Category: Latest Updates

European wire rod processor Van Merksteijn has put construction of its new integrated green steel EAF mill in the Netherlands on hold due to the uncertain economic climate in Europe, its commercial director told S&P Global Platts Thursday.

“We decided to suspend for now our project mainly because of nitrogen issues, as a result of a recent decision issued by the Dutch Council of State, potential carbon dioxide taxes, and the overall insecurity linked with the trade war,” Kris Van Ginderdeuren said.

The company wanted to concentrate on its core business, which has been hit by measures for imports of wire rod implemented by the European Commission, he said.

In May, the Dutch Council of State ruled that the Dutch Government Nitrogen Approach Program was not effective enough, resulting in hundreds of central government projects needing to be reviewed and putting restrictions on private funding projects.

In February, the EC put quotas on imports of several steel products to avoid steel re-directions after the US implemented Section 232 tariffs on steel. One of the products under quota is wire rod, the main business for Van Merksteijn which is the largest independent transformer importer of rod into the EU with an average of 800,000 mt of rod imported each year.

“We really need to stay focused on our imports and look into EC regulations, so we cannot look into other large project in particular with all new emission restrictions in Netherlands. Obviously, this mill would have made a valuable contribution to the circular local economy and it would have created direct employment for 300 people. So we are very disappointed,” Van Ginderdeuren said.

“As soon as there is more clarity concerning international trade relations, the national and international development of carbon dioxide legislation and adequate governmental solutions for the permit issues, we could carry on [with construction of the new mill],” he said.

Van Merksteijn decided in 2017 to build its own EAF mill in Groningen to transform regional scrap into wire rod, mainly to supply its Almelo plant with raw material.

Van Merksteijn International is a family-owned company with a total rod transform capacity of 2.3 million mt per year and a workforce of over 1,000 people in its subsidiaries in Almelo (NL), Dendermonde (BE) and Saint-Pourçain-sur-Sioule (FR).

— Annalisa Villa

Hot-rolled coil trading activity across domestic European markets remained muted over the past week, but Indian mills began offering very competitively into the EU as a result of their short order books, weak domestic and southeast Asian demand and the rupee’s depreciation against the dollar.

Market participants said Indian mills asked for the equivalent of $460/t fob India at the beginning of the week, which they then subsequently dropped to $455/t fob. Some said that bookings were concluded at €435-440/t cfr Italy, although others questioned if buyers would be ready to make purchases during the last week of August.

Some European producers are more concerned about Turkey and are pushing for the European Commission to review its safeguards revision proposal, and requesting an anti-dumping investigation. At present, the EC’s proposal means Indian sellers get an edge over Turkey, as they have historically comprised well below 30pc of total EU HRC imports.

In comparison to India, Turkish HRC has been higher-priced, with offers at $475-485/t fob this week. Indian material is available with October shipment dates, while Turkish mills are offering November shipment HRC. European buyers have put forward speculative bids to Turkish sellers at $435-440/t fob, although the realistic bids stood at $450-460/t fob, market participants said.

Market participants are bracing for a flurry of import arrivals of flat products from India, which they said could depress the European market further. European imports of Indian HRC averaged at 82,980t/month in the first half of the year, according to industry association Eurofer, but in April 249,298t was imported from the country.

June imports of Indian HRC were just 16,033t- the lowest so far this year. Imports of Turkish HRC were also at the lowest level at 177,642t. As expected, overall June imports declined by over 200,000t on the year to 409,997t. This is the lowest monthly level since December 2014 – a testimony of the weakness in European demand amid high availability from local European mills.

The Argus northwest European and Italian HRC indexes held stable today at €466.50/t ex-works and €442/t ex-works, respectively.

Production at German mills in July totalled 3.2 million tonnes of crude steel, which was around -5% less than in July 2018, Kallanish hears from steel federation WV Stahl. July thus confirmed the overall trend, with production in the first seven months of 2019 down by -5% year-on-year, totalling 23.9mt.

Notably, production of EAF-route mills in July dipped only -1.3% to 872,000t, while oxygen-route mills lost -6.6% to 16.8mt. This makes sense considering that oxygen mills make coil for the ailing automotive industry and are therefore suffering most from declining sales. Against that, EAF-based rebar mills have good sales because Germany’s construction industry is still flourishing.

Another factor is that EAF-based production in June and April saw relatively strong y-o-y declines. The federation did not offer any explanation for that, but it may have to do with longer temporary standstills, so that some EAF mills still have some catching up to do.

German July crude steel production marked the seventh consecutive month of decline by dropping 5.3% on the year to 3.2 million mt, German steel federation WV Stahl said Wednesday.
January-July output was down 5.1% on year to 29.94 million mt.

July’s production was dragged down by a drop in blast furnace output. Steel produced via blast furnaces fell 6.6% on year to 2.34 million mt. Over January-July it shrank 4.8% to 16.8 million mt.

Last month, production from electric arc furnaces fell 1.3% to 872,000 mt and in January-July it fell 5.9% to 7.15 million mt.

In July, German pig iron production decreased 6.2% on year to 2.17 million mt, and January-July it was down 4.4% at 15.5 million mt.

Market sources said production as a whole was lower because of the downturn in global growth, affecting German exports, as well as lower domestic demand, with mills cutting output and extending summer shutdowns.

The German economic slowdown was also underlined by the latest Markit flash composite Purchasing Managers’ Index, which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy. It edged up to 51.4 from 50.9 the previous month, but still pointed to one of the weakest performances over the past six years.

According to the index, total inflows of new business fell for the third time in four months in August. Furthermore, with intakes of new work at service providers rising only modestly and at the weakest rate in seven months, and manufacturing order books falling the most since April, the overall rate of decline was the fastest since April 2013. External demand remained particularly weak, with new orders from abroad falling across both monitored sectors.

Concern about demand was one of several factors — heightened uncertainty, weakness in the car industry and geopolitical tensions — behind the fall in business confidence in August. For the first time in almost five years, the number of firms expecting output to fall over the next 12 months exceeded those predicting a rise, with sentiment the most negative overall since November 2012.

— Annalisa Villa

Nach einer umfassenden Analyse gab BENTELER bekannt, sich in Zukunft verstärkt auf sein Kerngeschäft, die Automobilsparte, zu konzentrieren. Diese macht rund 80 Prozent der Umsätze der Gruppe aus. In diesem Zusammenhang wird die Division BENTELER Distribution an die Van Leeuwen Pipe and Tube Group verkauft. BENTELER Distribution ist ein internationaler Handelspartner für hochwertige Stahlrohre und damit verbundene Services und beschäftigt rund 1.600 Mitarbeiterinnen und Mitarbeiter. 

Der Markt befindet sich in einem ständigen Wandel. Für Unternehmen wie BENTELER gilt es, in Zukunftsthemen zu investieren. Digitalisierung, neue Technologien und Änderungen der Produktionsmethoden in der Automobilindustrie eröffnen BENTELER neue Chancen. Dies erfordert eine aktive Ausrichtung auf das Kerngeschäft, die mit umfangreichen Investitionen verbunden ist. 

Ralf Göttel, CEO der BENTELER Gruppe, sagt: „Es ist Teil unserer Unternehmenskultur, unsere Leistung ständig zu steigern und unser Portfolio und unsere Geschäftsprozesse stetig zu verbessern. So können wir für unsere Kunden maßgeschneiderte Lösungen entwickeln und in einem wettbewerbsintensiven Umfeld erfolgreich sein. Die Van Leeuwen Pipe and Tube Group ist ein idealer Partner für diese Transaktion und bestens gerüstet, um das profitable Distributionsgeschäft von BENTELER zu übernehmen.“ 

In den kommenden Monaten werden beide Unternehmen daran arbeiten, einen reibungslosen Übergang vorzubereiten. Der Verkauf steht unter dem Vorbehalt der Zustimmung der Wettbewerbsbehörden und soll bis Ende 2019 abgeschlossen sein. 

Quelle und Foto: BENTELER International Aktiengesellschaft

Van Leeuwen Pipe and Tube Group has entered into an agreement to acquire Benteler Distribution, Kallanish learns from the Dutch company.

Benteler Distribution (BD) is a division of Benteler International AG, a German/Swiss-based maker of tubes and other automotive components. BD is a distribution company offering a full range of carbon and stainless steel tubes and customized services. The company has 1,600 employees in 59 locations, including storage facilities, across 24 countries, and in 2018 achieved a turnover of €750 million ($832m), according to Van Leeuwen.

The buyer company’s strategy is to expand and improve its market position in various market segments and countries through acquisitions and autonomous growth. The addition of BD will significantly expand Van Leeuwen’s presence, specifically in Germany, Switzerland, Scandinavia and Central Europe, it states. The scale of the combined companies will enable further development of solutions, with optimized and specialized stocks with proximity to the customers, among other things.

The family-owned Van Leeuwen Group, with its head office in Zwijndrecht, was founded in 1924 and is active in virtually all industrial sectors. In 2018 the company achieved a turnover of €630m, with 1,150 employees. It has more than forty branches throughout Europe, the Middle East, Asia, Australia, and North America.

The French construction sector’s performance steadied month-on-month in August, according to a l’Institut National de la Statistique et des Études Économiques (Insee) report monitored by Kallanish. This followed an improved May performance and an equally steady June and July.

In August far fewer companies than in the previous month indicated an increase in activity over the last three months. However, business managers are more optimistic about their activity prospects, the report suggests.

In August more respondents than in July reported an increase in their staff size over the last three months, and employment prospects have improved. The balance of opinion on anticipated recruitment has recovered this month, the report reveals.

As many business managers as in the previous month considered their order-books to be well-filled. Companies assess their order-books as providing eight months of work, slightly higher than in July and higher than the long-term average of 5.6 months. Overall, current construction industry order-books indicate a favourable short-term economic outlook, Kallanish notes.

Construction production capacity utilisation increased slightly in August. At the same time, 45% of companies reported production bottlenecks due to workforce shortages, a slight increase compared to July.

Less companies than in July will increase their prices over the next three months, the Insee survey found.

Steelmaker thyssenkrupp is engaging in talks with steel distributor, processor and trader Klöckner & Co. for a possible merger, according to the German newspaper Handelblatt.

“The project is very concrete and has good chances to be implemented,” the German newspaper reported, citing people familiar with the matter.

The proposal that thyssenkrupp’s Materials Services division and Klöckner & Co could be interested in one another came up in the course of the unsuccessful merger with Tata when in June the European Commission blocked the merger with veto.

After the veto, thyssenkrupp planned a radical reorganization, including the spin-off of the elevator division and the re-organization of the steel unit. In an August conference call the company said that 2,000 jobs in the steel division will be cut and that it will announce future plans for steel before the end of the calendar year.

— Annalisa Villa

China announced late last week that it would impose a new round of retaliatory tariffs on imports from the USA. The new taxes cover a variety of steel products but will likely only have a meaningful impact on a handful of players in steel, Kallanish notes.

The Chinese move was in response to US President Trump’s threat to increase tariffs on almost all remaining untaxed imports from China effective 1 September. Almost as soon as China announced its retaliation, Trump announced his own confirmed tariffs on another $550 million of Chinese goods. As the trade war escalates, steel has been more prominent in rhetoric than in the actual flow of trade.

China’s imports of steel from the USA totalled 34,322 tonnes in the first half of 2019, down -25.2% year-on-year. The latest tariffs include a number of steel products. 10% tariffs will be imposed on some high-value goods such as grain-oriented electrical steel under 600mm wide. The total volume of products imported under the HS codes with 10% tariffs in the first half was only 73t, however.

5% tariffs will also be imposed on a larger volume of products, including line pipe and couplings, some sections and wire rod, and some hot rolled coil. In the first half of 2019 China imported 3,152t of these goods from the USA, or 9.18% of total steel imports from the USA.

Duties are also being imposed on a number of mineral imports from the USA and on fabricated and manufactured products containing steel. Overall, however, the impact of the tariffs is more political than practical. China had to find some way to respond in kind to the latest escalation in the trade war.

Liberty Ostrava posted a 30% on-year increase in net profit in 2018 to CZK 4.1 billion ($176.7 million). The firm turned to an operating profit of CZK 726m versus a loss in 2017 of CZK 2.6 billion.

The improved performance was thanks to a 22% increase in liquid steel output to 2.2 million tonnes and higher margins on account of the strong steel market in the first half of 2018. Hot metal output reached 1.9mt last year and wet coke production was 1.1mt.

Ostrava’s financial result in 2018 was CZK 3.6 billion, influenced positively by the sale of its stake in TAMEH Holding to ArcelorMittal. However, it was CZK 1.7 billion lower than in 2017 when it was boosted by the sale of ArcelorMittal Tubular Products Ostrava and ArcelorMittal Tubular Products Karvina.

Last month Liberty Ostrava announced its plan to reduce production by -20% due to rising raw material prices combined with the unfavourable market situation caused by non-EU imports (see Kallanish passim). It also increased prices of all products by €20/t to offset raw materials and energy cost increases. Liberty Group completed its long-touted acquisition of the former ArcelorMittal Ostrava plant on 1 July.