Category: Latest Updates

EUROMETAL Regional Meeting Nordics was convened in Helsinki on 22-23 of May 2019.

During the morning session, Prof Döhrn (RWI-Leibniz Institute) gave an outlook on global economic perspectives including relevant trends and figures, perspectives of automotive business and consequences of BREXIT.

Colin Richardson (Argus Media) passed interesting messages regarding world steel outlook: demand trends, PMIs, imports and export steel flows between Turkey and EU, global overcapacities in steel.

Alexander Siryk  (Metals Consulting International) outlined the scope of CIS steel supply chains where steel producers are realising excellent EBITDA margins.

Alexander outlined that in this region steel distribution is more oriented in commodities products and that service level is still rather low compared to EU.

Steel trade cases and safeguards measures in EU were explained in full detail by Xiaoyi Tang from Dentons Office in Brussels. 

Nora Härme (Capacent) outlined very important aspects regarding “Pricing for Value – the ultimate challenge in digital times”.

XOM Materials is a digital platform opened to all vendors and buyers of steel, metals and other materials. Tim Milde explained the current status as well as challenges that XOM Materials is facing in short term developments.

The afternoon session was focused on Nordics and Baltics.

Jukka Palokangas (chief economist Technology Industries of Finland) highlighted the key economic figures of Nordics inside the EU context. He also pointed out the importance of exports for the Nordics industry.

Mikael Nyquist explained the challenges facing Nordic steel distribution, SSC as well as stockholding.

Maxim Lvovskiy (Elme Metall) highlighted the main characteristics of Baltic steelmarket: steel consumption, players, growth perspectives, overcapacity’s in Steel Distribution.

Niko Korte (SSAB Digital Business Development) addressed the digital targets and expectations defined by his company.

A Panel Discussion about Digitalisation was moderated by Daniel Guinabert, EUROMETAL Director General. 

During this panel, a lot of fruitful exchanges on ideas and objectives took place. 

As a matter of fact, the panel highlighted a basic mismatch between digital objectives and expectations of a younger generation of managers and typical traditional effective business principles in Steel industry and Distribution. 

Conclusions and findings of the Meeting were summarised by Fernando Espada, president of EUROMETAL. 

We would like to thank our event sponsors SSAB and MEPS International as well asour event partner XOM Materials and to all speakers for coming to Helsinki and for a set of remarkable and challenging contributions.

EUROMETAL Regional Meeting Nordics in Helsinki was attended by 80 participants.

Next year we plan to convene  EUROMETAL Regional Meeting Nordics + Baltics in the Baltic region. 

More details have emerged about the circumstances surrounding the insolvency of UK long products specialist British Steel. The company was wound-up in the High Court on 22 May 2019 and the UK Official Receiver was appointed as liquidator on the same day. The company is still operating whilst it is in administration.

“The company in liquidation is continuing to trade and supply its customers while I consider options for the business. Staff have been paid and will continue to be employed. The court also appointed Special Managers to assist me with my work and they are engaging with staff and their representatives to keep them informed, as well as contacting British Steel’s customers,” the Official Receiver said in a statement.

Ernst and Young have been appointed as Special Managers and a three-strong team from the company are now in place. Former British Steel Limited directors Roland Junck, Gerald Reichmann and Antonius Deelen all resigned their positions on 22 May. The insolvency also removes Greybull Capital from day-to-day control of the company, UK Business secretary Greg Clarke said in a statement.

The scale of the company’s debts which led to its winding up have also been revealed, with one media source, citing the High Court winding-up judgment, placing the figure at £800 million ($1.012 billion). Although figures for the company’s financial year ending 31 March 2019 are not yet available, British Steel had made a loss of £19m a year earlier. That had followed a healthy £92m profit in the company’s first year of operations.

A steel industry source tells Kallanish that the integrated steelmaker was also hard hit by the rise in seaborne iron ore prices seen so far in 2019. The company had seen an average cost increase for iron ore of £5 million/month so far this year, the source says. The steelmaker was already on sticky ground, with the fall in value of the pound versus the dollar since 2016 also making dollar-denominated iron ore purchases that much more expensive over the period.

In the year ending 31 March 2018, 42% of the company’s revenue was generated in Europe, (as compared to 47% in the UK and the balance from the rest of the world). British Steel’s dependency on its European business therefore will not have been helped by the UK voters’ decision to Brexit. Greybull has already cited Brexit as one of the reasons for the steelmaker’s problems.

The North East Lincolnshire area, in which the firm’s Scunthorpe headquarters are located, saw one of the largest pro-Brexit results in 2016. 69.9% of those who took part in the referendum in that area chose to leave the EU, the tenth highest ‘leave’ percentage out of 400 polling areas in the UK

The search is underway for a potential buyer for British Steel’s assets after the UK High Court ordered the company’s compulsory liquidation Wednesday.

While the official receiver and accountancy firm EY scan for possible interest, British Steel is not alone in battling rising raw material costs and global steel oversupply — common themes across Europe. The following key facts illustrate the headwinds facing British Steel and the wider European steel market.

Luxembourg-based blast furnace specialist Paul Wurth has been awarded orders for two new blast furnaces for the Erdemir Group, Turkey’s largest steelmaker, at their Eregli and Iskenderun integrated steel plants. In both cases, one completely new furnace will replace an older production unit, S&P Global Platts learned from a Paul Wurth statement.

At Eregli on Turkey’s northern Black Sea shore, Erdemir’s new BF2 will have a hearth diameter of 10 meters, 24 tuyeres and two tapholes; it will produce 5,000 mt of hot metal per day from an inner volume of 2,188 cm, Wurth said. 

At Isdemir in Iskenderun on the Mediterranean Sea, the new BF1 will be sized at 12.5 meters in hearth diameter and 3,587 cm of inner volume. It will be fitted with 32 tuyeres and four tapholes and will produce 7,900 mt daily, which further increases the hot metal capacity at this site, the company noted.

Paul Wurth will execute both projects on an EP basis including the supply of key technological items and related supervision of erection and commissioning. 

Project schedules foresee blow-in of the new blast furnaces for March 2021 for Erdemir and May of the same year for Isdemir.

Erdemir will also double its current galvanized sheet production capacity of 330,000 mt/year with the installation of a new coating line in the second quarter, as reported.

The group’s Eregli works produces HRC, CRC and galvanized coils, plate and tinplate. The Isdemir works produces billet, wire rod and HRC.

— Cenk Can

Steel shipments from European service centers and stockholders fell in the first quarter versus the same period last year, EUROMETAL, the European Federation of Steel, Tubes and Metals Distribution & Trade, said on Monday.

In Q1 shipments by European flats stockists and distributors continued their negative trend of late last year and dropped by 4.5 %, when compared to Q1 2018. During the same period EU Multi-Product & Proximity Steel Stockholding Distribution continued to note lower shipments for most products in its portfolio with total shipments down by 3.4% year on year.

Only profiles, rebars and hot-rolled flats registered higher steel service center (SSC) shipments.

According to the note, the disappointing trend in SSC shipments was accompanied by a rising trend in SSC stock indices.

When expressed in days of shipments, stocks at EU SSC in March 2019 reached 69 days’ worth, compared to 64 days in March 2018.

While EUROMETAL does not specify volumes, the association releases an index for stock levels with the average of 2015 equivalent to 100. On this basis, stocks for March were at 115, compared with 110 in March 2018.

The stock volumes index of EU Multi-Product & Proximity Steel Stockholding Distribution registered at 101 in March versus an index of 103 one year before. When expressed in days of shipments, stock volumes in March leveled at 77 days of shipments, against 75 days in March 2018.

— Annalisa Villa

Marcegaglia, the world’s largest welded tube producer and one of the world’s largest steel re-rollers, expects volume to rise around 2% this year but is cautious on its EBITDA outlook amid tighter margins due to higher raw materials costs and a slowdown in demand.

“Due to uncertainty, buyers are more cautious … In some sectors such as automotive demand is less — but the market fundamentals are better than the overall sentiment,” Marcegaglia CEO Antonio Marcegaglia told S&P Global Platts on the sidelines of a conference in Milan.

“If we look at Q1 of this year, volumes went up by 2.5% to 1.5 million mt of finished products as well as the turnover registered an increment of 2.1% with respect to Q1 2018 that, we should remember, was a good year,” Marcegaglia said.

As a consequence, steel producers have been pushing for price increases.

Last year unlisted Marcegaglia — which operates 21 steel plants worldwide — saw output rise to 5.28 million mt, with sales up 6.3% to around Eur5 billion ($5.6 billion), Marcegaglia said. Net income rose 48% to Eur97 million.

“Considering the good 2018 results and the still overall positive 2019, we are planning investments for this year of Eur120 million from the Eur40-50 million last year. We will use the investment to expand our cold line in Ravenna and we will be more focus to develop our quality rather than expand our production capacity,” Marcegaglia said.

In Ravenna, the company will install a two-stand reversing cold mill of the compact cold mill (CCM) type with annual capacity of 550,000 mt/year.

Marcegaglia said that if German steel producer Thyssenkrupp were to put Italian steel plant Terni back on sale, he was still interested. In 2018, Marcegaglia wanted to buy the company but Thyssenkrupp took it off the market following the restructuring of Thyssenkrupp Materials to help with proposed merger of the steel divisions of Tata Europe and Thyssenkrupp. However, that merger has had to be canceled.

Marcegaglia also said the company sold its Chinese tube mill to a domestic buyer.

The UK government has confirmed that British Steel is entering into administration, although no formal confirmation has yet been received from the company itself.

The Scunthorpe-headquartered long products specialist has been in discussions with the government about a bail-out loan, said to be of around £30 million ($38m), since early this week. Now the UK Business Secretary Greg Clarke says that talks between the government and the company’s owner Greybull Capital have broken down and arrangements are being made to call in the receivers.

“The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel. We have shown our willingness to act, having already provided the company with a £120 million bridging facility to enable it to meet its emissions trading compliance costs,” Clarke says.

“The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made,” the business secretary continues.

The Official Receiver has now been called in.

Trade association UK Steel says that all is not yet lost. ““This news is significant blow for the company, its employees, and the communities across the UK that it supports. British Steel does not sit insolation but is a critical part of the UK’s wider steel sector, a strategic British industry underpinning a myriad of supply chains,“ says association director Gareth Stace in a statement sent to Kallanish.

“Receivership does at least leave options on the table including providing a time to secure a new buyer. All focus now needs to be on securing the future of steel production at the site and avoiding the mistakes seen at Teesside in 2015. We have every confidence that the Government is investigating every available opportunity and pulling out all the stops to ensure a viable solution is found. We stand ready to work with the Government to help it deliver this,” Stace adds.

While the US steel industry has embraced digital technology to increase efficiencies in production, overall the buying and selling of steel remains comparatively analog. With this in mind, Felux, a Cleveland startup, on Monday launched an online marketplace to buy and sell steel in an effort to increase efficiency, transparency and accuracy in the domestic market.

“In the manufacturing space especially, people are still doing what most other industries already shifted to digital,” John Camenisch, managing partner of Felux, told S&P Global Platts in a recent interview at the company’s Cleveland office. “It’s not the most efficient way for a buyer or seller to spend their time.”

With Felux, users can post and view material for sale, post a request for quotation, receive quotes from across the country, compare them on price and quality, then negotiate a deal with just a few clicks.

Camenisch said the site’s ease of use was a major priority while the team was building out the system and is one of its best selling points.

“It’s been a tech-phobic industry for a while now and we knew with a lot of confidence that if we created something that was in any way, shape or form complicated to use, there are a lot of users out there that would just give up right away,” he said.

While there have been past attempts to shift steel sales online, one of the challenges in creating a robust marketplace online is the amount of data that is required to transact steel, Camenisch said.

“If you think about buying shoes on Amazon, you’re providing a credit card number and an address, but in the steel world to transact, just on the logistics side, you need to know things like shipping hours, receiving hours, is there rail access, what kind of truck capacity a facility has,” he said. “Right away we knew that was something we were going to have to overcome because you can’t have people writing books every time they want to transact.”

Camenisch and fellow Felux managing partner Chris Day said they feel confident that their system will meet the needs of the industry because they and the Felux team are coming from the physical side of the industry.

Felux is the vision of its founder Todd Leebow, CEO of Majestic Steel USA, one of the largest US service centers. Felux was spun out in November 2018, but prior to that, its technology was incubated at Majestic, where Camenisch and Day worked in the company’s analytics and innovation business unit and were responsible for capturing, analyzing and visualizing data company-wide. Felux operates as a completely separate entity from Majestic.

To start, Felux is focusing on creating a marketplace for flat-rolled products, including carbon steel, stainless steel and aluminum. There are plans to expand into long products following the launch of the site, company executives said. It is free to create an account and the company collects a fee of less than 1% from sellers that transact business there.

The network is limited to users authenticated and verified by Felux to ensure that everyone on the site is a legitimate buyer and seller, Camenisch said. Users can store logistics information and create profiles for their regular buys in order to search the site and close orders quickly, he added. Users can also negotiate pricing through the site and receive text and email alerts to monitor their interactions.

“We thought that it was really important that whatever we build feels very familiar to people and allows them to do what they do today, so negotiation is a huge part of the space,” he said.

And given the competitive nature of the steel industry, Felux gives users complete control over how public anything they post will be.

“There are a lot of situations where people are trying to time the market and do hedge buying and things along those lines,” Camenisch said. “If you’re a service center trying to do a big hedge buy, you don’t want the other service centers to see that you placed this massive RFQ out there.”

With the steel industry struggling to attract younger talent, going digital has become crucial, Day said.

“You can feel a movement finally happening in our place,” he added. “I feel like if we would have tried to have this conversation even five years ago, I think people would have been less likely to take the time.”

— Justine Coyne

Nordwest Handel, one of two large German purchasing cooperatives for steel and ironware, has posted an all-time record high value for steel sales for the company, Kallanish learns.

2017 had already seen a year-on-year increase of 17%, but revenues in 2018 grew again by 27%, reaching steel sales of €1.2 billion ($1.3 billion). This development was due almost equally to an increase in tonnage sold in all product areas and a higher price level compared with the previous year.  The tonnage increased by 13.5 % compared to the previous year, Nordwest says, without giving a figure.

The reinforcing steel segment continues to be the growth driver.  With the new steel concept ‘Stahlverbund Phoenix’ established last year, Nordwest says it is strengthening its cooperation with specialist trade partners.

Together with its other activities, domestic technology and tools and services for construction and crafts, Nordwest’s revenues rose 21% over 2017, crossing the €3-billion threshold for the first time. Operating profit rose 28% to €10.6 million. For 2019, Nordwest expects growth of 1-10%, depending on the development of the steel business.

The company also announced the appointment of Andreas Ridder as ceo from 1 August until July 2022, succeeding interim ceo Martin Helmut Bertinchamp. Bernhard Dressler had retired from the position prematurely in October 2018.

During first 4 months of 2019, EU steel safeguard and anti-dumping / anti-subsidy measures have been putting brakes on steel imports originating from non-EU origins.

This finding is based on an analysis of steel imports according to customs declarations.

In fact, the impact of EU steel safeguard quotas was particularly strong in long steel products and in tubular steel products where non-EU imports decreased significantly during first 4 months of 2019.

During same period, non-EU imports of flat steel products decelerated to +2,8 % year-on-year, coming from +5 % in 2018.

As a total, all non-EU steel imports during first 4 months 2019 were by -4% lower when compared with first 4 months of 2018.

The following table gives the development of non-EU steel imports by main product groups, each time in a year-on-year comparison.

NON EU IMPORTS	4 months 2019	year 2018
Long Steel Products	-18,1%	+30%
Flat Steel Products	+2,8%	+5%
Steel Tubes	-10,5%	+17%
All Steel Products	-4,0%	+12%

Source: EUROMETAL