EUROFER: European steel industry and manufacturing at existential risk
The latest developments in the steel sector and across critical value chains are worrying signs of a steady deterioration, endangering the survival and the transition of steelmakers and their key manufacturing customers in Europe, such as automotive. A Clean Industrial Deal including swift and radical measures in EU industrial, energy and trade policies, is the last chance to ensure Europe’s prosperity and shield European industry from cheap imports driven by third countries’ unfair trade practices, overcapacity and lower climate ambition, urges the European Steel Association.
“The risk of de-industrialisation in Europe has never been more evident than today. The latest news coming from Germany and Eastern and Central Europe are only the tip of the iceberg we have been warning about since a decade, and which is now impacting not only steel but also key value chains such as automotive and wind. The situation is explosive; both industry and decarbonisation are at risk”, said Axel Eggert, Director General of the European Steel Association (EUROFER). “Either we get a robust Clean Industrial Deal, or Europe will inevitably become an industrial museum powered by Chinese and American clean technologies”, he warned, adding that: “The key requirements for the EU steel industry to remain in Europe are, firstly, immediate and comprehensive trade action stopping unfair trade practices and global overcapacity being offloaded onto, and destroying, the EU steel market. Secondly, a waterproof Carbon Border Adjustment Mechanism (CBAM) that will not allow steel imports from countries that circumvent climate protection by exporting to the EU from a few ‘clean’ installations and selling their dirty steel in their domestic and non-EU markets. Furthermore, we need affordable clean energy and lead markets for EU-made green products to support the transition”.
“The European steel sector is a litmus test for the entire EU industry’s health. We rang the alarm bell several years ago. Now the symptoms of deindustrialisation have spread to the value chain. We need, as Mario Draghi said, radical change in EU policies to reboot our competitiveness. This is the last train for Europe’s decarbonisation and prosperity”, concluded Mr. Eggert.
EUROFER Press release – EU steel industry at existential risk
European green steel premiums slide amid general downturn in steel sector
“This year started on a positive note, but demand is deteriorating, the steel market is weak in general and the willingness to pay a premium [for green steel] is not there,” a mill source told Fastmarkets.
Market participants said there was a lack of projects across Europe requiring green steel and demand from the key consumer – the automotive industry – had also been slow lately.
European suppliers have, therefore, started to be more flexible with their green steel sales and have started offering discounts on bigger lots.
Notably, recent trades for steel with Scope 1, 2 and upstream Scope 3 emissions below 0.8 tonnes of CO2 per tonne of steel, were reported at €100-150 ($111-166) per tonne.
And one transaction was said to have been completed with a premium below €100 per tonne – although that was for for steel with CO2 content below 0.3 tonnes per tonne of steel and could not be widely confirmed, sources told Fastmarkets.
Most buyers estimated the achievable premiums for green steel with Scope 1, 2 and upstream Scope 3 emissions below 0.8 tonnes of CO2 per tonne of steel at €100-200 per tonne.
In stark contrast, however, offers for the same material were reported at €200-300 per tonne during the assessment week.
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was €100-200 per tonne on Thursday, widening downward from €150-200 per tonne on August 29.
The corresponding green steel base price, HRC exw Northern Europe, daily inferred was €737.60 per tonne at the midpoint on September 5.
Despite the weak market and slow consumption, sources told Fastmarkets they remain optimistic regarding the take-off of green steel in Europe in the coming years.
“The transition to green steel is still on the cards – it’s coming; it’s inevitable. But considering the current economic situation [in Europe], it is going to be delayed,” a large buyer in Northern Europe said.
Prices stable in Northern Europe long steel market amid continued weak demand
Summer closures further slowed demand, sources said.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe was €620-635 ($688-705) per tonne on Wednesday, stable week on week.
Mills remained resistant to offering price discounts, despite weak demand and falling feedstock costs, Fastmarkets heard.
Minimal large-tonnage trades were reported, with customers opting to restock small tonnages with short lead times, and mills were reported to be offering premium prices for these very small-volume trades, sources said.
“Prices are unchanged, and demand is depressed,” a trader source told Fastmarkets.
“Producers are trying to delay an imminent price reduction, and since clients tend to order only what is necessary, this results in orders with very short lead times,” a buyer source said.
The corresponding Fastmarkets’ weekly price assessment for steel wire rod (mesh quality), domestic, delivered Northern Europe was €615-650 per tonne, stable week on week.
Despite prices remaining flat, new lower offers were expected in the coming week, Fastmarkets heard.
“At the moment, there is still stability in the wire rod prices. There could be some speculation based on scrap values that have dropped in Turkey,” a wire rod producer source said.
There was uncertainty in the market regarding the direction of future scrap prices, Fastmarkets understands.
“We don’t know what the real Northern European September scrap price for bigger volumes will be and what the reaction of rolling mills will be, as industry margins are very low,” the producer source added.
Scrap prices were largely stable at low levels week on week. Prices have fallen since the beginning of August due to a downturn in Asia-origin billet import prices.
Fastmarkets’ calculation of its daily index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey was $359.87 per tonne on Wednesday, down by $1.28 per tonne week on week and by $23.78 per tonne month on month.
Thyssenkrupp lines up Steel supervisory board chairman successor
Following the departure of several members of the executive and management boards of thyssenkrupp Steel last week, the next chairperson of the supervisory board could be Ilse Henne, chief executive of thyssenkrupp Materials Services.
Although an appointment has not yet taken place, parent thyssenkrupp AG says its executive board has proposed Henne, the company tells Kallanish upon request. Henne became ceo of the distribution division after the departure of Martin Stillger. She has been with the division for a while. As head of a unit in the Benelux, she improved the coordination of local companies in Belgium and the Netherlands to achieve synergy.
Stillger took his leave due to a disagreement with tk AG ceo Miguel López, insiders say. They also believe that Henne has a much better standing with López, as she not only became a divisional ceo, but earlier also a member of parent AG’s board. Her potential new appointment would support that assumption.
Her earlier appointment at tk Materials was one of two decisions that were preceded by a standoff in the supervisory board at the AG, between the representatives of shareholders and of employees. The decision came about on the basis of chairman Siegfried Russwurm executing his double vote. The same move served to release the sale of a 20% stake in tk Steel to Czech energy firm EPCG.
Both decisions were followed by harsh criticism from union and employer representatives, who called it a violation of the corporate culture of fair co-determination. The ongoing dispute between tk AG’s management and employer factions came to a head with last week’s mass exodus from tk Steel’s board.
In a statement this week, union IG Metall reiterated that the confidence between employees and ceo López was shattered. It asked López and Russwurm to return to a sensible dialogue with employees, rather than push through decisions against the other faction. The union mentions a campaign branded “López is not our ceo”, which has been signed online by several thousand members.
Christian Koehl Germany
European HRC prices steady on limited demand; production cuts seen as likely
They described the market for HRC in Europe as “quiet, if not dead” and said it was the “the weakest in years.”
“Domestic [HRC] prices are under heavy pressure due to oversupply, moderate automotive consumption/buying, a weak construction market and low import prices,” one buyer in Northern Europe told Fastmarkets.
A second bujyer said: “Nobody is in a rush to buy. The market is oversupplied and lead times are short.”
Restocking has not started and steel service centers (SSCs) and distributors were not looking for tonnages in light of the weak demand for steel downstream.
“SSCs have sufficient stock and, in fact, are trying to reduce their inventories,” a trading source in Europe told Fastmarkets. “There is fierce competition, especially between SSCs, because of [too] high inventories and cashflow needs.”
Buyer estimates of tradable prices for HRC were reported at €560-590 ($619-652) per tonne ex-works, depending on tonnage. But the lower end of the range was said to be too close to the cost line and no trades have been reported.
In Germany, offers were reported at €590-600 per tonne ex-works, while in the Benelux area offers came in at €570-610 per tonne ex-works, depending on supplier.
Sources said production cuts could help producers to stop the downtrend in prices and they expect some steelmakers to announce blast furnaces closures in September-October – although no official announcements have been made so far.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe at €590.00 per tonne on Wednesday, unchanged from Tuesday.
The index was down by €7.00 per tonne week on week and by €30.50 per tonne month on month.
In Southern Europe, Fastmarkets’ corresponding daily steel HRC index, domestic, exw Italy was also unchanged at €590.00 per tonne on Wednesday.
The Italian index was down by €5.00 per tonne week on week and by €30.63 per tonne month on month.
Buyers put the achievable price level at €590-600 per tonne CPT (€580-590 per tonne ex-works), depending on the tonnage.
A small transaction was reported at €600 per tonne CPT but, in general, activity remained limited amid slow end-user demand and a lack of clarity regarding the future price direction.
Import offers were stable to slightly weaker week on week, sources said.
Offers from Turkey were reported at €560 per tonne CFR, including the anti-dumping duty, for lots above 3,000 tonnes, with early-to-mid November shipment.
And an offer from India was heard at $600 per tonne CFR.
Buyers continued reporting HRC offers from China at €540-550 per tonne CFR, including import duties, but no fresh bookings were reported.
“The gap [between domestic and import prices] of just €30-40 per tonne is just not worth the risk. I think more [European buyers] would prefer to book [HRC] of European origin in the next restocking round,” a buyer in Italy told Fastmarkets.
Published by: Julia Bolotova
European HRC prices remain stable amid muted activity
Domestic prices for European hot-rolled coil remained stable Sept. 4 amid muted activity in the market, with stagnant demand and excess supply placing a strain on market fundamentals.
“At the moment, there are not many people buying,” a trader source said. “Maybe from next week [there will be] some medium to long term agreements.”
“The problem is low demand,” a distributor source said.
Market sources noted that the outlook for the next few months remains bleak, as consumer interest remains lower than usual for this time of the year. Despite mills attempting to lower prices, consumers are not interested, and are looking forward to the beginning of next year, sources said.
“In Italy, I doubt there are service centers that need to buy,” the trader source said.
Interest in imported HRC remains uncertain, especially as a combination of safeguard measures, long lead times and expensive freight rates weigh on market fundamentals.
Platts assessed Northwest European HRC at Eur590/mt ex-works Ruhr Sept. 4, stable on the day.
Tradable values were reported at Eur580-600/mt ex-works Ruhr.
Meanwhile, Platts assessed domestic HRC prices in Southern Europe at Eur590/mt ex-works Italy, also stable on the day.
Platts assessed imported HRC in Northwest Europe stable on the day at Eur559/mt CIF Antwerp and imported HRC in Southern Europe stable on the day at Eur560/mt CIF Italy.
Geraint Moody | Devbrat Saha
Italian crude steel output down 3.9% on year in July: Federacciai
In the first seven months of the year, national steel production dropped 5.4% on the year to 12.5 MMt, while the breakdown of finished steel products highlighted a two-speed trend in July output with longs products up on the year but flats products falling.
Long products rose 4.2% on the year to 1 MMt in July and 0.7% to 7.4 MMt in January to July.
In contrast, flat production fell 16.8% to 716,000 metric tons in July, with figures including a decline in production at the second-largest domestic flat producer ADI.
From January to July, flat steel production dropped 10.7% to 5.2 MMt.
In July hot rolled coil values in Italy fell from Eur630 ($696) metric tons per year base ex-work Italy to Eur620/t by the end of the month, and continued to drop in August. In the first seven months, HRC prices lost Eur65/t. On Sept. 3 HRC closed at Eur590/t base ex-works Italy, flat on the day.
Annalisa Villa
Italian crude steel output continues to decline
Italian crude steel output fell again in July, by 3.9% year-on-year to almost 1.7 million tonnes, local steelmakers’ association Federacciai confirms.
In the first seven months of the year, production slipped by 5.4% on-year to almost 12.5mt, Federacciai says in a note obtained by Kallanish.
In July, the association noted a “two-tier market trend” between long and flat products. Flat steel production fell by 16.8% to 716,000t in July and by 10.7% to 5.2mt over January-July. Longs output increased in July by 4.2% to 1mt and by 0.7% to 7.4mt in the first seven months.
In the first half, Italian crude steel output fell by 5.2% on-year to 10.8mt. It declined by 11.5% y-o-y in 2022 to 21.6mt and by a further 2.5% on-year to 21mt in 2023.
Natalia Capra France
Polish ministry to host large-scale steel industry meeting
The Polish industry ministry will host a meeting in early November with representatives of steel trade unions and management from steel companies to discuss the “overall functioning of the industry”, industry minister Marzena Czarnecka posted on X.
This follows a meeting with trade unions this week to discuss current steel company order levels, protecting industry jobs, financing investments and ensuring steel plants continue to operate, Kallanish notes.
Like the rest of Europe, Poland’s steel industry has experienced a downturn since the outbreak of war in Ukraine in 2022 amid high inflation and interest rates, as well as geopolitical uncertainty slowing economic growth and, most importantly, hammering the construction sector. Manufacturing has meanwhile been hit by elevated energy and carbon costs. This has been coupled with lower-priced imports as Chinese domestic demand has slowed and resulted in growing Chinese exports that have displaced Asian steel into Western markets.
Largest steelmaker ArcelorMittal Poland ended coke-making in Krakow this year after shutting the hot-end in 2020, while its flagship Dabrowa Gornicza works is eyeing a costly transition to electric arc furnace steelmaking. Plate maker Liberty Huta Czestochowa is insolvent and seeking a new owner, while Celsa, which is experiencing its own financial problems, is widely reported to have put its Huta Ostrowiec plant up for sale.
CMC Poland and Cognor are the country’s other major steelmakers.
Adam Smith Poland
Volkswagen may close German factories to reduce costs
German car producer Volkswagen (VW) is mulling the unprecedented option of closing some factories in Germany, the company tells Kallanish.
“The economic situation has become even more difficult and new players are invading Europe,” company chief executive Oliver Blume says in an official statement. “Germany continues to decline as a business location in terms of competitiveness. In this environment, we as a company must now act decisively.”
According to the company, Volkswagen Passenger Cars aims to contribute a sustainable earnings impact contribution of €10 billion ($11 billion) by 2026. “However, the current developments in the automotive market and the German economy demand further action,” it adds.
For the entire Volkswagen AG group, the priority now is to create the financial scope for investments in future products, without which production capacity at sites will be underutilised.
From the board’s perspective, the brands within Volkswagen AG must undergo comprehensive restructuring. The goal is to optimise product costs, material costs, and sales performance, as well as factory and labour costs, VW notes.
“In the current situation, even plant closures at vehicle production and component sites can no longer be ruled out without swift countermeasures,” the carmaker observes. “The situation is extremely tense and cannot be resolved through simple cost-cutting measures. This is why we want to initiate discussions with employee representatives as soon as possible to explore the possibilities for sustainably restructuring the brand.”
In the company’s view, restructuring based solely on demographic developments is insufficient to achieve the urgently needed structural adjustments for greater competitiveness in the short term. It therefore feels compelled to terminate the employment protection agreement that has been in place since 1994, it adds.
The possible closure of plants in its home country would be a first in the 87-year history of the German automotive icon.
According to German automotive experts, increasing the revenue and profit of the Volkswagen brand is becoming an increasingly difficult mission due to rising logistics, energy and labour costs. The German company is also losing momentum in its biggest market, China, with its EV models lagging far behind rivals, while cheaper Chinese cars are also entering Europe.
Svetoslav Abrossimov Bulgaria