Category: Latest Updates

The European steelmakers’ trade association Eurofer is warning that the regional sector could be heading for a crisis. It does in fact use the term “… severe crisis” in a statement on current market conditions sent to Kallanish.

Surging import volumes, stalling economic growth, high and volatile raw material costs and sharply growing carbon costs are coming together to form a perfect storm for the sector, Eurofer says. “The impact of this combination of factors has already begun to affect European steel producers, with facilities being idled and production being cut back significantly across Europe,” the association adds.

“The European steel sector has had less than two years of stability, a period which arguably ended in mid-2018 with the imposition of the US’ Section 232 measures”, says Eurofer director general Axel Eggert. The association expects steel market demand to decline in Europe by -0.4% in 2019. The stalling demand coincides with import volumes rising at an ever-faster rate, Eggert says, indicating that the safeguard measures in place since last year are inadequate.

There are also issues with carbon pricing, and surging raw material costs for iron ore, steel and coking coal. “Any one of these factors would cause difficulties for the sector. In combination they are a perfect storm of negative dynamics entirely beyond the control of the steel industry itself,” Eggert emphasises.

Eurofer has written to EU policy makers making this point, in particular relating to making the EU steel safeguard more robust and effective, it says. The association also wants European authorities to continue to work on World Trade Organization reform and on international cooperation to remove the causes of subsidised global steel overcapacity.

“Despite being well-intentioned, the current steel safeguard framework has not prevented surging imports. EU producer margins are on the floor, which undermines their ability to invest in skills, technology and low-carbon development. The alarm bells are already ringing and action is required today to prevent this flood washing the sector away,” Eggert warns.

The order intake at Salzgitter AG’s tube unit, Mannesmann, at €342 million ($382m), was noticeably below the previous year’s figure of €382m in the first quarter of 2019, the company says.

The drop was attributable, on the one hand, to the downturn in the medium-diameter line pipe segment. Although inquiries in the international project business remained at a normal level, large volumes were not awarded especially on the American market, the company says. On the other hand, orders in the precision tubes group’s automotive customer and industry sectors declined, Kallanish notes.

While the business unit’s shipments rose, from 134,000 tonnes to 147,000t, orders on hand fell noticeably in a year-on-year comparison from €540m to €477m. Revenue growth was strong however, rising from €400m to €477m. With earnings before taxes of € 8.4m (Q1 2018: € 1.6m), the result significantly outperformed the year-earlier figure.

Looking forward, In the Mannesmann Business Unit will be affected by unsatisfactory capacity utilisation, at least through to Q3 2019. In contrast, the American Europipe companies are set to benefit from earlier order intake, and similar to Mannesmann Grossrohr GmbH, anticipate further bookings. After two very good years, the medium-diameter line pipe segment expects demand to settle at a normal level.

The Trading unit, which encompasses stockholding distribution as well as trading, lifted sales from €775m to €814m on the back of improved selling prices. Shipments by the unit fell from 1.123 million tonnes to 1.04mt. While the tonnage of the stockholding business increased, the volumes in international trading declined, due to protectionist measures and fierce competition, the company says. Looking ahead, the unit is assuming stable shipments and price-induced sales growth but lower margins due to price pressures, it reveals.

The White house has announced that the 50 percent duty on Turkish steel imports has been halved to 25 percent as of May 17.

In August 2018, the US imposed an additional 25 percent duty only on Turkish steel imports after announcing Section 232 steel tariffs of 25 percent in March of the same year.

On the other hand, the US has terminated the Generalized System of Preferences (GSP) program for Turkey based on its level of economic development.

The US has reached an agreement to remove the Section 232 tariffs on steel and aluminum imports from Canada and Mexico, without imposing quotas to cap imports at a certain level, it was announced Friday.

The US has agreed to eliminate the tariffs on Canada and Mexico within 48 hours, with the countries also agreeing to drop retaliatory tariffs on US-made steel, according to a joint statement by issued by Canada and the US. The countries have also agreed to terminate all pending litigation with the World Trade Organization regarding the Section 232 tariffs.

Under the agreement, the countries will implement measures to prevent the importation of steel and aluminum that is unfairly subsidized or sold at dumped prices and prevent the transshipment of steel and aluminum between countries.

The countries will also establish an agreed-upon process for monitoring steel and aluminum trade between them.

“In monitoring for surges, either country may treat products made with steel that is melted and poured in North America separately from products that are not,” according to the joint statement. “In the event that imports of steel or aluminum products surge meaningfully beyond historic volumes of trade over a period of time, with consideration of market share, the importing country may request consultations with the exporting country.”

Following consultations, the importing country may choose to impose duties of 25% for steel and 10% for aluminum with respect to the individual products where the surge took place, according to the statement. If action is taken by the importing country, the exporting country is able to retaliate only in the affected sector, according to the agreement.

US President Donald Trump and Canadian Prime Minister Justin Trudeau discussed the tariffs in a call Friday, according to a readout of the call provided by the prime minister’s office.

Mexico and Canada received a temporary exemption from the Section 232 tariffs when they took effect March 23, 2018, but the US imposed the trade measures on Mexico, Canada and the EU in June 2018.

The import tariffs of 25% on steel and 10% on aluminum have become a sticking point in ratifying an updated trade agreement between the US, Canada and Mexico, known as the US-Mexico-Canada Agreement (USMCA). The USMCA was signed by the leaders of the US, Canada and Mexico in October 2018 but must still gain approval from legislators in all three countries.

— Justine Coyne

Steel sales at thyssenkrupp’s distribution division in the first half of its business year, 1 October to 31 March, performed better in North America than in Europe, Kallanish hears from the company.

The business unit Materials Services, combines stockholding distribution and trading, in various regions and countries. It reports that strong warehousing business in North America outperformed weaker service centre business in Europe and direct-to-customer business worldwide.

In total, the unit’s order intake was at the same level as one year earlier, at €7.1 billion ($8.0 billion). Revenues were also around €7.1 billion in both periods, due to strong volumes and prices in North America, while volumes delivered dropped from 5.6 million tonnes to 5.0m tonnes.

The group attributes the fall in demand in Europe particularly to declining volumes in auto-related service centres and direct-to-customer business. Operating profit (adjusted Ebit) of the distribution division fell from €151 million to €75m, due to margin pressure from declining prices particularly in warehousing and distribution. This compared with positive effects from dynamic price increases seen in the prior-year period.

The unit also temporarily includes stainless mill Acciai Speciali Terni (AST), where volumes and prices at AST were lower year-on-year mainly due to continuing import pressure from Asia. It notes that stainless steel prices have been recovering slightly since March after having falling in the first five months of the financial year. Finished steel prices stabilised towards the end of 2nd quarter and the overall average price level was lower on-year.

Brussels, 16 May 2019 – Surging import volumes, stalling economic growth, high and volatile raw material costs and sharply growing carbon costs are coming together to form a perfect storm that could knock the European steel industry back into a period of severe crisis. The impact of this combination of factors has already begun to affect European steel producers, with facilities being idled and production being cut back significantly across Europe.

“The European steel sector has had less than two years of stability, a period which arguably ended in mid-2018 with the imposition of the US’ Section 232 measures”, said Axel Eggert, Director General of the European Steel Association (EUROFER). “2017 saw 8,000 jobs return to the sector, with another 2,000 following in 2018 – bringing total direct employment in the steel industry back up to 330,000. However, if this mix of negative conditions persists, these gains could be reversed”.

Steel markets have slowed abruptly, both in the EU and worldwide. Growth in steel demand was 3.3% in 2018. EUROFER forecasts suggest there will be a decline of 0.4% in 2019.

“This stalling demand coincides with import volumes rising at an ever faster rate. These grew by 12% year-on-year in 2018 – 2017 was already a record – and 2019 might see volumes increase even further”, added Mr Eggert. “This import growth underlines the absurdity of a safeguard which includes programmed periodic ‘relaxations’ of 5%: in February and July 2019, and again in July 2020 – even though demand is expected to be flat. This is an overgenerous gift to steel exporters to the EU”.

Meanwhile, the carbon price has now reached €25 per tonne of CO_2, which is considerable given the relative size of the steel sector’s tight margins. Pared with supply volatility for iron ore in the wake of the Vale/Brumadinho dam disaster in Brazil, alongside high and volatile scrap and coking coal prices, the European steel industry is struggling on several fronts at once.

“Any one of these factors would cause difficulties for the sector. In combination they are a perfect storm of negative dynamics entirely beyond the control of the steel industry itself”, emphasised Mr Eggert.

Following the financial and economic crisis European steel struggled to swing back onto an even keel, with depressed demand growth and aggressive targeting by exporters to the EU in a global market awash with excess production capacity.

“We have now had as little as 18 months to rebuild – and have achieved just as the economic cycle seems to have reached the tail end”, said Mr Eggert. “For the European steel industry not to be swept away we need policy makers to handle the primary threat: the surge of imports that has consumed virtually the entirety of the growth in EU steel demand for the better part of a decade”.

EUROFER has written to EU policy makers making this point, in particular relating to making the EU steel safeguard more robust and effective, as well as continuing work on WTO reform and on international cooperation to remove the causes of subsidised global overcapacity.

“Despite being well-intentioned, the current steel safeguard framework has not prevented surging imports. EU producer margins are on the floor, which undermines their ability to invest in skills, technology and low-carbon development. The alarm bells are already ringing and action is required today to prevent this flood washing the sector away”, concluded Mr Eggert.

European steel executives speaking at Made in Steel in Milan this week suggest that the second part of 2019 should be more positive for the European market.

Antonio Gozzi, ceo of the Duferco Group, said that a global recession is not underway. Europe is slowing down however due to a number of challenges and a lot of uncertainties which the continent has largely created autonomously.

“The problems of the automotive sector, for example, have been created by a lot of mixed signals that the European authorities and the local government have sent out, impacting consumption,” Gozzi noted.

A similar view was shared by EUROMETAL president Fernando Espada. He stressed that China and the US are showing that a global crisis is not taking place.

“Things will not get worse in the second part of 2019. Demand is stable at the moment and in some markets, as in Spain, we have seen things getting better during recent months compared with the beginning of the year,” Espada said.

He added that Europe is a specialist in creating uncertainties for the market, be it with political decisions such as Brexit or with the carmaking industry.

A further element of uncertainty has been created in the market by the announcement of the cancellation of the thyssenkrupp-Tata Steel Europe merger last week, Kallanish notes. Speakers at Made in Steel said the news came as a surprise to most and stressed that there is a need for further room for consolidation in the flats sector going forward.

European steelmakers association, Eurofer, confirmed last week that apparent steel consumption in Europe should fall by -0.4% y-o-y in 2019.

ArcelorMittal Italia is set to produce a volume of 5 million tonnes of steel products n 2019. This follows the announcement that the increase in output to 6 million tonnes/year has been reduced due to market conditions, ArcelorMittal Italia ceo Matthieu Jehl said during Made in Steel in Milan this week.

The executive notes that the group decided to take action to be responsible and address the issues impacting the market on a European level. The group announced a reduction in output across Europe of some 3m t/y last week (see Kallanish 7 May).

The announcement has attracted some criticism from trade unions. Jehl stresses however that the decisioni has also to be seen as an opportunity for the company in Italy to focus on further increasing production quality and the service to clients. He also notes that the planned investments in the Italian units announced during the acquisition of Ilva have not been changed.

In 2018 the Ilva assets produced some 4.5 million tonnes of steel products.

In addition to the reductions in Italy, ArcelorMittal is also set to reduce output in Poland and Spain.

British Steel has been hit by further Brexit-related problems and is negotiating a further loan with the UK government to help it “… navigate” increasingly choppy waters.

This follows the £120 million ($155m) loan granted by the British government in April to help the steelmaker resolve an issue with the non-appearance of its expected carbon allowances from the EU for 2019. This happened because EU Emissions Trading Scheme free allowances were not issued to UK steelmakers by the EU because of Brexit uncertainty.

Reports by UK media on Tuesday first broke the news of the new request by British Steel for another government loan of “… up to £75m”. The firm has reportedly faced a slump in orders from European customers ‎due to uncertainty over the Brexit process.

When asked for comment by Kallanish, a British Steel spokesperson said: “As we have previously commented, the uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.”

The long products specialist made a loss of £19m in its last reported financial year ending 31 March 2018 after having made a healthy profit in its first year of operation of over £92m. As well as Brexit-related waves, the integrated producer has also faced climbing iron ore costs over its nearly 3-year existence. At the beginning of June 2016, the Kallanish KORE 62% Fe index was at $49.06/tonne. On 14 May 2019 it was above $94/t, and has been in the $60-90/t range for much of the time in between.

E’ la sintesi emersa dal primo convegno pomeridiano di Made in Steel 2019: «Comunicare meglio sarà decisivo»

RHO (Mi) – “Steel vision: a global perspective” ha messo a fuoco quattro punti di vista autorevoli – di altrettanti personaggi che si sono alternati sul palco della siderweb conference room a Made in Steel, per rispondere alle domande di Lucio Dall’Angelo, direttore generale di siderweb e di Emanuele Norsa, giornalista di Kallanish– per guardare al futuro dell’acciaio.

Secondo Antonio Gozzi, CEO di Duferco, «uno dei problemi della siderurgia italiana è quello della narrazione. Gli italiani fanno le cose, ma le fanno in silenzio. Abbiamo le migliori pratiche e tecnologie in circolazione, ma non siamo capaci di raccontarle e quindi benedetto Made in Steel che ci permette di farlo».

Virinder Bahadur Garg, Chief Marketing Officer di Liberty Steel Europe, ha messo in evidenza che «la forza dell’Europa è determinata dalla capacità di fare prodotti di qualità elevata, la sua debolezza è invece rappresentata da tasse e costi. Noi, anche con le recenti operazioni di accorpamento, vogliamo consolidare la nostra posizione, mantenendo rapporti chiari con fornitori e clienti».

Il presidente di Eurometal, Fernando Espada, ha invece voluto mettere l’accento su un aspetto diverso: «Il nostro business deve evolvere perché abbiamo talmente tanti dati che non sono stati ancora analizzati che non abbiamo una visione complessiva della realtà. Dobbiamo imparare ad implementarli per rendere più performanti tutte le nostre imprese».

Un inno al realismo, ma anche e soprattutto all’ottimismo è infine arrivato da Matthieu Jehl, CEO di ArcelorMittal Italia: «Il taglio dell’output è stato un atto dovuto, vista la situazione di mercato – ha spiegato – ma nella seconda parte dell’anno ci aspettiamo una ripresa e noi dobbiamo lavorare per portare la qualità del nostro prodotto italiano sui livelli che ci caratterizzano altrove». Per poi tornare sul tema relativo alla comunicazione: «L’acciaio non è l’industria del diciannovesimo secolo, ma del ventunesimo. Dobbiamo solo comunicarlo bene».

Siderweb.com