Category: Latest Updates

Turkish steelmakers could easily establish a dumping case against European mills based on their recent flurry of hot-rolled coil (HRC) exports into the country, Colakoglu managing director Ugur Dalbeler told Argus on the sidelines of an industry event in New York yesterday.

Colakoglu is one of Turkey’s largest steelmakers, with crude steel capacity of 3mn t/yr. Turkey recently terminated its steel safeguard investigation as it did not find dumping, in line with World Trade Organisation rules. Other regions have opened cases without proving dumping.

European steel association Eurofer is pressuring the European Commission to amend its global HRC import quota to a country-by-country basis, citing the increase in Turkish volumes in recent months. Turkish HRC imports into the EU ballooned by 53pc year on year to 1.4mn t in the first four months of 2019.

But Dalbeler said Turkish volumes are only increasing because of the existing European dumping duties on other primary exporters, such as China, Iran, Russia and Ukraine.

One large Italian re-roller sharply reduced its slab imports over the first three months, given high prices, opting instead for imported coil and driving a significant portion of the increase in HRC imports into the EU, Dalbeler said.

He also said that it was unfair for EU mills to target Turkey after they have enjoyed it as their largest export market for the last decade.

“It’s two-way traffic. If you ask others to behave fairly and then you don’t, there’s bound to be a collision”, he said.

The EU has shipped around 56mn t into Turkey over the last decade, while Turkey has shipped 28mn t into the 28 EU members, according to Dalbeler. And over the next few months European shipments to Turkey are likely to increase given the weak EU market over recent months.

Although Turkey’s market has contracted significantly in the last year or so, the weak currency has kept imports at bay, allowing mills to maintain production. Turkish producers as a whole are at around 75pc of capacity.

The primary problems have been on rebar, where export destinations have been limited by trade actions and weak prices, and the domestic market is down by around 60pc.

Turkish mills are not selling into the US despite the reduction of the Section 232 tariff back to 25pc, as they would have to do so below domestic levels. And they cannot increase shipments into southeast Asia much more, while safeguards cap levels into Europe. As a result shipments are likely to increase and prices could come under more pressure.

At the same time scrap prices could slip based on soft domestic markets in export regions. However, blast furnace mills are likely to ramp up their scrap charge given the squeezed ratio to iron ore, which could bolster demand. While rebar shipments have been more difficult, Turkey has ramped up billet and wire rod exports.

HRC prices should be underpinned by firm raw material costs, according to Dalbeler. After a sustained bout of destocking buyers will return to the table, which will increase demand and support pricing. With blast furnace-based mill margins now in the red, it makes little sense for them to keep competing at such levels.

Automotive production in Portugal continues to increase rapidly this year, after a significant rise registered in 2018, according to the figures released by the local trade association Associação Automóvel de Portugal (ACAP).

During the first five months of this year the country saw the production of vehicles increase by over 22% year-on-year to to above 155,000 units. Between 2010 and 2017 the country produced on average 12,000 to 15,000 vehicles each month but since last year production has almost doubled at Portugal’s carmaking plants.

The figure is particularly interesting when considered within the European context, where most major car-producing countries such as Germany, Spain and France are seeing output shrink in the first half of 2019.

In Germany, for example, production during the first five months of the year was down -10% y-o-y, according to ACAP, Kallanish notes.

Germany’s thyssenkrupp Materials Services has integrated an artificial intelligence solution (AI), supported by Microsoft’s Azure cloud platform into its processes, Kallanish learns from the company.

In a first stage, ‘alfred’, named after Krupp founder figure in the 19th century Alfred Krupp, will help to optimise transport routes and thus save the transport of thousands of tons/year of material. Going forward, tk Materials Services says it will be able to make all processes more flexible, for example with regard to specific customer requirements for delivery time, pricing or material quality.

“alfred gives us better insight into our customers’ needs so that we can align our offerings accordingly and will also open up new business opportunities for us,” says tk Materials Services ceo Klaus Keysberg.

With the AI, the 14 million order items received annually by tk Materials Services can be processed and analysed much more efficiently, the company says. For the first time, the materials experts are also bringing all company data together on a single platform. Using self-learning algorithms based on Microsoft Azure Machine Learning, the new system analyses all relevant information, generates important findings and gives support, the company explains.

alfred will help in addressing issues such as the most intelligent transport route to supply customers in the best possible way, and the needs of individual locations, the company says. tk Materials Services operates a global logistics network with 271 warehouse sites and more than 150,000 products and services.

US Steel late Tuesday said that in response to market conditions it will idle two blast furnaces at sheet mills in the US as well as a BF in Europe until markets rebound.

In moves to “better align our global production with our order book” the B2 blast furnace at the Great Lakes Works in Michigan will remain idle after a planned maintenance outage that started last week, and a BF at the Gary Works in Indiana will be temporarily idled.

With the US moves, the steelmaker expects to decrease monthly BF production capacity by about 200,000-225,000 short tons beginning in July. “If both furnaces remain idled for the remainder of the year, we expect full-year Flat-Rolled shipments to third party customers to be approximately 11.0 million tons,” US Steel stated.

“We will resume blast furnace production at one or both idled blast furnaces when market conditions improve.”

US Steel had 10.5 million st of Flat-Rolled segment shipments last year.

At US Steel Europe (USSE) in Kosice, Slovak Republic, the No. 2 BF, which can produce about 125,000 st/month, will be idled. US Steel said USSE “continues to be negatively impacted by increasing levels of imports and continued market headwinds related to raw material costs and demand.”

If the European BF remains idle for the remainder of 2019, full-year USSE shipments to third party customers are expected to be roughly 3.6 million st. USSE shipped 4.46 million st last year.

“While market conditions have softened, we remain focused on executing the value creation strategy that is underway,” US Steel stated in a release.

US Steel also provided second quarter earnings guidance late Tuesday, expecting adjusted diluted earnings per share to be approximately 40 cents. For perspective, the steelmaker had adjusted earnings per diluted share of 47 cents in the first quarter, or $81 million.

— Tom Balcerek

Celsa Group, the largest Spanish steel group and the second largest European producer of steel long products, has started construction of a rolling mill in its French plant, the company stated Monday.

The investment will be around Eur 60 million and will give Celsa France the capacity to better penetrate the French and Benelux markets. The company estimates the rolling mill will start in about 20 months.

“This operation will position Celsa France as the largest steel complex in southern France and will be an element of great strategic value for the Group’s growth,” said Francesc Rubiralta, Celsa Group president.

Celsa France, located in the Bayonne region, is one of the major companies in the French Basque Country, representing 45% of Bayonne’s port traffic. The company has an electrical arc furnace specializing in the production of steel billets from scrap.

According to the S&P Global Platts archive, the rolling mill installation was a project started in 2007 but not realized due to the global economic crisis. According to the archive, the rolling mill could produce 500,000 mt/year of finished products. Celsa, when asked by Platts, did not comment on the line’s capacity and which long products would be produced.

Celsa France employs about 200 people directly and 1,200 indirectly. The steel group estimates that, as a result of the project, around 140 new jobs will be generated directly and about 420 indirectly. The project is part of the company’s strategic Plan 2016-2022, the main aim of which is the consolidation of its longs market leadership.

Steel output for the EU’s steel-using sectors is forecast to grow by 1.5% in 2019 and by 1.7% in 2020, according to a Eurofer economic report published last Thursday.

Eurofer believes EU steel market fundamentals will remain moderately positive, although the rise of protectionism could have a negative impact on confidence, investment and exports.

Production in the EU steel-using sectors lost momentum in Q3 2018, particularly in the automotive sector. This trend likely continued in the final quarter of 2018 and will persist into 2019 and 2020, the association noted.

— Annalisa Villa

thyssenkrupp Steel Europe AG has a new chairman of its executive board of, the steelmaker’s parent company thyssenkrupp AG announced late on Friday.

The new incumbent is Premal Desai who takes up the position as from 16 June. Desai has been chief financial officer of tk Steel since 2015 and was previously head of strategy at thyssenkrupp AG.

Andreas Goss is resigning from his position as ceo by mutual agreement in the wake of the cancellation of the joint venture tk Steel/Tata (see Kallanish 29 May). He had held the position since June 2014.

Heribert Fischer will also leave tk Steel’s board on June 15. Bernhard Osburg, currently responsible for sales management in the Steel unit, will join the executive board of thyssenkrupp Steel Europe AG as chief commercial officer.

The steel executive board will thus consist of four members. Aside from Desai and Osburg, the board will continue to include Arnd Köfler, responsible for production, and Sabine Maassen, responsible for personnel and social policy.

The European steel market can expect negative-to-muted growth for this and coming years with some brighter spots in demand from the construction, renewable energy and agricultural sectors, according to steelmakers speaking at this week’s S&P Global Platts’ Steel Markets Europe conference in Barcelona.

Construction is today the market’s stronghold, with growth of 2.2% foreseen in calendar year 2019, said Anil Jhanji, director, markets, customer and shared services, Tata Steel Europe. The engineering sector will grow 0.9%, he said.

Automotive vehicle production, another major steel-consuming area, is seen declining 2.4% this year, following the introduction of the WLTP vehicle emissions testing standards.

“Automotive is going through a shake-up,” Jhanji said, pointing out that the advent of new energy vehicles is also changing the sector’s metals usage.

Jhanji noted that growth of 30-40% in steel imports in the EU over the last two years, together with overall dull market growth prospects, has squeezed mills’ EBITDA margins to far below the 15% considered optimum for a healthy spend on research and development. “The ability to innovate is at risk…none of the EU mills is running at that level today.”

Jerome Guth, product sales steering, ArcelorMittal, said that the solar and wind energy sectors should provide steel growth areas for the coming years although steel intensity may vary according to specific projects.

With a typical usage of between 2 mt and 50 mt per megawatt of capacity installed, these sectors can look forward to double-digit growth rates over the next five years, Guth said.

A “mega-trend” in steel-using construction is growth in the use of HVAC (heating, ventilation and air conditioning) systems, where compound annual growth rates of 5.6% are seen in the 2015-2022 period, he said.

The use of steel in grain and silo storage in the agricultural sector is also “growing very fast,” Guth said.

The ArcelorMittal executive noted that steel intensity has reduced significantly in the packaging sector as “customers are moving quickly to become more committed to CO2 emissions reduction.”

— Diana Kinch

Debrunner-Acifer, the Swiss distribution group owned by Klöckner & Co, has finished the construction of a new high-bay warehouse at its site in Birsfelden.

The warehouse with a length of 40 metres, a height of 21m and a width of 20m consists of 3,000 cassettes for products of up to a length of 6.5m, Kallanish learns from the Swiss company. At a maximum tonnage of 3t per cassette, the warehouse can store up to 9,000t of products.

The handling is linked to an enterprise resource planning system (ERP). It has a fast connection to the site’s processing facilities, so that delivery times to customers are shortened, the company claims. The processing facilities encompass five sawing stations for mainly bar products with magnet cranes, each of which allows for autonomous handling.

Debrunner Acifer offers a range of some 160,000 products for customers at 26 sites mainly in Switzerland. 22 of the sites also carry a wide range for construction and sanitary installation, with tools, machinery, fastening technology, water supply products, and others.

The EU steel imports safeguard system currently under review is disrupting the sector as it undermines supply continuity, according to speakers and delegates at S&P Global Platts’ Steel Markets Europe conference in Barcelona.

Supply continuity is more important to most consumers than price considerations, they said Wednesday.

Steel supplies in some product categories subject to quota, including galvanized steel, wire rod and rebar, are piling up at ports in Europe, waiting for the start of the next quota period on July 1, according to traders at the event.

Trade distortions typically arise from protectionist measures and this has been seen both in the case of the US Section 232 import tariffs, which initially caused “ridiculous price inflation even exceeding the 25% import duty,” and in markets with safeguards such as the EU, said Dick Sands, director of trader Stemcor, in a presentation.

“Hundreds of thousands of tons of category 4B automotive [galvanized steel] is being held up at ports in the EU – Antwerp, Spain and Portugal – awaiting July 1 … this affects customers’ production lines,” one prominent trader linked to a global steelmaker said on the sidelines of the event.

“This quota is for 500,000 mt for one year, but may fill up in a week,” the trader said, noting that the pressure of a sudden arrival of substantial imported volumes could risk causing a “breakdown” in the customs system, and is incurring storage costs for producers of the steel being stockpiled.

Another conference participant heard some 200,000 mt of galvanized steel for the automotive industry was being stored at EU ports. Most of the galvanized steel for automotive applications comes from China and South Korea.

The UK-based International Steel Trade Association recently proposed that category 4A (non-automotive) and 4B (automotive) galvanized material quotas should be merged during the European Commission’s current review of the safeguards system.

However, traders canvassed at the event said they thought this was unlikely to occur as demand for automotive galvanized steel would fill up the quota. EC figures show there was still a 228,000 mt balance to fill in the non-automotive category as of May 31.

According to Sands, this is due to Chinese 4A material already being subject to anti-dumping duties on entry to the EU. “This quota is not likely to fill up from other origins,” he said.

The EU car industry has not been significantly affected by the loss of material currently held at the ports due to low regional vehicle demand, which means the vehicles being produced are being exported to markets including China, one trader said.

Safeguard market distortions are creating a “feast-then-famine” scenario for steel buyers, who are faced with quarterly or annual quotas that encourage early purchasing for products including wire rod, rebar and galvanized steel, while quotas for heavy plate and cold-rolled coil will not be used up, said Sands.

The safeguards have not so far had any discernible impact on EU domestic market prices, according to Sands, traders and consumers present.

Still, overall EU imports are likely to fall this year by around 1.89 million mt from 2018’s roughly 19 million mt, albeit partly due to a rush to send imports to the bloc in late 2018 before the safeguard quota system was introduced, according to Sands.

“These measures will only support prices if EU [steel] producers show discipline,” said Sands, noting that prices may be upheld further down the line when mill production cuts announced by ArcelorMittal take effect.

— Diana Kinch

Arvedi, the second largest Italian flats producer, has forecast a challenging 2019 on higher energy costs and imports, according to President Giovanni Arvedi. He stressed that the EU safeguards must be reviewed.

“The large number of imports are weighing on the coils sector. Despite the safeguard measures imports increased in Italy by 54% in the first four months of the year compared to the same period in 2018, dragging down prices. The increase in energy costs is also weighing on 2019 due to the rise in the prices of CO2 emission allowances,” Arvedi said.

“In this sense, we hope it will be a revision of the safeguards with the adoption of quotas by country also for hot coils, in order to avoid ‘predatory’ behavior by some non-European steel mills, and the adoption in Europe of a carbon border adjustment on imports of steel products to allow our companies to compete on a fair playing field.”

Arvedi said his company “is in any case fully equipped to face the new competitive challenges…as demonstrated by the recent and important partnership agreement signed with a major American player [US Steel], which invested in our technology (Arvedi ISP/ESP) and in our know-how.”

Arvedi is family-owned company and is not listed, so it just disclosed its 2018 financial results. The company closed last year with an increase of its production by 5% over 2017 to 4.5 million mt. In 2018, revenues went up by 9.5% to Eur 3.13 billion while debt declined by Eur72.7 million.

The company last year invested around Eur110 million — Eur60 million just for the steel plant — completing its Eur1.2 billion investment plan launched in 2007.

— Annalisa Villa