Category: Latest Updates

Inventories at German steel stockholders remained largely stable in Q3 this year compared to the same period last year, up by 0.5%, while sales saw a 2.4% y-o-y drop in Q3, according to latest figures from the stockholders’ association Bundesverband Deutscher Stahlhandel (BDS).

Stocks remained stable at 2.3 million metric tons in Q3, while sales fell to 893,327 mt, owing to lower sales of long products which saw a fall of 7% y-o-y to 286,304 mt. Flat products sales went down by 2.1% y-o-y.

Stocks of long products grew by 2% y-o-y to 839,907 mt in Q3, whereas flat products remained stable at 1.4 million mt.

In month-on-month comparison, stocks of long steel products went down by 7.9% to 790,022 mt in September, while flat products fell by 1.9% to 1.4 million mt. Sales showed the opposite dynamic in September, indicating a continued upwards trend after the summer slowdown. Sales of long products grew by 1.8% m-o-m to 295,150 mt, whereas flats rose by 3.3% m-o-m to 545,648.

Laura Varriale, PLATTS

Please find attached the article in stahlmarkt following your interview with them during the Stahl Tag event in September.

stahlmarkt (steel trade press; paid circulation: 7,300. Read by decision makers in the German steel industry)

Headline and date: ‘No hiding from global competition – Tata Steel prepares for the future’ on 8 November 2016

Short summary: As Europe is still a highly open market and faces cheap imports, Jens Lauber from Tata Steel says international trade needs to be fair on a global scale. Tata Steel is developing new products such as Celsius 355 or Serica to face these challenges and remain competitive. Yet, according to Lauber it is not enough to just develop new products and offer them in a traditional way as new non-European players have entered the market, directly approaching customers or buying steel companies in Eastern Europe. Moreover, online sales and distribution will intensify with new players such as Alibaba entering the market.

As a result, new digital ways of bringing products into the markets are needed. In this regard, the customer is the most important part of the supply chain according to Lauber: New concepts and products need to be developed in strong cooperation with them. Furthermore, steel producers need to deeply network with their customers to be able to consider their steel demand within daily business. The aim is to generate value, offer new services and connect delivery logistics with the customer’s demand. In this regard, digitisation is a useful tool to fulfil new wishes and requirements of the customers. Humans are not replaced, but new possibilities of linking all steps of the supply chain are revealed. In the future, no company will be successful without deeply engaging with its customers as Europe is one of the most demanding markets when it comes to customer requirements. Thus, “we need to discuss with each other and find new ways together”, Lauber concludes.

stahlmarkt_no-hiding-from-global-competition

Kind regards,

Rob Simpson

Head of Media Relations, Europe

Tata Steel

T:  +44 (0)207 717 4404

M: +44 (0)7990 786531

Germany-based distributor and service center operator Klöckner & Co continued to improve its net and operating income (EBIDTA) in Q3, driven by steel price upswings and margin improvements, despite lower sales and volumes, CEO Gisbert Rühl said in a press call on Thursday.

The company expects an increase in EBIDTA to €180-190 million for 2016, but expects seasonally lower sales in Q4 (see related article).

According to Klöckner, positive price effects of €46 million in Q3 resulted in an EBIDTA of €71 million in total compared to Q3 last year. The increase was supported by the increased use of market-sensitive digital pricing tools, the company said. Klöckner’s net income went up to €31 million in Q3 from a loss of €9 million last year.

The proportion of sales generated digitally grew to 11% in Q3. As reported, Klöckner aims to achieve 50% of its trading online by 2019.

Shipments went down by 8.3% to 1.5 million metric tons y-o-y in Q3 due to the exit of the low margin business, according to the financial report. There has also been a quarter-on-quarter decrease because of seasonal declines in Europe and weaker demand for industrial products in the US. While prices have recovered compared to the beginning of the year, lower average sales prices resulted nevertheless in a 10.5 y-o-y decrease in sales to €1.4 billion.

“After the market- and restructuring-driven impacts of the past few years, our improved operating line-up is now increasingly visible in the results. By systematically implementing our digitalization strategy and the extension of business involving higher value-added products and services, we are working all out to ensure that the upward trend continues,” said Rühl.

As reported, Klöckner is currently expanding its aluminium trading and processing as the distributor sees a demand increase in aluminium of 20% by 2020. “However, aluminium will not replace steel,” emphasised Rühl.

Aluminium currently accounts for 7% of the company’s sales, while steel products account for around 80%.

Laura Varriale, PLATTS

Flat product prices are likely to stabilise in Europe until mid-next year, while the US market remains uncertain, Gisbert Rühl, CEO at German distributor and service centre Klöckner & Co. told Platts in a conference call on Thursday. Rühl suggested, however, that price decreases in the US have, nevertheless, hit rock bottom already.

“We are not pessimistic about next year. It is hard to forecast, but we basically expect a stable development in Europe,” said Rühl, adding that the US market will be dependent on an upswing from the industrial sector and a price recovery in oil and gas in particular.

Klöckner expects this year’s positive trend to continue in Q4, though with seasonally lower sales. “Q4 is typically the weakest quarter,” said Rühl. The distributor anticipates an operating income of between €180 million and €190 million, significantly above the previous year’s figure of €86 million, as well as a positive net income.

Despite the favourable forecast, the steel distributor remains bearish. “Pressure in the steel market will continue,” said Rühl. “Overcapacities will remain, but anti-dumping duties will help,” he added.

Current demand and the future outlook of Klöckner’s main markets – the US and Europe vary significantly. While consumer-based demand is solid in the US, demand from the heavy equipment and oil and gas sectors is expected to remain weak this year and they are likely to show no short-term uptick, affecting the heavy plate business in particular.

“It is surprising that the US market has been so disappointing. The development of secondary effects was worse than expected,” Rühl said.

In the US, positive noises are coming from the construction industry and automotive demand is likely to remain steady, while in contrast the manufacturing, energy and shipbuilding sectors are lacking an uptick.

Klöckner’s view on Europe looks brighter by comparison; apart from the energy industry, all sectors are seeing positive developments, while Germany’s shipbuilding industry is particularly strong. Real steel demand is estimated to increase in Europe by 2% until the end of the year, whereas US demand is forecast to dip by 3%. The European market accounts for 61% of Klöckner’s sales, the US for 38%.

Laura Varriale, PLATTS

ArcelorMittal CLN Distribuzione Italia (AMCLN) intends to acquire Acierplus, a newly constituted company, after the European Commission merger regulators approved the deal.

A person close to the deal disclosed that AMCLN is eying three plants that used to be part of a former company called Solustil that are focused on processed steel products for yellow goods and railway part components, a company that used to be owned by AMDS.

Solustil is a flat product metalworking company that stamps, bends, welds for the heavy good machineries, railways and energy sectors. The rest of its operations will be sold to a company called Cellino.

The deal is expected to be done by the end of this year.

AMCLN is a joint venture controlled by ArcelorMittal and Italy’s CLN Group, active in steel distribution through service centers. Acierplus will be focused in the steel distribution through oxycutting centres. Cellino is a metalwork company.

Annalisa Villa, PLATTS

The German cooperative Einkaufsbüro Deutscher Eisenhändler “E/D/E”, which purchases material on behalf of steel distributors and hardware companies, has relaunched its steel division Union-Stahl-Handel, now named ESH Euro Stahl-Handel (ESH), and given it a more international focus, the company confirmed to Platts Friday.

“Looking at overcapacities at European steel producers and ongoing consolidations, market conditions will continue to change. We want to be prepared for that. The new organisation improves our position to react flexibly and in a timely manner,” ESH managing director Heinz-Alfred Liebig told Platts.

Liebig said the company would intensify its relationships with international suppliers and is reacting to the changing requirements of its 160 members and prevailing market conditions through the reorganisation of steel purchasing.

ESH has changed its previous focus (as Union-Stahl-Handel) on rebar and mesh to now include products such as sections, tube, flat products and bar as well as core business.

ESH buys products in Europe and worldwide. “Looking beyond the borders in steel trading, especially in purchasing, is getting more and more important. We will, from now on, think in European dimensions with our partners and establish their relevance in international business accordingly,” said E/D/E board member Joachim Hiemeyer in a press note.

As reported, earlier this year Union Stahl-Handel saw a year-on-year fall of 11.2% to €816 million in 2015, but was able to increase sale volumes of rebar, tube and flat product while experiencing average product price falls of 11% over last year.

— Laura Varriale, PLATTS

Participants in the European strip product distribution market are evaluating what their new pricing strategy should be in light of the raft of higher mill offer levels, while mills are talking up the possibility of further increases.

Service centers and stockholders are assessing how they can pass on the extra cost of their future replacement stock to customers in light of the oversupply in the downstream sector.

The market took a break last week as buyers and sellers met during the EuroBLECH meeting in Hannover, Germany. Mills have been firm in increasing their hot rolled coil offer levels to €500/metric ton ex-works while CRC and base hot-dip galv is a further €100/mt.

“At the moment there is a kind of panic, due to the higher prices from Tata and ArcelorMittal. Everybody has to pay higher prices but when you go into the market there are still a lot of stockholders keeping their same level,” a service center buying source said.

A stockholder in Germany said he had achieved €10-15/mt of the €20/mt increase his company had implemented weeks earlier, but now outsell prices have to push again.

The raft of anti-dumping measures has spooked a number of those in the market feeling squeezed by European mills. New sources have been seen in HRC and CRC, with Taiwan increasingly mentioned as an option for HRC buyers, although others suggested Taiwan was mainly active in the PPGI market. However, there are very few attractive options currently.

Mill sources have been bullish with one noting “€460/470 EXW has been easily achieved, we feel the target of €500/mt will be reached very soon. And if raw materials don’t drop we could see more increases in the second part of Q1”.

Peter Brennan, PLATTS

The Italian coil market is in waiting mood following ArcelorMittal’s recent announcement it would increase prices across Europe, market sources told Platts Tuesday.

Italian stockholders said before they return to buy, they are trying to pass on the higher prices (to end users) that they had previously paid. “We are cautious about making any purchases, we must first pass on our higher cost prices, but we are also cautious about selling, as we believe that prices will go up further, so we don’t want to make any discounts in the rush to sell. Mills have pushed for higher prices as raw materials went up and we see room for further increases as non EU mills have also raised their prices,” a source at a large stockholder said.

“ArcelorMittal pushed prices up also here [in Italy] although it did not manage to pass its previous increase, but the message is very clear – they want to raise prices because raw material prices are going up and we expect that other Italian mills will follow,” a source at a large stockholder said.

“It seems also that it could be a move to prepare clients before the next important negotiations. Additionally, the fact that ArcelorMittal made its announcement just before EuroBLECH indicates that it is publicly displaying the direction that it intends to go in,” he added.

In Italy ArcelorMittal is officially quoting €480/mt base ex-works for hot rolled coil; but other domestic mills are still at around €430-440/mt base ex-works. Import offers into Italian ports moved to around €440/mt CIF Italian ports (from Turkey, arriving in January) down from quotes of €400/mt CIF Italian ports, from two-three weeks ago.

Domestic mills are now quoting cold rolled coil at €530/mt base ex-works, but ArcelorMittal wants to achieve €600/mt base ex-works. Imports have also moved up to €550/mt CIF Italian ports (from India, end-January delivery).

Annalisa Villa, PLATTS

In the modern global economy, trade is essential for growth, jobs and competitiveness, and the EU is committed to an open rules-based trading system.

Exports now support almost one in seven manufacturing jobs in Europe (i.e. more than 30 million jobs – two thirds more than 15 years ago), while imports are a major source of productivity gains and allow consumers to benefit from access to more choice and lower cost products.

Production in the EU is dependent not only on energy and raw material imports, but also on parts, components and capital goods like machinery.

Together, these products make up 80% of EU imports.

EU-COMMISION-COMMUNICATION-ON-TRADE-POLICY-18.10.2016