Category: Latest Updates

Global steelmaking capacity could increase by around 4%-5% between 2019 and 2021 if planned projects are completed and there are no closures, amounting to additional crude steel capacity of 88 million-110 million mt/year, the Organization for Economic Co-operation and Development said in a report released Tuesday.

The report said 87.8 million mt/year of gross capacity additions are currently underway and could come on stream over 2019-2021. An additional 22.4 million mt/year of capacity additions are currently in the planning stages for possible startup over the same period.

According to the report, Asia could experience a considerable increase in steelmaking capacity over the next few years, with over 53.4 million mt/year of gross capacity additions currently underway and 10 million mt/year in the planning stage for 2019-21.

Several capacity investments are also taking place in the Middle East, where projects amounting to 25.1 million mt/year of capacity are currently underway and due for completion in the next three years.

Some investments are also underway in Africa and Europe, amounting to a total of 2.9 million mt/year and 4.1 million mt/year of capacity that could come on stream during 2019-2021, respectively.

The CIS, Latin America and NAFTA regions could also see an increase in capacity, with 1.8 million mt, 200,000 mt and 300,000 mt/year of gross additions currently underway in each region, respectively. No capacity additions are currently underway in Oceania.

Steelmaking capacity remained nearly unchanged in 2018, following falls in 2016 and 2017. The OECD revised its 2017 figures for global steelmaking capacity slightly downward to 2.24 billion mt/year. The net capacity change in 2018, taking into account new capacity additions and closures, brings current global steelmaking capacity to 2.23 billion mt/year.

OECD stressed that in the context of global excess capacity, it will be important for policymakers to continue to monitor investments and closures closely.

— Annalisa Villa

The Brazilian steel industry criticized the preliminary free trade agreement signed between the South American trading bloc Mercosur and the European Union Tuesday, saying the pact would not benefit the sector.

“The agreement does not bring gains to the Brazilian steel industry, which currently faces a 34% idle capacity capacity due to the country’s economic crisis and global oversupply,” national steel institute Aco Brasil said in a statement.

On Sunday, Brazil’s President Jair Bolsonaro said that the Mercosur agreement with the EU should come into force in about three years, after almost 20 years of negotiations.

Aco Brasil predicts that local industry will “lose its preference” within Mercosur and “run the risk of receiving” EU products, but with components manufactured outside the European bloc.

The industry currently has an average import tariff on steel products of 12%, which will be zeroed after the transition period of the agreement. This protection, according to the statement, is justified by the “numerous asymmetries” between the two blocs.

For competitive asymmetries, the institute refers to the high tax costs and deficit infrastructure in Brazil that makes logistics more expensive, among other factors are considered competitive asymmetries, the institute said.

The potential elimination of the import tariffs over steel goods is worrisome for the Brazilian industry because it has been for years trying to work with a premium of 8%-10% of domestic goods over foreign material, which is considered a “healthy” parity. 

“With the elimination of the import tariff, the local material will become much more expensive than any imported steel, not just the Chinese … and it is possible that we will witness a flood of imports as we have seen in 2010,” one market participant said.

In 2010, steel imports totaled around 3.8 million mt, nearly triple the 1.34 million mt imported the previous year. In 2018, steel imports totaled 2.4 million mt, according to custom data.

Another source said that pressure from imports with zero import tariff may be strongly detrimental to an industry that is already struggling to keep production amid rising costs, tepid domestic and external demand.

According to Platts calculations, Brazilian HRC sold domestically at Real 2,625/mt, ex-works, taxes excluded, is currently at a premium of 7% over Chinese HRC delivered price to Brazilian customers, after customs clearance – including import tariff of 12% – at $635.32/mt.

— Adriana Carvalho

Die Halbjahresbilanz auf dem deutschen Pkw-Markt fällt positiv aus. In den ersten sechs Monaten dieses Jahres wurden gut 1,8 Mio. Pkw neu zugelassen (+1 Prozent). Dies ist das höchste Marktvolumen in einem ersten Halbjahr in diesem Jahrzehnt. 32,9 Prozent der neu zugelassenen Fahrzeuge werden mit Diesel angetrieben. Dieser Anteil ist leicht höher als im Vorjahreszeitraum (32,1 Prozent). Im Juni wurden 325.200 Pkw neu zugelassen (-5 Prozent). Allerdings standen drei Arbeitstage weniger zur Verfügung als im Vorjahresmonat.

Ebenfalls positiv entwickelte sich der Auftragseingang aus dem Inland: Seit Januar gingen gut 4 Prozent mehr Aufträge inländischer Kunden ein. Im abgelaufenen Monat wurde das Vorjahresniveau jedoch um 11 Prozent unterschritten. Hierbei wirkte sich die geringere Zahl an Arbeitstagen aus. Die Auftragseingänge aus dem Ausland lagen im ersten Halbjahr um knapp 6 Prozent unter Vorjahresniveau. Im Juni hingegen gingen 3 Prozent mehr Aufträge von Kunden aus dem Ausland ein.

Da drei von vier in Deutschland gefertigten Pkw exportiert werden, wirkt sich im ersten Halbjahr der schwächere Auftragseingang aus dem Ausland auf Produktion und Export aus: Die deutschen Pkw-Hersteller haben bis Juni 2,5 Mio. Pkw gefertigt (-12 Prozent). Im Juni liefen, auch bedingt durch die geringere Anzahl an Arbeitstagen, 374.700 in Deutschland produzierte Neuwagen vom Band (-24 Prozent). Entsprechend entwickelte sich der Export: Seit Januar wurden knapp 1,9 Mio. neue Pkw ausgeführt (-15 Prozent), im Juni waren es 273.00 Pkw (-25 Prozent).

Quelle: Verband der Automobilindustrie e.V.

ArcelorMittal said Monday it has completed the sale — to Liberty House Group — of seven steelworks and five service centers as part of the divestment package it agreed with the European Commission to secure the green light for its purchase of Italy’s largest steel plant, Ilva Group, now renamed ArcelorMittal Italia.

Steel and metals group Liberty House said it is embarking on a 100-day review of the businesses acquired and plans to restore the AM assets to full working capacity.

Assets sold include ArcelorMittal Ostrava in the Czech Republic, ArcelorMittal Galati in Romania, ArcelorMittal Skopje in Macedonia, ArcelorMittal Piombino in Italy, ArcelorMittal Dudelange in Luxembourg, and several finishing lines at ArcelorMittal Liege in Belgium.

The service centers are based in France and Italy.

According to an ArcelorMittal statement, the total net consideration for the assets payable to ArcelorMittal is Eur740 million ($838 million), of which Eur610 million was received June 28.

ArcelorMittal is required to deposit Eur110 million in escrow, which Liberty will use for certain capital expenditure projects as part of the EC approval process.

In an interview with S&P Global Platts, Jay Hambro, chief investment officer of GFG Alliance, parent of the expanding Liberty House group, said that “substantial cash has been set aside for development” of the former AM assets, which it aims to be “getting up to capacity.” The assets are in good condition generally, although they have suffered by being run by a monitoring trustee, appointed by the European Commission, rather than a steelmaker, during the few months of the transition period, the CIO said.

Hambro did not immediately confirm the time frame for reaching full capacity on the assets or what their recent production levels have been. Achieving full capacity makes sense for their successful operation, he indicated. “If you can produce profitably you should be expanding production,” he added.

Liberty aims to boost sales from these sites, with combined rolling capacity of more than 10 million mt/year and 6.3 million mt/year crude steelmaking capacity, by around 50% over the next three years, supplying steel to various European industries, the company said in a statement. The plan is to extend product range and explore opportunities to produce higher-quality steels with a more flexible production profile, it said.

The plan to regain full capacity at the assets comes against a backdrop of European Steel Association Eurofer’s forecast of a 0.4% downturn in European steel demand this year and announcements of production cutbacks by major producer ArcelorMittal and by US Steel at European locations.

“The cost of raw materials (iron ore and coking coal), is what is punishing steelmakers at the moment, causing pain to steelmakers as the margin has been contracted…We hope there will be a correction in raw materials prices or in steel prices,” Hambro said.

Liberty will adopt a “team collaboration” in its development of the AM assets, Hambro said. “We have kept most of the management…there is no material plan at the moment for any hiring or firing,” he said.

The acquisition of the AM assets “fits into the global pillar of Liberty” with its existing steelmaking assets in Australia, the UK and the US, Hambro said. The acquisition makes Liberty Steel one of the top 10 steel producers globally, excluding China, with a total rolling capacity of more than 18 million mt/year in a wide range of finished products.

Earlier this year Liberty said it was targeting crude steel capacity of some 20 million mt/year within five years.

— Diana Kinch and Annalisa Villa

Spanish automotive component producer Gestamp has increased its presence in the European market by opening a new manufacturing plant in Nitra, Slovakia.The new facility manufactures several skin panels and structural parts, Kallanish learns from the company.

The unit includes two servo press tandem lines that will manufacture 70% of its components using aluminium. The Gestamp Nitra plant will mainly supply its production to Jaguar Land Rover group, which recently also started operations in Slovakia.

“The plant is part of Gestamp`s strategy to become a multi-material strategic supplier for its clients. Components manufactured in Nitra are intended to reduce the weight and enhance the safety of vehicles,” the Spanish firm says.

The investment amounts to €130 million ($147.9m), and Gestamp will create 200 jobs in the Nitra plant, the company says.

Gestamp also operates the Velky Meder plant in Dunajská Streda in Slovakia.

Inventories of flat steel rose in May as increasingly depressed market conditions resulted in German stockholders accumulating the largest steel position since October 2018, according to data from German stockholders’ association BDS published Thursday.

Flat steel stocks increased 2.2% from the previous month, and 7.6% on the year to 1.55 million mt at the end of May.

Sources had consistently referred to declining demand for flat steel in May, which was further exacerbated by list price increases from European mills across sheet products in Europe.

In contrast, long steel stocks declined 2.5% month on month and 2.1% on the year to 877,272 mt at the end of May.

Sales from stocks saw mild increases in both categories, rising 1.39% month on month to 582,144 mt in long steel, while flat steel sales performed marginally better, gaining 2.8% month on month to 549,844 mt.

— Len Griffin

US Steel Kosice (USSK) has ordered from Tenova LOI Thermprocess an annealing and coating line (ACL) for dynamo steel strip.

The new unit named Dynamo-Line no.4 will meet the highest requirements for the production of non-grain oriented (NGO) electrical steel, according to technology supplier Tenova.

In addition to thin sheet, ultra-fine sheet and galvanized strip, USSK has produced non-grain-oriented electrical steel sheet for more than 30 years. The steelmaker is realising extensive modernisation measures to improve product quality, including dismantling two outdated annealing and coating lines and replacing them with the new annealing and coating plant, Tenova observes.

Last January USSK said it plans to build a new 100,000 tonnes/year capacity NGO electrical steel line at a cost of $130 million (see Kallanish passim). The new line will enable production of silicon NGO electrical steel, which is in increasing demand in automotive and generator manufacturing. Commissioning is expected by end-2020.

Due to increasing raw materials costs and reduced European steel demand coupled with elevated imports, however, USSK said earlier this month it is planning to indefinitely idle blast furnace no.2 (see Kallanish passim).

USSK’s shipments declined -6% on-year in the first quarter to 1.06 million net tons, with capacity utilisation dropping 11 percentage points to 94%. Besides reduced shipments hampering earnings, USSK was affected by higher costs for coal and outside purchased coke in Q1, as well as higher planned outages.

In a brief note to the Indian stock exchange India’s Tata Steel Limited (TSL) reveals that it is to replace the ceo of its European business, Kallanish reports. The European operations will also have a new cfo at the end of 2019.

Hans Fischer has decided to retire from the position of ceo of Tata Steel Europe (TSE) with effect from 1 July 2019, the steelmaker says. Fischer will continue to serve on the TSE board as a non-executive director and adviser to T. V. Narendran, ceo of TSL, until 30 September 2019 “… to ensure smooth transition of leadership,” the statement reads.

Henrik Adam, currently the chief commercial officer of TSE, has been appointed to succeed Fischer as TSE ceo from 1 July 2019. Adam has also been inducted on the board of TSE, the steelmaker confirms.

TSE will also have a new cfo as from 31 December 2019. N K Misra will retire from the position at that stage. Mr. Sandip Biswas, group executive vice president (Finance) of TSL, has been appointed as the executive director of TSE with effect from 1 July 2019. He will be responsible for driving the company’s transformation programme and will work with the current incumbent to also ensure a smooth transition.

The first possible changes to the existing EU safeguard system for steel imports could be applied from early October, Eurofer’s director of international affairs Karl Tachelet says. He was speaking at the Kallanish Europe Steel Markets conference in Amsterdam on Thursday.

A review of the current system is underway, but a final report on the ongoing revision is expected to be presented by mid-August. Tachelet explains that once this report is presented the decision will be put to the votes by EU member states in September. This would lead to any potential changes taking effect from the beginning of October, when a new quarter for assigned quotas will be starting.

Eurofer is requesting that the authorities consider its six proposals to make sure that the safeguard system is operating correctly. In the association’s view, the permanent safeguard measures are still not effective in protecting European steelmakers from the deflection of imports into the region following last year’s imposition of US Section 232 tariffs.

Eurofer believes that the tariff-free quotas currently in place should also be calculated quarterly for specific countries. It is also requesting managed access to residual quotas once the country-specific allowances are exhausted and opposes the planned 5% relaxation of the quotas expected to come into effect on 1 July this year.

In addition, the association believes that exemptions from the quotas system for developing countries should be automatically cancelled once imports from these sources go beyond 3% of the total. The volumes from such countries should also not be used in the tariff-free quota calculation, as these have had a direct impact on the overall tariff-free volumes of allowed quotas by up to 2.5%.

Eurofer is also requesting that the European authorities apply country-specific quotas for HRC, as opposed to the current general quota approved in February this year.

The circumvention of EU safeguard quotas assigned to Chinese HDG material for automotive use by a number of importers remains an issue in Europe. This is according to a number of speakers gathered at the Kallanish Europe Steel Markets conference in Amsterdam this week.

According to ArcelorMittal, the issue is known to both the European Commission (EC) and European carmakers. The company expects the EC to make some changes during the current revision of the safeguard system, says Laurent Plasman, ArcelorMittal’s head of operational marketing for flat products in Europe.

Quotas for Chinese HDG for the automotive sector are assigned under group 4b, and therefore separated from general HDG imports. Plasman notes that this division is easily circumvented by importers, who are bringing Chinese HDG into Europe destined for other uses.

Dick Sands from Stemcor agrees with ArcelorMittal’s view and adds that the problem exist because of the way the division was designed for the safeguard measures. “There are many anomalies and some importers are playing with it [… the system],” he adds.

A trader from the conference floor confirms that his company had an important volume of Chinese HDG sitting at a European port. The consignment will be cleared through customs at the beginning of July, as soon as new quotas are available. He added this material is set to be used in construction despite falling under the category designed for automotive use.