Category: Latest Updates

Two start-up companies that had stepped up the development of online portals to match steel sellers with steel buyers have silently left the market.

Mapudo and steel.shop both emerged 4-5 years ago – the latter then still as #netzwerkstahl. Last year, things still looked bright as each attracted bigger industry partners. Mapudo partnered up with Saarland mills Dillinger Hütte & Saarstahl, and steel.shop partnered up with E/D/E, one of Germany’s large steel purchasing cooperatives.

Industry observers tell Kallanish both companies exited the market virtually at the same time. “steel.shop will be closing its business activities with effective date May 31st,” the firm’s last message reads. On its homepage Mapudo talks of “…five exciting years with numerous digital transactions,” after which it discontinued operations as of 12 June, thanking its customers and partners for a “…great time.”

#netzwerkstahl, was launched in summer 2015, preceded by a big-style roadshow through dozens of cities all over Germany. The company in the background was Switzerland’s Montanstahl, itself actually a niche vendor for stainless sections. Two years later, the idea of an Amazon-like webshop had not made progress the way the makers had planned. ‘#netzwerkstahl’ was abandoned, or rather renamed to steel.shop, now an IT service for distributors to develop their own e-shops.

The only associated companies to respond to inquiry were the Saarland mills, whose subsidiary SHS Ventures gives funds to young companies. They confirmed that Saarstahl had handled its 2A material via Mapudo since last year. “These were smaller lots compared with the total output, so the repercussions for us are very minor,” the statement says.

India’s National Company Law Appellate Tribunal has approved ArcelorMittal’s resolution plan to take over debt-ridden Essar Steel on July 4.

The decision came after the NCLAT dismissed an appeal by Essar Steel’s founders, Shashi Ruia and Ravi Ruia, saying India’s supreme court had cleared the takeover bid and therefore it could not consider the appeal.

On April 12, 2019, the supreme court stopped a disbursement of funds to Essar Steel’s creditors, pending the outcome of the NCLAT hearing, which occurred after the National Company Law Tribunal had approved ArcelorMittal’s plan on March 8, 2019. 

The NCLT was created under the Companies Act of 2013 to handle corporate civil disputes arising under the act, whereas the NCLAT hears appeals against decisions of the NCLT.

ArcelorMittal’s plan includes an upfront payment of Rupees 420 billion ($5.7 billion) to resolve Essar Steel’s debt and a further Rupees 80 billion to improve the steelmaker’s operations and raise production.

Upon the NCLAT’s decision, ArcelorMittal said it needs “to review the full written order to understand any implications on completion of the transaction.” The steelmaker had said it expected the transaction to be finalized over Q3 2019.

Similarly, market sources in India told S&P Global Platts they expected ArcelorMittal to take control of Essar Steel as early as August 2019.

The plan includes a capital expenditure of Rupees 186.97 billion to be implemented in two stages over six years.

The first stage will raise Essar Steel’s production of finished steel products to 6.5 million mt/year, while the second stage will boost that output to 8.5 million mt/year by 2024.

— Clement Choo and Ashima Tyagi

The president of Germany’s steel stockholders’ federation Bundesverband Deutscher Stahlhandel (BDS) Oliver Ellermann believes that the next decade will not be disappointing for the country’s steel distributors.

In his essay [sic] entitled ‘Are there Golden Twenties coming?’ he refers to a study by research institute Prognos Deutschland, which predicts an annual growth in gross domestic product by on average 1.5%.

One of the roles of distribution in the steel value chain he says is the immediacy of availability of supply and a “… price cleaning function,” which smooths oscillations in pricing. “Price hikes by the mills are handed on by distributors with a delay, while price reductions are handed on immediately and shared with the users.” This is an observation that results from 33 years in the trade, he explains to Kallanish.

E-commerce webshops are “… nice to have”, he writes, but they will not replace the current structure of people dealing with one another in the specific B2B sector of steel. Regarding the current dispute on international trade flows, he defends distributors against criticism from some quarters that the sector acts in an opportunistic way. “We do care where steel comes from,” and “… only steel production that is close-by will give distributors competitive advantages,” he says, citing transport advantages, know-how and easy communication.

Ellermann assumes that Donald Trump will be re-elected next year in November, which will also mean a continuation of trade measures, he says. “We will remain very busy tracking contingencies and quotas,” he says

Chinese steelmakers have been increasingly removed from urban areas in recent years for environmental reasons. This has combined with a move towards installing more coastal steel capacity which is cutting costs and boosting competitiveness, Kallanish notes.

The Chinese steel industry is undergoing a steady shift from production sites near natural resources to locations near the coast. China has formed five major coastal steel bases, which contain over 100 million tonnes/year of commissioned, under-construction and planned steel capacity.

In Laioning province, Angang’s Bayuquan facility was commissioned in September 2008 with 6.2m t/y of iron and steel capacity, whilst Minmentals Yingkou has another 6m t/y. Hebei’s Caofeidian will contain around one quarter of Tangshan’s total steelmaking capacity, at over 20m t/y, including the existing Shougang Jingtang plant, Tangshan Stainless and Tangyin Steel. Shandong has coastal steelmaking capacity of 40m t/y. The Shandong government expects coastal steel capacity to reach 70% of the whole provincial capability, with 40m t/y capacity in the city of Rizhao alone. Rizhao contains both Rizhao Steel and the new Shandong Iron and Steel plant.

In Guangxi province, Fangchenggang expects to see iron and steel output from the coastal base of around 330,000 tonnes and 1.97 million tonnes respectively in 2019. The Liuzhou Iron & Steel plant there has a planned crude steel capacity of 14.7m t/y however and will be ramping up over the coming years. Guangxi Shenglong is also building a 3.4m t/y steelworks there. Baowu Group’s Zhanjiang plant meanwhile is adding a new phase and expects to reach 12.53m t/y of crude steel capacity.

As China moves more capacity to the coast, its mills will benefit from lower costs to move both raw amterials and steel. This will make them more competitive in export markets as well as domestically, over time. Costs are also being reduced by the replacement of small funaces with larger ones and the installation of more modern equipment.

German re-roller Mendritzki, is seeking more business outside the country. The company has just opened a representative office in Brazil, a spokeswoman confirms to Kallanish. It is planning a corresponding opening in Russia, possibly this year, but is still analysing the market, she says.

The company is headquartered in Plettenberg in the Siegerland. Over the years it has made acquisitions in the automotive supply, agricultural technology, and tool engineering sector. Its main move towards doing more business overseas came last year, when it acquired French group Paturle, which has production sites not only in France, but also in China.

According to its managing director Roland Newe, this has brought a realignment of the company’s direction. It “… now seeks growth in any other area than automotive and Germany,” he was quoted by local media as having said at a meeting at the Plettenberg city council.

In this context, he gave details on the synergy between Mendritzki and Paturle.

With its strip steel products, which are extremely thin at 0.05-1mm, Paturle tends to service niche markets, which has even included the fashion industry in the past. Mendritzki, on the other hand, will continue to focus on strip steel between 1-10mm, precision parts and cutting tools. These products are supplied, for example, to well-known companies such as Daimler, automotive supplier Schaeffler or motor saw manufacturer Stihl.

Italian steel trade association Assofermet notes that there have been significant falls in Italian domestic scrap prices in June. The international market meanwhile saw initial stability followed by a price decline. In the international arena however, June ended with some price rises that have been sustained by very few transactions,Kallanish learns from the association’s monthly market report.

The domestic contraction in Italian scrap values was in line with lower quantities purchased by mills last month. This shows a weak demand for finished products in line with the general downturn of the Italian economic situation, the association says.

Last month, prices for pig iron were also in line with weak scrap values in Italy. Major CIS producers are offering less quantities to both Italy and the wider Mediterranean market and prefer to sell much of their production to the US. The latter region is a more responsive and reliable market in terms of both demand and payments, Assofermet notes.

The lack of offers for HBI in Italy persisted in June while prices have remained unchanged. Assofermet has also registered continued erosion in ferroalloy prices and margins.

Gemeinsam mit Bundesverkehrsminister Andreas Scheuer und Vertretern der Industrie hat der Bundesverband der Deutschen Binnenschifffahrt e.V. (BDB) heute in Köln an Bord der „MS Mainz“ den vom BMVI aufgelegten Aktionsplan „Niedrigwasser Rhein“ unterzeichnet. Das 8-Punkte-Papier ist eine Reaktion auf das extreme Niedrigwasserjahr 2018, das insbesondere im Rheineinzugsgebiet die herausragende Bedeutung des Wasserstraßentransports für die Industriestandorte deutlich gemacht und zugleich einer breiten Öffentlichkeit ins Bewusstsein gerufen hat. Um den klimawandelbedingten Herausforderungen für den Güterverkehr auf dem Rhein und seinen Nebenflüssen begegnen zu können, werden in dem Plan in den Handlungsfeldern „Informationsbereitstellung“, „Transport und Logistik“, „Infrastruktur“ sowie „langfristige Lösungsansätze“ insgesamt acht kurz-, mittel- und langfristig wirkende Maßnahmen aufgestellt.

„Das Jahr 2018 mit seinem extremen Niedrigwasser und Pegeltiefständen an verschiedenen Flüssen (wir berichteten) hat den Kunden und auch den Endverbrauchern deutlich vor Augen geführt, wie wichtig der Güterverkehr per Binnenschiff für die Versorgung der Industriestandorte, gerade auch im Rheingebiet, ist. Kein anderer Verkehrsträger war in der Lage, Ladungsmengen der Binnenschifffahrt zu übernehmen, so dass sich Güter verteuert haben und teils nicht in gewohntem Umfang bereitgestellt werden konnten. Wir begrüßen daher, dass das Bundesverkehrsministerium in der Erwartung, dass derartige Niedrigwassersituation künftig wohl häufiger zu befürchten sind, einen Aktionsplan erarbeitet hat, der die Leistungsfähigkeit der Binnenschifffahrt langfristig auch bei niedrigen Wasserständen sichern soll“, betonte BDB-Präsident Martin Staats (MSG).

Besonders wichtig sei in diesem Zusammenhang die in dem Papier verankerte Ankündigung des Bundes, alle sinnvollen Maßnahmen zur Beschleunigung der im Bundesverkehrswegeplan 2030 verankerten Abladeoptimierungen an Mittel- und Niederrhein, zu prüfen, beispielsweise durch den Erlass von Maßnahmengesetzen. Wichtig sei außerdem, auch darüber hinausgehende wasserbauliche Lösungen zur Sicherstellung kalkulierter Transportbedingungen am Rhein in den Fokus zu nehmen: „Da eine Häufung von signifikanten Niedrigwasserereignissen künftig nicht ausgeschlossen werden kann, muss auch ganz ernsthaft über den Bau von Staustufen und Speicherlösungen am Rhein diskutiert werden. Es ist daher richtig, dass im Aktionsplan eine profunde Untersuchung derartiger Maßnahmen verankert ist“, so der BDB-Präsident.

Für eine Verbesserung der Schiffsnavigation bei Niedrigwasser sieht das Papier u.a. optimierte Wasserstandsprognosen und eine Bereitstellung von aktuellen Tiefeninformationen in der elektronischen Binnenschifffahrtskarte (Inland ECDIS) vor. Dadurch werden langfristigere Planungsmöglichkeiten für Gütertransporte und eine verbesserte Ausnutzung der Fahrrinnentiefen für die Schiffsführung ermöglicht.

„Das Gewerbe benötigt außerdem ein mit einer attraktiven Förderkulisse unterlegtes Flottenneubauprogramm“, so Staats. Im 8-Punkte-Plan wird im Handlungsfeld „Transport und Logistik“ immerhin eine mögliche fiskalische und ordnungspolitische Unterstützung bei der Entwicklung und Verfügbarkeit von angepassten, flachgängigen Schiffstypen genannt.

Quelle: Bundesverband der Deutschen Binnenschifffahrt e.V. (BDB)

German steel industry interest group Wirtschaftsvereinigung (WV) Stahl has expressed concern over the increase in the quotas for steel imports into the European Union, which took effect on 1 July.

“Another relaxation of the safeguard measures is very bad news for steelmakers in Germany and the EU,” says WV Stahl’s president, Hans Jürgen Fuhrmann. “The system of protection clauses, which is already insufficient, is weakened even further.” Kerkhoff says that the “… defective design” of the measures should be corrected by an auditing procedure announced by the European Commission in mid-May. “From a [… German] steel industry viewpoint, the measures in their present form are not adequate,” WV Stahl’s statement reads.

But more precisely, the statement ought to read ‘steelmaking’ industry. German coil processors, only a few steps on from the liquid steel phase, have already come out strongly against a review. The federations of cold rollers (FVK) and sheet formers (IBU) have asked the EU to expand the quotas for steel categories 1 (hot-rolled coil) and 4B (hot-dip galvanized coil). And If expansion is possible, then the federations are asking the EU to at least keep quotas at the current level.

Processors do not deny that steel imports have risen this year, consultant Andreas Schneider explains to Kallanish on behalf of the two federations. However, they reject the contention that this is due to a “… massive diversion of trade flows,” following the duties imposed by the USA, as is argued by WV Stahl. Against that, the processors point out that US imports of 4B coil products have risen as well as having done so in the EU.

According to Schneider, reasons for shifts in imports are as widespread as product lacking availability in the EU, price advantage, purchasing strategy, or quality improvement in foreign products. He finds that the import share for steel products at 10-25% is reasonable, given that cars also have an import share of 20%.

Marcegaglia group chairman Antonio Marcegaglia has sent a letter to the European Parliament and the European Commission to explain his opposition to the rumoured possibility of including Indonesian stainless steel in EU safeguard measures. This has been addressed directly to parliament president Antonio Tajani and EC president Jean-Claude Juncker,Kallanish notes.

In the letter, the executive explains that Italian-headquartered Marcegaglia sources 40% of its stainless HRC from Europe while the rest comes from third country sources, including Indonesia. He adds that demand for stainless steel coils in Europe projected to grow by 3-5% in the coming year. Limiting the possibility to import considerable volumes on a timely basis therefore would put the viability of the company’s business at risk, without benefitting EU producers.

According to Marcegaglia, after the restructuring project put in place by Outokumpu in Germany (following the merger with Inoxum), European producers do not have significant volumes of HRC to sell to re-rollers like Marcegaglia. The executive explains that his company buys only from Acciai Speciali Terni, the sole European stainless mill with spare capacity of HRC to sell. Other hot rolled producers use their production to feed their own finishing lines, he says.

“In that context, adequate volumes of HRC imports are vital in the processing industry and to Marcegaglia in particular. Marcegaglia in fact represents almost 90% of the total imports of black stainless coils into the EU and 60% of stainless HRC,” Marcegaglia claims. “In that regard, I draw your attention to the fact that Indonesia is selling their hot-rolled coils exclusively in the form of black coils and exclusively to Marcegaglia. Moreover, the increase in Indonesian exports in the first five months of 2019 (+33,000t) is more than offset by the decrease of imports from China (-16,000t) and USA (-24,000t). Furthermore, total imports of hot rolled stainless steel coils decreased by -10% compared with 2018.”

During recent months, steelmakers’ association Eurofer and a number of market sources within the production side, have asked the European Commission to include Indonesia in the safeguard system. This is specifically because of the surge of stainless steel imports from the Asean country. A similar view was shared by Antonio Tajani in a recent visit to Acciai Speciali Terni last month (see Kallanish passim).

Liberty Steel has bid for British Steel in its entirety, including the steel production and sections mills.

The only part of the business Liberty has not bid for is TSP Projects, which two French companies are interested in acquiring.

JSW and a Chinese mill have also submitted bids for the whole company, according to market chatter.

Liberty sources slab for its Scottish plate mills from British Steel, and also occasionally for its coil mill in Newport, south Wales.

Liberty has been a big proponent of electric arc furnace (EAF) production in the UK, and has planned to install at least one EAF at its site in Newport.

Community Union, which represents steelworkers, favours a sale of the whole British Steel business, rather than piecemeal. But there is an expectation that the successful bidder, should it acquire the whole business, will make changes going forward.

The main change could be a move from carbon-intensive blast furnace-based production to an EAF. The Scunthorpe site has four blast furnaces, known locally as the “Four Queens”, but typically only operates two at a time.

Given the rising cost of carbon, and the comparative expense of imported iron ore and coking coal — at least at current spot prices — using the UK’s reservoir of domestic scrap makes sense.

Participants question the profitability of the sections mills, particularly Lackenby, which is some distance from the Scunthorpe semi-finished production site, and therefore logistically inefficient.