Category: Latest Updates

Steel shipments from European service centers and stockholders dropped across all products in November, according to the European Federation of Steel, Tubes and Metals Distribution & Trade (EUROMETAL).

Shipments at steel service centers dropped by 4% in November last year compared to November 2017, meaning the January-November total was down 2.6%.

Shipments at multi-product stockholders dropped 1% y-o-y in November. Eurometal said that only rebars and quarto plates registered higher shipments. In the January to November period shipments were roughly flat on year. 

While the association does not specify volumes, EUROMETAL releases an index for stock levels with the average of 2015 equivalent to 100. 

On that basis, stock levels in Europe stood at 106 in November at steel service center distributors and 94 at multi-product sites. Stocks of hot-dip galvanized sheet remained particularly high at steel service centers, EUROMETAL said.

When expressed in days of shipments, stocks at European steel service centers reached 67 days in November, the same level as in November 2017. For multi-product stockholders, stocks stood at 75 days of shipments, against 69 days in November 2017.

— Laura Varriale

Mit sofortiger Wirkung beginnen zwei erfolgreiche Pioniere der digitalen Transformation eine neue strategische Kooperation. Axel Springer hy und Klöckner & Co über die Digitaleinheit kloeckner.i bieten ausgewählte Leistungen künftig gemeinsam an. Damit entsteht ein einzigartiges Beratungsangebot von Unternehmern für Unternehmer. Axel Springer und Klöckner & Co haben ihr jeweiliges Geschäft außergewöhnlich erfolgreich in die digitale Welt überführt. Sie gelten als Pioniere und Vorbilder der Transformation. Ihr Erfahrungswissen stellen sie anderen Unternehmen nun gemeinsam zur Verfügung. Beide Partner bringen ihre Stärken in die Partnerschaft ein.

Axel Springer erzielt über 80 % seines operativen Konzernergebnisses mit digitalen Angeboten. Dazu gehören zahlreiche disruptive Plattformen, die weltweit erfolgreich sind. Axel Springer hy ist ein Unternehmen der Axel Springer SE und wurde Anfang 2017 neu gegründet. Die Experten von Axel Springer hy helfen Unternehmen bei ihrer digitalen Transformation, beim Kulturwandel, beim Entwickeln der Strategie und bei deren Umsetzung. Klöckner & Co hat durch kloeckner.i die digitale Transformation bereits so weit vorangetrieben, dass rund ein Viertel des Konzernumsatzes über digitale Kanäle abgewickelt wird. Bis zum Jahr 2022 sind 60 % Digitalumsatz geplant. Darüber hinaus hat Klöckner die Plattform XOM Materials gestartet, die den digitalen Handel mit zahlreichen Werkstoffen ermöglicht und auch den Wettbewerbern des Unternehmens offensteht. Beide Unternehmen haben einen internen Kultur- und Organisationswandel bewältigt, der solche Erfolge ermöglichte.

Axel Springer hy beschäftigt über 40 Digitalexperten, die Kunden außerhalb der Axel Springer SE bei Analyse, Strategie, Kulturwandel, Firmenbau, Investments und Venturing beraten. Seit Gründung im Februar 2017 fanden bereits 90 Projekte mit 52 Kunden statt. In Berlin arbeiten für kloeckner.i nahezu 90 Mitarbeiter an der digitalen Transformation von Klöckner & Co und der Konzeption, dem Aufbau und dem Betrieb von Plattformen. Sie treiben auch den Kulturwandel innerhalb des Konzerns voran. Die Fähigkeiten dieses Teams werden nun erstmals auch dem offenen Markt zur Verfügung gestellt. Axel Springer hy und Klöckners Digital-Team bleiben rechtlich selbständige Einheiten, die den Kunden ihre gemeinsamen Leistungen aus einer Hand anbieten.

Christoph Keese, geschäftsführender Gesellschafter von Axel Springer hy: „Uns eint der unternehmerische Ansatz. Wir bei Axel Springer hy und unsere Kollegen bei Klöckner sind getrieben von Unternehmergeist und Umsetzungswillen. Alles, was wir unseren Kunden anbieten, haben wir selbst schon einmal gemacht, und wir lernen ständig dazu. Wir kennen die Schwierigkeiten der digitalen Transformation und ruhen nicht, bis wir sie für unsere Kunden gelöst haben. Wir ergänzen uns gut mit Klöckners Team und sprechen die Sprachen der Schwer- und der Digitalindustrie fließend. Uns geht es gemeinsam darum, Erfolge für unsere Kunden zu schaffen. Wir helfen, aus den Gewinnern des 20. Jahrhunderts die Champions des 21. Jahrhunderts zu machen.“

Gisbert Rühl, Vorsitzender des Vorstands der Klöckner & Co SE: „Die Fähigkeiten der beiden Unternehmen ergänzen sich optimal. Wir haben mit kloeckner.i erfolgreich B2B-Plattformen mit einem eigenen Team aufgebaut – vom Konzept über das Design bis zur Programmierung. Gleichzeitig haben wir die Integration mit dem Kerngeschäft geschafft. Dieses Pionierwissen bieten wir nun auch anderen Unternehmen an und kombinieren es mit den außergewöhnlichen Fähigkeiten von Axel Springer hy. Das Team von hy ist ein führender Berater für disruptive Strategien und deren Implementierung bei Unternehmen.“

Quelle: Klöckner & Co SE / Vorschaufoto: fotolia

Brussels, 17 January 2019 – Member states have approved the European Commission’s final safeguard measures on steel. With imports surging by 12% in 2018, the need for an effective defence mechanism is essential, though elements of the final measures are not ideal.

“EU steel imports rose by an unprecedented 12% in 2018. For every three tonnes of steel blocked by the US’ section 232 tariffs, two tonnes have been shipped to the open EU market”, said Axel Eggert, Director General of EUROFER.

“It was important that final safeguard measures be approved by the member states; these will now be implemented by 4 February 2019. While we welcome this endorsement, we are nevertheless worried that the form of the final measures may undermine their intended safeguarding function”, stressed Mr Eggert. “It is therefore vital that the Commission closely monitors EU steel demand development and adjusts the generous increase of the tariff-free import quota accordingly in July 2019, if necessary”.   

The final measures include an immediate ‘relaxation’, increasing the size of the quota by 5% (calculated on the base years of 2015-2017) – with a further 5% relaxation in July 2019 and another 5% in July 2020, subject to review. This is despite the fact that steel demand is expected to increase by only 1% in 2019.

“This means that the rise in the quota may be multiple times larger than the increase in the size of the market, leaving EU producers to fight over a shrinking market share. Imports already account for around a quarter of the market, up from less than a fifth historically”, added Mr Eggert.

The final measures give country-specific quotas to the main steel exporters to the EU. The remaining ‘residual’ quota for other countries will be quarterly. However, countries with their own quota are free to consume the residual quota once they have used up their own.

The final safeguard measure also continues to exempt some developing countries because their import share was below 3%, despite exceeding this threshold during 2018. This is, for instance, the case for Indonesia, whose share of the stainless hot rolled flat steel product segment reached 9.5% in 2018. It is essential that such countries lose their exemption in upcoming revisions.

“So, while we reiterate our welcome for the final measures, and the overwhelming backing they have received from member states, we caution that steel demand must be monitored closely in the coming periods if this mechanism is to prove effective in the long run”, concluded Mr Eggert.

The UK parliament’s rejection Tuesday of Prime Minister Theresa May’s proposal for a deal to take the UK out of the EU brought the country closer to the prospect of a “No-deal Brexit” — widely feared by the UK metals industry and its partners and suppliers in the EU and elsewhere.

Industry and trade organizations, including from the steel sectors, were vociferous in their condemnation of a no-deal scenario which would they said boost uncertainties, delay investment decisions, increase trade bureaucracies and possibly costs.

“No-deal would be disastrous for UK manufacturing and its 2.7 million jobs,” said Stephen Phipson, CEO of EEF, the UK manufacturers’ organization. “The government and parliament must act collectively, swiftly and decisively in the best interest of the people and the economy. The time for theater is over.”

German mechanical engineering federation VDMA said the outcome of Tuesday’s vote was “irresponsible.” According to VDMA President Carl Martin Welcker, “the [House of] Commons has missed the chance to avoid a hard Brexit and lay the foundations with a close relationship with the EU.”

The VDMA had urged companies to step up preparations for a hard Brexit and assess supply chains with Britain to avoid delays in import and export. The association said German industry had benefited so far from business with the currency-related strength of Britain’s export industry, while orders had been brought forward and stocks increased.

The EU imported 2.5 million mt of finished steel products from the UK in 2017 and 2.2 million mt in January-November 2018, equivalent to one third of UK output. Steel trade from the EU into the UK was even greater: amounting to 3.7 million mt of finished products in 2017 and 3.6 million mt in January-November 2018 according to Eurofer, the European Steel Association.

UK default to WTO rules
If the UK leaves the EU without an accord, it was expected to become subject to World Trade Organization rules on trade with countries in the EU and elsewhere, involving varied import and export tariffs, depending on the product. That could mean, for example, that UK aluminum products would become liable to third country 3% tariffs upon import into the EU while UK car components would incur a 4.5% EU import tax.

Under WTO rules, UK industry would not face tariffs on steel trade with the EU and vice-versa on the day of departure, according to informed steel sector sources.

However, that could change. UK steel could eventually be subject to the safeguards that the EU plans to put in place from February 4 to avoid re-direction of steel on global markets following the US steel import tariff hike last year. These safeguard tariffs are to be applied on a country-by-country basis, based on recent import volumes (see other story).

Impact on supply chains, contracts
Eurofer noted that amid the current lack of clarity, the steel sector’s chief concern was how supply chains would be affected in the event of a no-deal situation.

The links between the UK and Germany were highlighted by Hans Juergen Kerkhoff, president of German steel makers’ association WV Stahl. “An orderly exit of Britain with a transition period to clarify the future relationship of the country with the EU is of great importance for the German steel industry,” Kerkhoff said. “A disorderly exit would have grave negative implications for steel-based value chains.”

Germany exports about 3 million mt per year of steel contained in products such as cars or white goods to the UK, accounting for about 10% of Germany’s overall indirect steel exports.

A UK-based scrap trader said Tuesday it was reducing stock levels in its yards due to legal and transportation concerns linked to a possible no-deal Brexit. The trader also said a large copper scrap buyer in Europe was only offering short-term contracts to UK suppliers because of the uncertainty.

Thyssenkrupp-Tata merger
Thyssenkrupp, which will merge its steel divisions with Tata Steel Europe, located in the Netherlands as well as Port Talbot in Wales, did not see “immediate negative influences” as likely for the joint venture.

“As soon as there will be clarity over the future economic relationship between the UK and EU it will be possible to take economically reasonable and responsible decisions for the further future,” the company said.

Tata Steel plans to maintain a two-blast furnace operation at port Talbot, but Tata Steel CEO T.V. Narendran said last July that, looking beyond a reline of one furnace, it remained to be seen if the UK business would meet financial targets.

Thyssenkrupp said Wednesday that, in general, a no-deal Brexit would heavily affect multinational companies. For its existing business with the UK, the company has already prepared, with customers and suppliers, for various Brexit outcomes.

“This affects particularly our business with tight supply chains [such] as the automotive supply business,” the Germany-based steelmaker said. “Direct consequences of a hard Brexit are from today’s point of view not possible to assess seriously. We continue to hope for a political solution that avoids the ‘worst case scenario’ of a hard Brexit.”

— Diana Kinch, Laura Varriale and Annalisa Villa

The European Commission (EC) has issued a statement on Wednesday confirming that EU member states have ratified the proposal on definitive safeguard measures, Kallanishreports.

“These measures are intended to shield European steel producers following the trade diversion of steel into the EU market from other producers around the world as a result of the unilateral US measures restricting imports of steel to the American market. The definitive measures aim to preserve traditional trade flows,” the EC comments.

Earlier in January the proposal was notified to the WTO, confirming the intention to apply definitive safeguard measures on the import into the EU of steel products until mid-2021. The measures will be stricter that the provisional ones adopted in July 2018, by applying a country-based tariff-free quotas for larger importers and a quarterly calculation of quotas for residual volumes.

All details, including the exact tariff-free volumes are available on the EC website.

“The Commission will now finalise the procedure, so that the definitive measures can enter into force in the beginning of February 2019,” the statement explains.

The European Commission’s draft proposal failed to attract much support in the steel industry and the steel using sectors. Large users of steel such as carmakers criticised the decision to limit further imports and some calculations of the tariff-free quotas. The German steel federation and other national steelmaker associations have noted that the draft proposal failed to address the issue of increasing imports fully. They specifically mentioned the decision to increase the volume of the tariff-free quotas assigned by 5% each year.

European member states, as widely expected, have backed the European Commission’s plan to impose definitive safeguard measures on imports of steel, the EC stated Wednesday. 

The EC will now finalize the procedure, so that the definitive measures can enter into force on February 4. 

European member states made no changes to the previous provisional measures sent to the World Trade Organization. The EC notified the WTO of its plan before Christmas and made it publicly available on January 4. 

Provisional safeguard measures have been in place since July 2018 and were set to expire February 4. The new measures will remain in place until July 2021. “These measures are intended to shield European steel producers following the trade diversion of steel into the EU market from other producers around the world as a result of the unilateral US measures restricting imports of steel to the American market,” the EC said in a statement. “The definitive measures aim to preserve traditional trade flows.”

The proposal is to impose country-specific quotas for the biggest sources of imports, along with quarterly global quotas for each product for all other countries. The exception is for hot-rolled coil, which received a quarterly global quota. When a country with “significant supplying interest” has exhausted its specific tariff-rate quota, it would be allowed to have access to the quarterly global tariff-rate quota for the specific steel product, which would apply to all other countries, according to the EC.

The proposal has been widely criticized by buyers as well as partially by European steel producers.

The main criticism has come from the steel buyers of long and flat products as they fear that steel prices will surge while the market tightens, harming European consumers and Europe’s supply chain competitiveness.

As soon as the announcement was made, the European Automobile Manufacturers’ Association (ACEA), issued a press release saying it was “extremely disappointed” and that the measures “do not take into account the needs of downstream users of steel, such as the automotive sector.”

The ACEA said it would be sourcing 94% of its steel within the EU and fears that European steel prices could increase and that European mills would not be able to fulfill orders amid a restricted import system.

“The cost of automotive grades of steel has been consistently high for several years and delivery lead times have lengthened considerably. Meanwhile, through consolidation in the European steel industry, the pool of EU producers is getting smaller and the scarce capacity for automotive steel is getting ever tighter,” the ACEA said.

Eurofer, the European steel producers association, welcomed the vote while noting that “there are elements that are not ideal” such as the enlarged quota, the fact that countries with specific quotas can consume the residual part, and the fact that some developing countries are exempt even though they exceed the 3% threshold in some products. 

— Annalisa Villa and Laura Varriale

Klöckner & Co has entered into a strategic partnership with media publishing house Axel Springer, Kallanish learns.  The two companies’ digital units Axel Springer hy and kloeckner.i, will in the future work together to offer consulting services for entrepreneurs to assist them in their digital transformation.

With its kloeckner.i system, the German-based steel distribution group has forged ahead with its own digital transformation, to the extent that digital channels already account for around a quarter of group revenues. The company plans to increase this to 60% by 2022. Last year, Klöckner launched the XOM Materials platform, which is also open to its competitors (see Kallanish passim).

This would apply to two of six companies listed on XOM’s website so far – Friedr Lohmann GmbH and Häuselmann Metall. Four more companies have just joined and will start trading soon, among them more steel distributors, a spokesman reveals to Kallanish, but declined to name them as yet.

The Axel Springer group generates more than 80% of its operating profits through digital offerings. Set up in 2017, Axel Springer hy employs more than 40 digital experts who provide consulting services to customers outside the group.

Both companies say that they have carried out internal cultural and organisational change in order to make their successes possible. They are therefore joining forces to share what they have learned with other companies.

This week the association dedicated to represent the interests of the European wind-energy sector, WindEurope, has criticised the European Commission (EC) proposal on the permanent safeguard measures on imports of steel products. The statement came as EU member countries are to begin discussing and voting on the proposal on Wednesday 16 January, Kallanish notes.

“It’s good the Commission has opted for an annual increase in the steel import volumes. But 5% is very low: we expect demand for steel in offshore wind alone to rise by 36% in 2019. It’s in nobody’s interest for access to steel volumes to turn into a scramble for raw materials with other sectors like we’re all chasing seats in musical chairs. Not least when our own sector has binding EU renewables targets it’s got to help meet,” WindEurope ceo Giles Dickson says in the statement.

“If we have to pay tariffs on our steel imports the price of wind energy will increase. Steel makes up over half the material used in wind turbine production. Tariffs could add 18% to the price of turbines. This would offset the cost reductions we’ve achieved in recent years. And mean achieving the EU’s 32% renewable energy target for 2030 will cost society more than is necessary,” he adds.

WindEurope notes that the increase of steel prices linked to difficulties in importing materials will create a disadvantage for European manufactured goods against, for example, Chinese competitors. This mirrors the concerns already raised by other sources in in contact with end-users in the market.

“We call on European countries and the Commission to agree a higher annual rate of increase in non-tariff volumes than the proposed 5% when they vote on Friday,” WindEurope concludes.

Similar concerns have been issued, for example, by the European carmakers’ association, ACEA. It is unlikely that the EC proposal will be changed drastically. The issues raised by European steel end-users however could well force the EC to agree to further increase the tariff-free quotas proposed or at least to organise them in a different way.

The European Commission said Tuesday it had restarted its investigation into the proposed merger of Tata and Thyssenkrupp’s steel operations following a suspension of the case in December, setting a new deadline of April 29.

The commission paused the case in December to wait for required documents and information which the companies failed to submit in September when they notified the EC about the merger.

The suspension of the investigation ended last week, with the new April deadline set, the EC confirmed to S&P Global Platts Tuesday.

The initial deadline was March 19, but had already been extended once following concerns regarding primarily flat carbon steel for automotive applications, metallic coated steel for packaging, and grain-oriented electrical steel.

The EC said it was concerned that customers of the joint venture between Germany’s ThyssenKrupp and India’s Tata would face a reduced choice in suppliers and higher prices.

If the merger is approved it will create Europe’s second-biggest steelmaker behind ArcelorMittal, producing 21 million mt/year.

The two companies will continue their steel operations separately until the deal is closed.

The CEO of the merged entity will be current Thyssenkrupp Steel Europe head Andreas Goss, while Hans Fischer, CEO of Tata Steel Europe, will be deputy CEO and chief technology officer.

The venture will be a 50-50 split for at least six years with equal representation from both companies, while Thyssenkrupp will have a financial stake in an initial public offering of 55%. The German steelmaker will also have the right to decide when and if an IPO takes place.

— Laura Varriale

Assofermet, the Italian Association of Steel Traders and Distributors, one of Europe’s leading industry associations, sees a “large risk” of surging steel prices harmful to European consumers and Europe’s supply chain competitiveness, if the EU proceeds with its proposed steel import safeguards.

“As we saw also in the US, prices are likely to go up as a consequence of trade barriers, making it more expensive to produce steel locally, and consequently final products such as white goods and cars, as well as steel products for the construction sector,” Riccardo Benso, Assofermet chairman and the CEO of Albasider, said Tuesday. “We do think that the duties that are already in place are enough.

“The provision of more and more protectionist measures can only aggravate the competitiveness problems that already partly afflict our businesses,” Benso said in a telephone interview. “In the long term it can also accelerate the process of delocalization and further loss of competitiveness of some parts of our European industrial system. Much of the added value that characterizes the European industrial system lies precisely in the manufacturing industry chain in its entirety.”

Assofermet has sent a letter to the European Commission explaining the association’s view that a country-quota system is not the right way to proceed, Benso said. According to the association, the use of “averages per country” corresponds in fact to a reduction of the available quotas, since in the first two years of the three years (2015-2017) taken into account, Russia and China still exported large volumes to Europe.

The EC notified the World Trade Organization on December 19 of its proposal to impose country-specific quotas for the biggest sources of imports, along with quarterly global quotas for each product for all other countries. The exception is for hot-rolled coil, which received a quarterly global quota. EC member states are expected to decide in coming days whether to keep the proposal as it is or make changes.

The EC’s proposal for the tariffs on steel imports was also criticized by the European Automobile Manufacturers’ Association (ACEA), which said the proposal would not take into consideration the needs of the automotive sector, which has complained that access to EU steel production is already extremely tight.

According to Assoferment, the split of the HDG quota into two specific groups (4.A and 4.B) will create an additional restriction to import flows. The group with the products not charged with duties (4.B) is mainly targeting the automotive industry and the quotas of the countries within the group are totally insufficient to fulfill the demand. For example, the yearly Chinese quota is 500,000 mt, while in the first 11 months of 2018 imports from China were close to 1.3 million mt. This will lead to a dramatic shortage in the automotive sector, Benso said.

A procurement source at German industrials giant Siemens described the quotas as “in the end so complicated that they have made them incalculable. The quarterly quota distribution makes it incalculable how and when to order or when it is going to be delivered,” he said.

Nevertheless, he does not expect large price increases for end-customers, as prices would be protected by European producers with risk premiums. But country-specific quotas and global quotas limit flexibility in the supply chain, he added.

Also some European mills have criticized the safeguards. For hot-rolled flat steel, Turkey has not received a country-specific quota and will be covered by the quarterly global quotas. Many producers believe that Turkish offers contributed to the Q4 downturn in prices.

— Annalisa Villa and Laura Varriale