have the opposite effect, WSM argues. Burdens on entrepreneurship must be reduced and the competitiveness of industrial value chains strengthened. Taxes, levies and especially energy costs must be reduced in the short term, the federation demands.

On the eve of the next session of the German government’s working group on climate affairs on Wednesday 4 September, WSM also warns of increasing costs for CO2. Among other things, it demands that money collected this way ought to be used for the support of investments for technical innovation, and should be harmonised at the European level.

“Bans do not lead to a common goal; this is only possible through technical innovation that best comes from the manufacturing industries,” says WSM economist Holger Ade.

Sweden’s high-strength steel producer SSAB Monday started negotiations with unions for potential temporary lay-offs at its Finnish operations, excluding Lappohja tube mill and the subsidiaries Ruukki Construction, Tibnor, Raahen Voima and Presteel, the company told S&P Global Platts.

The biggest sites in Finland are in Raahe and Hämeenlinna which belong to SSAB Europe division, but there are also some smaller units included in SSAB Europe division as well as Group functions. All together some 4,000 employees work at these units. The initiative is due to a reduction in production volumes at the Nordic operations.

It will be decided during the negotiations how many people are to be affected and how long the lay-offs will be for. The results will be published after the negotiations.

Lappohja tube mill is to be closed -a decision made earlier by the company- and its production will be transferred to Hämeenlinna tube mill.

Tibnor negotiations are also going on but will last 6 weeks and the end result will be announced after the negotiations. Tibnor is the steel distributor.

— Annalisa Villa

Tata Steel says it plans to close its Orb Electrical Steels unit in Newport, Wales, after failing to find a buyer for the business.

“The Orb Electrical Steels business has been loss-making for several years as it struggled to compete in the fast-moving market to supply steels used in electricity transformers in which customer requirements have out-stripped the site’s capability,” Tata Steel observes. “Converting the site to create steels for future electric vehicle production would cost in excess of £50 million in a highly competitive market where Tata Steel faces higher-volume competitors both in Europe and globally.”

Tata Steel Europe chief executive Henrik Adam says continued funding of Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges. “We saw no prospects of returning the Orb business to profitability in the coming years,” he comments in a note seen by Kallanish.

Orb is one part of Tata Steel’s Cogent Electrical Steels business, which is among the non-core businesses that the Indian steelmaker announced it would divest in May (see Kallanish passim).

The other two parts have secured brighter futures. Cogent Power Inc, in Burlington, Canada, which produces cores for electrical distribution transformers, will be sold to Japan’s FE Shoji Trade Corporation. Surahammars Bruks AB, in Surahammar, Sweden, which makes advanced steels for electric vehicles, meanwhile, will be retained by Tata Steel.

Tata Steel has meanwhile been unable to find a buyer for Wolverhampton Engineering Steels Service Centre, in the UK, and proposes to close it.

Tata says it will take steps to mitigate the impact on employees at the units to be closed, including offering alternative employment opportunities at other Tata Steel sites. Consultations with affected employees and trade unions at both Orb and Wolverhampton will commence shortly.

Monday will see the opening of a new reloading and re-distribution point for mostly steel products in the town of Ahlen near Münster. The site is in the Westphalian part of German state North Rhine Wesphalia (NRW), somewhat to the northeast of the Ruhr Valley and its mills.

A private local entrepreneur, Wilhelm Haver, had bought a 120,000 square metres industrial area which had been forsaken for a long time. It used to belong to a company named Blomberg, and in the region since has remained known as the Blomberg ground. Haver has invested a two-digit million sum to vamp up the existing halls that take half of the area, local newspaper Westfälische Nachrichten reports.

The reconstruction was supported by the state, and NRW transport minister Hendrik Wüst will attend the opening of the new company, to be called Ahlener Logistik-Zentrum (ALZ). It addresses suppliers of mainly steel coils for further distribution by rail to customers. State rail company Westfälische Landeseisenbahn (WLE) will be reviving the 2.5 km long idled rail connection from the ground to the Ahlen freight terminal, Kallanish learns from the paper.  

“Many goods that are still coming by road truck to Ahlen can now be transferred to rail,” it quotes Haver as saying. He notes that he is in talks with various companies from the steel and chemicals industry. Haver’s own company of the same name is a local producer and provider of outside floor covering for sports and residential grounds.

Thyssenkrupp plans to make digital networking on its toii platform available to other industrial companies in the future.

In 2017, thyssenkrupp Materials Services began to digitally connect its machinery network, using their self-developed Industrial Internet of Things (IIoT) platform toii, as Kallanish reported then.

“From the beginning, we built toii not as a project, but as a product,” says Axel Berger, head of digital transformation at tk Materials Services.

More than 30 thyssenkrupp locations are now working with toii – including companies from Materials Services, Components Technology and Steel Europe. Nearly 300 machines have been integrated into the system, including numerous slitting and cut-to-length lines, slitting lines for steel slabs, packaging lines, band saws, measuring systems and high-bay warehouses. For example, a single plant in the production of slit strip and sheet can expect an increase in annual production of up to 10,000 tonnes, according to the company. 

Although Materials Services developed toii especially for its own requirements, the platform can be easily integrated into the processes of other companies.

“Now that we have brought digital change to our facilities, the next step is to offer toii to our customers and other industrial companies,” says Klaus Keysberg, ceo of tk Materials Services.

Italian plates are seen only slightly declining in September and remaining mostly stable compared to July-August. As margins are not very high, sources believe there is little space for further declines as domestic prices had already slightly reduced in July before the August market shut down, distributors tell Kallanish.

This week the sector is still quiet due to the August holiday. Considering the current raw material price decline and the uncertainty surrounding imported slabs, buyers are not expected to make any purchases this or next week. “We will wait and see what happens. If there is a price reduction it should not be higher than €5/t ($5.5/t) and it will happen in the second week of September”, a large distributor comments.

275 quality is stable month-on-month at €515-520/t delivered while 355 is at €535-540/t delivered. There is more demand for the higher 355 quality and producers are beginning to ask €25/t more compared to the 275 grade. In Italy 355 has typically been €20/t more expensive than 275, Kallanish notes.

Ukraine’s president Vladimir Zelensky may ask the US president Donald Trump to consider cancelling the 25% import duty imposed last year upon the conclusion of the Section 232 investigation at their meeting penned for 1 September, Kallanish learns from Ukrainian metals association Ukrmetallurgprom.

The association’s letter to the Ukrainian president contains a reminder that, akin to several countries that have managed to renegotiate the duty – Canada, Mexico, Australia, Brazil, Argentina and South Korea – Ukraine has also started the process of negotiations for its exports of steel and aluminium, but fell short of completing it due to “…uncoordinated efforts of various institutions.”

According to the association’s estimates, the cancellation of the 25% import duty for Ukrainian products will have little effect on the US domestic steel market, as its share in total US imports is less than 1%. It notes also that the trade balance is in the US favour at over $1 billion annually.

Ukraine’s major remaining ferrous export to the US is pig iron, which is exempt from the 25% duty.

British car manufacturing output declined by almost 11% in July to 108,239 units, according to figures released Thursday by the Society of Motor Manufacturers and Traders. This was the 14th successive month of decline as ongoing weakness in major EU and Asian markets coupled with some key model changes affected performance.

Production for export fell by 15% in the month, although overseas demand remained the main driver of overall volumes, accounting for 8 in 10 cars built, the association said.

Output for the domestic market rose by 10%, or just fewer than 2,000 units, following a steep 35% fall in July last year, when multiple factors — including preparation for WLTP — affected output.

Year-to-date, some 774,760 cars have been made in Britain, 180,864 fewer than in the same period last year, representing a fall of 19%. With exports accounting for the vast majority of orders, their decline is primarily responsible for the overall fall in output with overseas shipments down by 20% since January, while year-on-year production for the UK is down by almost 14%.

“Another month of decline for UK car manufacturing is a serious concern. The sector is overwhelmingly reliant on exports and the global headwinds are strong, with escalating trade tensions, softening demand and significant technological change,” SMMT Chief Executive Mike Hawes said, again underlining the importance of maintaining the UK’s global competitiveness with a Brexit deal “to unlock investment and safeguard the long-term future of a sector which has recently been such an international success story.”

— Annalisa Villa

Liberty Steel Group will invest EUR 200 million ($221 million) in its Romanian mill over the next five years on maintenance and to grow production and sales, the company’s spokesman told S&P Global Platts Thursday.

Liberty Steel Group’s plan for the Galati steelworks it integrated in July is to grow production volumes and modernize the downstream mills to improve product quality and range. The company will disclose more details in a couple of months once it completes a 100-day review of the mill’s operation, it told Platts.

Apart from injecting the funds, Liberty hopes to achieve the target by giving Galati’s management greater flexibility and autonomy to implement their strategy and to compete in geographies that they have previously been excluded from, according to the spokesman.

“Galati is a major part of our future plans. It is an efficient operation with a highly skilled management and workforce and a competitive cost structure which we will develop,” he said.

Speaking of the short term, despite persisting challenges for European steelmakers and their opaque business prospects, he said there are no current plans to reduce production at Galati.

— Ekaterina Bouckley

Ostrava steelworks in the Czech Republic, which last month suggested it will cut output by 20%, is continuously reviewing its production levels as raw material prices have decreased recently, the spokesman for Liberty Steel Group, which owns the mill, told S&P Global Platts Thursday.

Given lower raw material prices, as well as the minor reduction in the EU’s steel import quota, the production plan for the remainder of 2019 for the Czech plant remains unsettled.

Although the reduction in the steel import quota increase from 5% to 3% seems like a positive step, it is not enough in the stagnant market, according to the spokeswoman for Ostrava steelworks. “Any quota increase will outpace EU steel demand because the latter is expected to fall this year,” she said.

Speaking long term, Liberty has ambitions to grow steel production at Ostrava at least by half versus 2018, when the mill made 2.2 million mt.

The Czech mill has the potential for investment to capitalize on unused rolling capacity and to adjust the product mix towards greater profitability. In addition to the EUR 35 million ($39 million)/year sustenance capex Liberty Steel budgeted for the plant for the next 10 years, the group has also outlined the strategic investment to grow production at Ostrava to 3.4 million mt/year over time. Whether this development program will be rolled over or not depends on the results of the comprehensive review, according to the spokesman.

The company is undertaking a 100-day review of all aspects of the Ostrava mill operations and once that is complete it will provide more information on its future plans for the plant.

— Ekaterina Bouckley