Category: Latest Updates

Russian iron ore miner and steel and metallics producer Metalloinvest has signed a five-year take-or-pay agreement with shipping operator Ultramar. This will support expansion of its exports of iron ore pellet and hot-briquetted iron (HBI) to northern Europe, the company says.

Operations are due to start in the second half of 2020, after Ultramar completes construction of a new dry terminal in Ust-Luga Port in Saint-Petersburg. This will be complete with railways, warehousing and berth facility to accommodate Panamax vessels. Construction of the terminal will be financed by Ultramar’s own and borrowed funds, it says.

Metalloinvest plans to ship up to 2.5 million tonnes/year of pellet and HBI from the port to northern Europe, namely Germany, UK and the Netherlands. The company is already supplying the region, but plans to expand output and shipments of higher-added-value (HVA) metallic products. This is in line with steelmakers’ growing requirements of higher-quality metallised feedstock amid tightening environmental rules for the steel industry, it tells Kallanish.

The company is continuously investing into moving its iron-containing products further downstream. HVA metallics’ share in iron ore sales increased by 8 percentage points on-quarter and 5pp. on-year in the first quarter to 74%. Iron ore pellet shipments rose 8% and HBI/DRI shipments 10% on-year. Europe’s share in exports grew 8pp. on-year to 26% in Q1, and Asia grew by 7pp. to 11%.

Polish hot rolled flat product imports fell -7% on-year in February to 237,745 tonnes, according to data from Poland’s Central Statistical Office (GUS) monitored by Kallanish. Their average value was PLN 2,354/tonne ($625) versus PLN 2,280/t in February 2018.

The most-imported product was unpickled HR wide strip of 3-4.75mm thick whose intake in fact grew 1% to 46,285t. Russia and Slovakia supplied 16,622t and 12,768t respectively. This was a -27% drop in Russia’s case but a 9% rise in Slovakia’s case. Ukraine also supplied over 5,000t compared to 666t last year.

Imports of unpickled HR wide strip under 3mm thick, however, fell -6% in February to 44,608t. Russia supplied 24,204t, down -1% on-year. Slovakia-origin supply fell -5% to 7,024t. Ukraine supplied over 4,000t versus 653t a year earlier.

Polish HR plate above 10mm thick imports fell -10% to 41,062t. Of the three HS codes in this category, 72085120 imports comprised 32,355t, of which Czech Republic, Denmark and Ukraine were the top three suppliers in that order.

In January-February Polish HR flats imports thus fell -6% on-year to 473,246t.

Polish coated flats imports, meanwhile, surged 28% in February to 191,427t. Their average value was PLN 3,401/t versus PLN 3,345/t in February 2018.

Hot-dipped galvanized coil imports comprised 104,028t, up 36% on-year. Germany supplied 35,096t, flat on-year, and Russia 14,557t, up 257%. Italy provided 10,423t, more than double on-year.

The next most-imported product was paint/plastic coated sheet whose intake surged 25% to 56,618t. Within this, HS code 72107080 comprised 54,813t, of which Germany and Italy supplied 10,566t and 8,096t respectively, down -24% and up 22%. There was increased intake from Belgium, India and South Korea.

Two-month Polish coated flats imports thus rose 19% on-year to 360,555t.

Der «Tag des Handels» am Freitag, 21. Juni 2019 im Kursaal Bern ist die Branchenplattform des Schweizer Handels. Der Dachverband Handel Schweiz mit seinen 33 Branchenverbänden lädt Sie zum Netzwerken ein. Nutzen Sie diese Gelegenheit zum Austausch beim Auftakt Lunch und dem abschliessenden Apéro.

Wertvolle Informationen und den einen oder anderen AHA Effekt werden Sie im Referat von Prof. Hans-Werner Sinn – Deutschlands bekanntester Ökonom und einer der prägenden Köpfe bei wirtschafts- und sozialpolitischen Debatten – und der anschliessenden Podiumsdiskussion mitnehmen können.

Wir freuen uns sehr über die Zusagen von Elisabeth Schneider-Schneiter, Nationalrätin CVP und Präsidentin der Aussenpolitischen Komission des Nationalrates und der Mitglieder der APK des Nationalrates – Andreas Aebi, Nationalrat SVP und Christa Markwalder, Nationalrätin FDP.

Melden Sie sich jetzt mit dem Anmeldetalon oder über die Webseite von Handel Schweiz an.

Wir würden uns freuen, Sie persönlich in Bern begrüssen zu dürfen.

Weiterlesen im Programm

Ista, the UK-based steel traders association, said EU import safeguards are counterproductive as they are currently designed and has proposed changes.

The association is seeking to have no country-specific quota for any product. “We concur with the view expressed by Stemcor in their submission,” Ista said. “Trade flows are in a constant state of flux. The tides of international trade ebb and flow depending on a whole variety of complex political, social and economic reasons. Imposing country specific quotas ignores this principle and for that reason we feel the simplest, fairest, solution would be to abolish country specific quotas.”

However, Ista said if this is still not supported by the majority, unutilized country-specific quotas should be available to others in the same way residual-origin quotas are treated. 

The association said it warned of the risk of implementing a quota system whereby an importer never knows whether it will be paying a duty or not until the shipment is cleared. In its Notice of Initiation of a Review of Steel Safeguard Measures published at the end of May the European Commission is considering why some countries have exhausted their country-specific quotas so rapidly in some product groups, and why corresponding residual-origin quotas are also being rapidly exhausted.

According to Ista, the answer is simple: “Importers and consumers of these products from these countries have been forced to rush into purchasing as soon as possible in order to secure their normal supply without risk of incurring a penal 25% duty.”

Ista highlighted the fact that members of its association also reported shortages of rebar in the UK and Ireland. 

Ista underlined also the view that it would be beneficial to merge 4A and 4B coils (4A mainly non automotive and 4b automotive grades) into one category and increase the overall size of the quota to a minimum of 2018 levels. 

— Annalisa Villa

European steelmakers are lobbying hard for expedited and substantive changes to the definitive steel safeguard, including for product category one, hot-rolled coil (HRC).

Mills want the HRC quota, which is currently global, to be country-by-country as with other products. They cite surging imports in the first quarter of this year, despite the safeguard being implemented on 2 February. A total of 2.31mn t of wide HRC was imported to the EU 28 in January-March 2019, up by 15pc from 2mn t in the same period last year.

Most notable has been the growth in Turkish import volumes, which soared to 1.07mn t from 712,000t in the first quarter of 2018. Domestic mills argue that the safeguard has failed to adequately counter the diversion from the US, especially since the Section 232 steel and aluminum tariffs were doubled to 50pc in August last year.

The tariffs have now been relaxed to 25pc and Turkish offers to the EU have not been competitive for the past three months or so. In fact, EU-28 exports to Turkey rose to 178,000t in March, their highest level since December 2017, as domestic sellers looked to offload tonnes in a weakening market. Turkey is also the largest market for EU HRC mills, despite volumes falling dramatically last year as the country grappled with a 50pc contraction in domestic demand.

Russian HRC shipments, primarily from Severstal, which has the lowest dumping duty of any of the country’s mills, will also be in focus.

There is a growing expectation that the HRC quota will be amended, although it is not yet clear how.

European mills want the 5pc increase in the quota levels to be amended in light of the weakening market, and the fact that the short quota periods have made for a 10pc yearly rise. The WTO mandates growth in the quota from one period to the next, but not by 5pc.

Steelmakers suggest that the hot-dip galvanised quota needs to be rejigged. They argue that typical industrial material that should be sold into the 4A category is being sold into the 4B automotive grade category — there are existing anti-dumping duties on 4A HDG from China, so it has no quota for this product, but a substantial one for automotive-gauge galvanised steel. Mills said they believe that the quotas should not be increased, despite them filling up so quickly. In their view, traditional flows are being disturbed when residual country quotas open up and are immediately filled — Chinese material has been accounting for a significant portion of this in the 4B category.

Traders are also lobbying for amendments to the galvanised quota. They suggest it should be global, like the current HRC quota, and not split into 4A and 4B. One source close to the review said auto-gauge material could be removed from the safeguard measure altogether.

The International Steel Trade Association (Ista) is expected to send a letter to the commission requesting a meeting to discuss such issues. It will argue that the current quotas are below 2017 and 2018 import volumes, and too restrictive on certain products.

The commission had said that, because of the speed of the review, it would not hold meetings.

Rebar should also be global, and it is deficient by around 500,000t, Ista said. Some buyers, particularly in the UK where Cares certification is necessary, have seen their supply sources dwindle. Turkey is the primary region for Cares-certified rebar, in light of the existing duties on Chinese material. Sole domestic producer Celsa owns around 50pc of the downstream fabrication market.

The commission’s steel safeguard is not designed to reduce or upset legally traded traditional flows or create blockages, but to stop import volumes rising in the light of protectionism elsewhere — namely Section 232 in the US.

Importers argue that some of the changes mills are suggesting, such as HRC becoming a country-by-country quota, would reduce typical flows. For HRC there are already anti-dumping duties in place on Brazilian, Iranian, Russian, Ukrainian and Chinese material — these cover all of the big exporting regions except Turkey.

European steel industry association Eurofer’s submission to the commission will be made available to interested parties next week.

UK car manufacturing output plummeted by almost half in April, with production down 44.5% year on year at 70,971 units, according to figures published Thursday by the Society of Motor Manufacturers and Traders.

“Factory shutdowns, rescheduled to mitigate against the expected uncertainty of a March 29 Brexit, took effect in many plants across the UK,” SMMT said.

April’s dismal performance, the 11th-straight month of decline, exacerbated the underlying downward trend, due largely to slowing demand in key international markets, including the EU, China and the US, as well as at home, the group added.

The latest figures “are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers,” SMMT’s chief executive, Mike Hawes, said in a statement.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation,” Hawes said. “This is why ‘no deal’ must be taken off the table immediately and permanently.”

Manufacturing for domestic and overseas markets fell 43.7% and 44.7%, respectively, from April 2018 levels, as most volume manufacturers brought forward, and extended, production stoppages normally scheduled for the summer holiday period.

For January-April, output was down 22.4% year on year, with similarly large percentage falls in production for the UK and export.

Provided the UK leaves the EU with “a favorable deal and substantial transition period,” and notwithstanding any escalation of global trade tensions, the decline in volumes is expected to ease by the end of the year, SMMT said.

However, it added, “the latest independent outlook suggests output will still be down some 10.5% on 2018 levels,” with a ‘no deal’ Brexit likely to exacerbate this decline.

— Andy Blamey

A number of potential British Steel bidders have already signed non-disclosure agreements related to bids to be submitted by early June, the Official Receiver — the government body overseeing the company’s liquidation — told S&P Global Platts on Thursday.

The Official Receiver declined to disclose how many offers have been received, but market sources said several companies have expressed interest in the company.

British Steel is the second-largest UK steel producer, with around 3 million mt/year of steel design capacity in the UK, France and the Netherlands. Last year, the company produced 2.7 million mt of liquid steel and saw sales of 2.6 million mt.

It entered into compulsory liquidation on May 22, but the company will continue to trade and supply its customers while the Official Receiver considers options for the business. For now, according to the BBC, the government is covering the firm’s wage bill. However, if the Official Receiver fails to find a buyer, British Steel could be wound up and redundancies would follow.

Buyers are said to be interested in the company not only because of its size, but also its assets produce attractive niche products. The main one is the one Scunthorpe, where British Steel produces rails and supplies 96% of the UK rail network’s steel rail requirements.

— Annalisa Villa

Germany’s Salzgitter AG is currently in the process of assembling a new slitting line for hot-rolled strip at its strip mill Salzgitter Flachstahl.

The investment is part of an effort by the company to develop its portfolio towards high tensile qualities of strip, a spokesman says. Expenditure at the strip mill this year includes new plant and equipment as well as the modernisation of existing machinery, he notes.

Apart from Salzgitter, another major steelmaker is reportedly adding a mill-based slitting line, at one of its European works. A service centre manager recently expressed his concerns to Kallanish over the mills’ apparent ambitions to include processing services in their portfolio. These should remain within the distribution sector when it comes to servicing external customers, he opines.

The Trump administration has asked the US Supreme Court to reject a legal challenge to the Section 232 tariffs on steel and aluminum filed by the American Institute for International Steel (AIIS), arguing that the court previously decided the matter and there is no need to revisit its decision, according to a brief filed on behalf of the White House.

Lawyers representing US President Donald Trump’s administration argue the court rejected a similar challenge to Section 232 in 1976 in the Federal Energy Administration v. Algonquin case, according to the filing made public Tuesday. In the Algonquin case, the court held that “Section 232 sets forth an intelligible principle to guide the President’s adjustment of imports and therefore is constitutional,” the brief states. “Algonquin was correctly decided, and it is consistent with this Court’s more recent nondelegation precedents.”

The AIIS took its legal challenge to end the Section 232 tariffs on steel and aluminum to the Supreme Court in April following a March ruling by a US Court of International Trade (CIT) panel, which said it was bound by the 1970s-era Algonquin case decided by the high court. The AIIS first filed its lawsuit challenging the constitutionality of the tariffs with the CIT in June 2018.

While he did not issue a dissent, CIT Judge Gary Katzman filed an opinion dubitante, suggesting that the laws governing Section 232 may need to be revisited, stating: “If the delegation permitted by Section 232, as now revealed, does not constitute excessive delegation in violation of the constitution, what would?”

While the typical course for appeal would take the case to the Court of Appeals for the Federal Circuit, the AIIS Supreme Court petition looks to bypass this step, as the second panel of judges in the circuit court would also have to rely on the Algonquin precedent. However, bypassing the lower court should be grounds for dismissal at the Supreme Court, the US government said in its brief.

“In any event, certiorari before judgment is an exceptional procedure, and petitioners identify no sound reason for this Court to deviate from its usual practice of deferring any review until after the court of appeals has issued its decision,” the filing states. “The petition therefore should be denied.”

The government also argued that, despite the flexibility the president has under Section 232 to impose tariffs, the standards under the trade law “are more specific than some of the standards that this Court has sustained in the domestic context.”

Additionally, the courts have repeatedly given the executive branch broad authority in making policy decisions related to national security, the government said.

“The line between a permissible grant of discretion to the executive and an impermissible delegation of legislative power ‘must be fixed according to common sense and the inherent necessities of the governmental coordination,’” the brief states. “If there is any area in which common sense and the inherent necessities of governmental coordination support a grant of discretion to the President, it is the area in which Section 232 operates: ‘national security.’”

Trump used Section 232 of the Trade Expansion Act of 1962 when he applied an import tariff of 25% on steel and 10% on aluminum in March 2018.

— Justine Coyne

Konsorcjum Stali (KS) reported an -8% on-year decline in revenue in the first quarter to PLN 425.7 million ($110.3m), while net profit plummeted -90% to PLN 1.1m, Kallanish learns from the top-three Polish distributor.

Although the quarter occurred in winter, during which selling activity usually quietens, it was characterised by good demand, KS observes. However, due to high stocks partly on account of increased influence from imports, transaction prices declined.

After a very good 2018 in which Polish GDP grew by 5.1%, the current year is forecast to register 4% growth. The main cause of this is weakening external demand resulting from the uncertain global economic situation. Exporters are likely to be the worst hit, KS says. “The worsening mood among entrepreneurs and investors is translating into delayed investment and purchasing decisions,” KS says in its report.

Steel-using sectors, such as automotive, machine-building and pipemaking, registered a demand decline in Q1, with Polish apparent steel consumption declining -6% on-year in January-February. Despite the weaker demand forecast, KS is optimistic about maintaining sales volumes as a leader in the processing and distribution market. This is thanks in part to the continued high level of rail and road infrastructure investment, KS says.

KS’ board has also approved the 2019-2021 investment plan that envisages PLN 39m spending into increasing processing and distribution capacity. The firm says this should strengthen its market position thanks to increased quality and cost optimisation. It is now seeking supervisory board approval.

In 2018 KS increased sales 7% on-year to 682,000 tonnes. Rebar sales rose 20% to 201,000t and sheet sales were up 7% to 74,000t. Z and G sections sales were flat at 60,000t. Sales of KS-produced or processed products, meanwhile, fell -2% to 236,000t.