European HRC buyers await higher offers; slow demand remains key issue
Buyers in Europe continued to refrain from restocking, opting for hand-to-mouth bookings while assessing the market situation.
“Safeguards news indeed flustered the market. But it’s too early to draw a conclusion. The problem, however, is in low production of new cars [in Europe]. If that continues, end-user demand will remain weak,” a buyer source in Northern Europe said.
“Demand [from end-users] remains on the low side, so getting higher [HRC] prices just based on expected safeguards effects would be difficult,” a second buyer said.
Meanwhile, suppliers in Northern Europe were either keeping quiet, or opting for minor upward price adjustments, testing the market.
An integrated mill from the Benelux area was offering July delivery HRC at €650 ($707) per tonne ex-works, versus €640 per tonne ex-works in the previous week.
In Germany, integrated mills were heard offering July-delivery coil at €640-650 per tonne delivered, which nets back to about €630-640 per tonne ex-works.
An offer was heard for July-August delivery HRC from a Benelux-based re-roller at €620 per tonne ex-works. Lower offer levels, previously reported by buyer sources at €600 per tonne ex-works, were not widely confirmed.
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €633.75 per tonne on Thursday, up marginally by €1 per tonne day on day from €632.75 per tonne.
The index was stable week on week, but down by €7.50 per tonne month on month.
Fastmarkets’ corresponding daily steel hot-rolled coil index domestic, exw Italy was calculated at €630.52 per tonne on Thursday, down negligibly €0.11 per tonne from €630.63 per tonne the previous day.
The index was up by €0.52 per tonne week on week but down by €3.23 per tonne month on month.
The Italian HRC market was also broadly stable.
“Spot demand is soft; buyers are only filling gaps in stocks, no major activity. But mills seem to be defending current price levels and are not willing to step much lower. Limited import options can be supportive for [European steelmakers] in a longer run,” a buyer in Italy said.
Tradeable prices were heard at around €640-650 per tonne delivered from buyers and sellers, which nets back to €630-640 per tonne ex-works.
Transactions for small tonnages of HRC in Italy were heard at €630 per tonne ex-works.
Lead times from local and European mills were around four to five weeks.
In the secondary market, 3-6 mm HR sheet was still traded within the range of €700-730 per tonne CPT, with most trades around €720-730 per tonne CPT, Fastmarkets understands.
Steel service centers’ attempts to increase prices for HR sheets during May were largely unsuccessful due to slow end-user demand, sources said.
No new import offers were heard from Asia after the safeguards review announcement.
“Nobody is willing to buy import [HRC] because of the long lead times. Some buyers opt for imports only to mitigate the risk that EU-mils do not deliver/take production out of the market,” a buyer in Europe said.
So far, Turkey was the major “safe origin” for European buyers. In the past week offers for Turkish HRC with end-July shipment were reported at €600-610 per tonne CFR, including the anti-dumping duty.
Published by: Julia Bolotova
Nordic steelmakers gear up for low-carbon projects, seek clarity on green steel definition
Nordic steelmakers are gearing up with their low-carbon projects to achieve net zero while demand for green steel is increasing as end-users want to cut their emissions, market participants said at a EUROMETAL Nordics event held in Oslo on June 4. Participants also sought clarity over the definition of green steel.
“Demand for low-carbon steel is going to increase higher in the years ahead,” Matts Nilsson, Head of Sales Sweden and Norway for SSAB, said during the panel discussion echoing the sentiment of other panelists.
Sarah Milne, H2Green Steel sales manager, said: “I think this is the most exciting time to be in our industry as we are going through an epochal change.”
“Last year, we put out as a world, 37 billion mt of CO2 in the atmosphere, of which 8% of that was because of the products that we produce. We can’t carry on the way as we are making steel today. We have to change,” Milne said.
Europe aims to cut carbon emissions by 55% compared with 1990 levels by 2030 and aims to achieve climate neutrality by 2050. To achieve these targets, European steelmakers are switching technologies; there are around 60 projects that have the potential to reduce CO2 emissions by 81.5 million mt/year by 2030, of which the most innovative projects are based in the Nordics, given the large quantity of hydrogen.
According to worldsteel data from 2022, on average, every metric ton of steel produced leads to 1.91 mt of CO2 in emission. The carbon intensity changes depending on the route and raw materials used to produce steel.
In Europe, just over 40% of EU steel is produced via the electric arc furnace production process with blast furnace producers that are now mostly changing to the EAF-DRI process. As underlined by panelists at the event, it is not possible to produce steel just with scrap as all the scrap in the world can cover only 30% of the total world capacity, so new breakthrough technologies are needed, similar to the one that H2 Green Steel and Hybrit are using in the Nordics.
Milne said they have sold already half of their future volume production in pre-taken binding agreement and have managed to raise a total of Eur6.5 billion, which is the biggest project funding raised during 2023. “We see more and more demand for low-carbon products; we expected [in] the automotive sector, but now we can see all other sectors are following,” Milne added.
Milne said H2 Green Steel is on track to start its low-carbon production by 2026. The Boden plant will have a 1-GW electrolyze to produce hydrogen for direct-reduced iron produced from renewable electricity — rather than coal — emitting as much as 95% less CO2 in comparison with the steel produced via traditional BF technology in two phases, for a total capacity of 5 million mt of steel.
Steelmaker SSAB said their works to cut emissions were moving forward. “At the beginning of April, SSAB took the decision to invest Eur4.5 billion in a steel mini-mill in Lulea that will cut Sweden’s CO2 emissions by 7%, in addition to the 3% reduction from the conversion of the mill in Oxelosund, which is also progressing well,” Nilsson said, adding that the company will have to take the decision to convert also its BF in Raahe.
SSAB has already a low-carbon steel product — SSAB zero — which comes with a premium, and it will be replaced by fossil free steel by 2030, using scrap and fossil free iron as raw materials once the transformation of all of its sites is completed.
Panelists agreed that even as steelmakers are working to produce a green product, there is a need for the definition of “green steel,” which is key to working with transparency.
“We need an industry definition of what is green, we are all talking about the same thing but slightly differently. How we measure the CO2 is very important, we will see different shades of green,” Milne said, adding that it will probably be more expensive to reduce carbon content 90%-95%.
Platts, part of S&P Global Commodity Insights, launched its carbon-accounted price assessments in May 2023 following the increase in market demand for low-carbon steel products and transparency.
Platts last assessed Northwest European hot-rolled carbon-accounted coil stable on the day at Eur755/mt ($820.4585/mt) ex-works Ruhr June 5.
The assessment was calculated in line with the sum of Platts daily carbon-accounted steel premium (CASP) assessment and Platts daily hot-rolled coil price assessment in Northwest Europe.
Annalisa Villa
Celsa Nordic targets start of hydrogen-based sustainable steel production in H2 2027
At the EUROMETAL meeting in Oslo, a Nordic division of Celsa Group provided details of its more than EUR 35 million project to introduce hydrogen in their value chain.
Celsa Nordic is making progress in its project to reduce CO2 emissions by 50% by 2030 as compared to the 2018 level and become carbon neutral by 2050. The project is based on integrating a unique hydrogen-based solution. The first step of the two-phase hydrogen plan includes the construction of an elecrolyzer by Norwegian renewable energy company Statkraft in Mo industrial park. The second step involves the use of this green hydrogen in a reheating furnace to heat billets, Metal Expert learnt from the presentation made by Celsa Nordic’s marketing director, Halvard Meisfjord, during the Eurometal event in Oslo. The producer will be able to use hydrogen as a 100% energy source or in combination with natural gas in the new rolling mill furnace. Using a mix of different gases will help the producer hedge the risks arising from energy price volatility.
“When we succeed, we will be the world’s first steel producer offering the marked reinforcing steel produced using clean hydro power and green hydrogen,” the company said.
The producer expects investment in the project to be above NOK 400 million (EUR 35 million), of which NOK 121 million (EUR 11 million) is provided by state-owned funding firm Enova. It is now in the process of choosing the supplier of the new furnace. The construction of the elecrolyzer and the furnace is now planned to start in late 2026. Celsa Nordic aims to start producing the first products at the upgraded mill in H2 2027, Metal Expert learnt.
Celsa Nordic produced 683,000 t of rebar and wire rod in 2023, according to the presentation.
Earlier this year, Celsa Group announced it was considering an option of selling its international divisions in Norway, Poland and the UK to be able to repay its debts, Metal Expert reported.
Lilit Papoian – l.papoian@metalexpert.com
EUROMETAL Nordics: Decarbonisation of EU steel industry at full speed, market struggles to keep up
Three key topics were discussed during the Nordics conference held by Eurometal in Oslo on June 3-4: decarbonisation of the steel industry; demand for green steel; CBAM regulation.
Green steel and decarbonisation
The supply and demand for green steel in the European market were widely discussed in Oslo. Steel mills at the conference expressed confidence in the future growth of green steel demand, despite current interest being limited to certain industries. According to SSAB’s Matts Nilsson, this demand is mainly driven by EU-imposed legislation. “Buyers never want to pay more, so mills have to always calculate the value for the customers. If they cannot generate the value towards their customers it’s impossible for the mills to charge a high premium price. It has to be a win-win situation and so far buyers have quite high targets put on them and this is more of a compliance for them to fulfill that,” Nilsson said during the panel discussion.
However, buyers’ attitudes are gradually changing, with the market becoming more receptive, according to Sarah Milne from H2GS. “We have five to seven year long legally binding agreements, they are not framework agreements, and they have got pricing in them, they have got supply in them. Our customers are willing to pay, we pre-sold half of our volume [2.5 million tpy]. There is a lot of first move advantage, there is a lot of OEMs wanting to be first. Automotive also wants to be first, and now we see construction companies coming through. We are also having conversations with Tiers, service centers,” Milne said.
To properly function, the green steel market requires EU legislation that defines what green steel is. Currently, there is no market consensus, other than it being steel with low carbon emissions, with each mill defining its own standards. “We are all talking about the same things but slightly different. And I am absolutely sure that we will see different shades of green and there will be different pricing points associated with abatement of CO2,” Milne said.
Access to renewable energy is crucial for EU steelmakers to successfully decarbonise their businesses. Therefore, new green steelmaking facilities are emerging in areas with affordable renewable energy, such as SSAB and H2Green Steel in northern Sweden and Hydnum Steel in southern Spain. “The future of hydrogen industry in Spain is in Puertollano, the first electroliser of Spain is there and that’s why we are located there,” Fernando Pessanha from Hydnim Steel said during the panel discursion. However, the EU’s renewable energy infrastructure is underdeveloped, necessitating government support for its expansion, according to industry participants.
Higher demand for steel from renewable energy industry
As investments in the renewable energy sector continue, they are boosting demand for steel products, particularly steel plates. With the development of the offshore wind segment, the need for thicker-gauge steel plates for foundations production will increase. Most of these foundations will be monopiles and the number of annually installed foundations is projected to rise from about 250 in 2023 to over 800 in 2027, requiring approximately 1.9 million t of plates over 80 mm thick.
Currently, neither EU mills nor foreign suppliers can meet the future demand for these plates. Rystad Energy, an independent research and business intelligence company, estimates that EU mills can supply only 1.2 million t of plates over 80 mm thick, with an additional 300,000 t potentially imported from suppliers like Nippon Steel, Posco, and JFE. This shortfall will inevitably lead to a shortage of plates for the offshore industry and subsequent price increases.
“This means that large companies will be able to procure first, while small developers will be second and third in line. So, we expect some stockpiling of that material so that the developers will have the material at hand when the time comes to use them,” Audun Martinsen from Rystad Energy said during his presentation.
As this shortage of plate used in monopiles could not be supplied by the EU mills, which are not expected to invest enough to catch up in capacity, Europe will start importing more ready-made monopiles, from China particularly.
CBAM and safeguards
Another widely discussed topic at the meeting was the Carbon Border Adjustment Mechanism (CBAM), its necessity, and the potential harm it could inflict on the EU steel industry as a whole. Both buyers and sellers agree that CBAM regulation is essential for EU steelmakers to remain competitive against foreign suppliers, who are globally increasing their production capacities.
“They key interesting market is India. They are increasing production capacity immensely, building new blast furnaces. They are also saying they will decarbonise by 2070,” Jaap-Jan Aardenburg from Tata Steel Netherlands said.
“There always comes import steel to Europe and if it comes without any demand to it and at much lower cost the rest of us managing to raise that capital and produce will be erased,” Halvard Meisfjor from Celsa Armeringsstal added.
However, these import restriction measures are affecting steel consuming industries. “I wish EOMs had more representation in Brussels, because their needs are hardly considered by the EC while making decisions to protect EU steel industry. Import of certain components starts to increase to the EU and domestic OEMs have hard time competing with them,” a conference participant told Metal Expert on the sidelines of the event.
Eventually, the course for decarbonisation of EU mills and CBAM will make European steel products more expensive and not always competitive with imports, an issue that the European Commission must address. There are expectations that it will do so and expand the CBAM product scope to include finished products as well.
Lilit Papoian – l.papoian@metalexpert.com
EU quota cap could impact Indian HRC imports
India may see a rise in hot rolled coil steel imports as an unintended consequence of Europe’s residual tariff-rate quota (TRQ) capping, Kallanish learns from Indian sources. This could lead to a re-direction of HRC imports from Southeast Asian and Asian countries into India.
Last week, the European Commission proposed to extend the EU safeguard measure on steel by a further two years to 30 June 2026. It also plans to introduce a 15% cap per origin over the “other country” TRQ for HRC (see Kallanish passim).
A market participant notes that a rise in HRC imports could occur from countries such as Vietnam, Japan, Korea and others, being redirected into India. Another trader notes: “[India’s] HRC imports could grow if Asian mills drop prices further.”
Indian producers have been outspoken about their concern over rising imports from Asian and Southeast Asian countries. In May, Indian steel representatives warned of the potential impact of imports into India following the US tariff hike on China-origin steel.
Indian Steel Association (ISA) secretary-general Alok Sahay said: “Imports from China and Japan have already gone up last year. Given this kind of situation, India is already under grave threat of import because all major steel consuming economies are shutting their doors on these steel producing countries.”
Given India has not implemented any trade remedial action on steel in the last couple of years, this makes it vulnerable to “predatory” imports that will hamper its ambitious steel capacity expansion plans, he added.
In May, Vietnamese steelmaker Formosa Ha Tinh Steel was also granted a licence renewal from the Bureau of Indian Standards (BIS), adding to the number of foreign players in the Indian import market.
India remained a net importer of finished steel in April, according to Joint Plant Committee data. Finished steel imports rose by 27.1% year-on-year to 0.585 million tonnes, while exports contracted by 41% to 0.505mt (see Kallanish passim).
India was a net finished steel importer in the fiscal year ending March 2024. Annual finished steel imports rose by 38.2% on-year to 8.32mt. Exports grew 11.5% to 7.487mt.
In January, ISA called for the Indian government to implement safeguard measures, such as a 8-12% import duty applicable to all steel shipments, particularly those arriving from countries such as China. But the steel ministry said it is not likely to impose a duty, citing higher-than-expected domestic demand.
Suhita Poddar India
Voestalpine expects relatively stable markets
Market trends have not changed significantly for voestalpine following the start of its 2024/25 business year in April, the Austrian group said when presenting its annual results on Wednesday.
In fiscal 2023/24 – ending March 2024 – voestalpine achieved satisfactory results, with overseas markets performing better than Europe. Looking at its customer segments, it expects good demand from railway infrastructure, aerospace, and warehouse technology to continue. The automotive industry and the energy sector, as its main segments, should largely continue their stable development to date, the group noted.
At the annual press conference attended by Kallanish, chief executive Herbert Eibensteiner conceded that the energy sector will not repeat last year’s boom, as exploration and pipeline projects have slowed down. Last year’s “problem children” – the construction, mechanical engineering, and consumer goods segments – are likely to remain at least at their current level. “It seems that the bottom has been reached here – at least, we do not see a further deterioration,” he observed.
The group’s revenue in 2023/24 was its second-highest in history, at €16.7 billion ($18.2 billion), after achieving record revenue of €18.2 billion in the previous year. Key figures have now “returned to normal” in the latest reporting year, voestalpine noted. Ebitda reached €1.7 billion, down from €2.5 billion. Ebit came to €570 million. While the economic slowdown was partly responsible for the earnings drop from the previous year, non-recurring effects also played a role, the company said.
Voestalpine’s management will continue to expand the group’s processing activities globally in the 2024/25 business year (see separate story).
Christian Koehl Germany
Italian rebar producers seek increases
Italian rebar transaction and producer quote prices are rising, mills and distribution sources tell Kallanish.
Steelmakers are now asking for a significant, €30/tonne ($32) on-month hike to €370-390/tonne base ex-works. Domestic deal values, however, have increased so far by only €10/t versus last month and are pegged at €330-340/t base ex-works. Including extras, this week’s transactions have reached €590-600/t base ex-works. The level of €610/t ex-works has also been achieved but for very low tonnages.
Domestic mesh is increasing in line with rebar, hovering at €430-440/t base ex-works. Buyers must add transport costs and around €300/t in size extras to obtain effective prices, sources suggest.
According to a buyer, the increases will not stick due to the weak market, and prices will fall back again to about €320/t base ex-works on average. Some local mills have pushed up values due to the current low margins and high cost of raw material. Another source reports limited consumption and sluggish activity in May.
Natalia Capra France
ArcelorMittal increases longs prices in Europe
Market sources say ArcelorMittal is announcing higher prices for long products across Europe. The move is driven by the high cost of production and the need to recover margins, Kallanish notes.
The steelmaker is reported to be offering €30/tonne ($32) above its May quotes for all commodity grade longs. “Capacities have been reduced because of the lower consumption across Europe, but prices are now being strongly impacted by the high cost of energy and raw materials, such as scrap which remains expensive,” a source comments. He adds that demand is not as high as it was in recent years, but is still “acceptable”.
The northern and southern European longs markets have been hit by lower consumption and high production costs. According to a mill source, southern European countries are performing better than those in the north and west, where sales are weak and margins low. Last month, all longs producers in Germany, France, Italy and Spain pushed up values with mixed results. This month, Italian rebar makers are again attempting a price increase (see separate article).
Natalia Capra France
Trader Cargill exits China domestic steel trading
According to China metals trading lead, Oliver Handasyde Dick, Cargill is adjusting its structure according to market fundamentals and had ceased steel trading after a recent examination of its business model.
“However, this does not change Cargill’s position in China; we will continue to provide risk management solutions for our clients in China. For example, we continue to maintain a strong position in iron ore and will continue to provide Chinese steelmakers with pricing and supply chain solutions,” Dick said in a note the clients.
He also promised no changes to Cargill’s current contract obligations in China.
“The Chinese market is very tough to compete in,” an industry source in Southeast Asia told Fastmarkets.
Multiple trading companies have suspended their physical trading in the past couple of years, according to market participants.
“It’s been a big struggle for the ferrous industry chain, from steelmakers to downstream users, to make money in the recent two years. With traders in the middle of the chain, we are facing greater challenges in maintaining margins,” a Shanghai-based trader, who handles spot steel trading in China, told Fastmarkets.
China’s ferrous metal smelting and rolling processing industry recorded a total loss of 22.22 billion yuan ($3.07 billion) in the first four months of 2024, according to data from National Bureau of Statistics (NBS).
Meanwhile, Cargill’s exit from Chinese domestic steel trading is not expected to have any effect on the overall market in terms of prices, supply or demand, a second steel trader in Shanghai said.
With demand seasonally slowing and cost supports softening in anticipation of peaking hot metal production, Chinese steel prices have moved lower in the past two weeks.
Fastmarkets’ price assessment for steel hot-rolled coil domestic, ex-whs Eastern China (Shanghai) was 3,780-3,800 yuan ($522-525) per tonne on Tuesday. This is its lowest level in about eight weeks.
On the same day, Fastmarkets’ daily price assessment for steel reinforcing bar (rebar) domestic, ex-whs Eastern China was 3,500-3,520 yuan ($483-487) per tonne, marking the lowest level in three weeks.
Jessica Zong in Shanghai contributed to this article.
Published by: Zihuan Pan, Paul Lim
Norway’s steel demand expected to strengthen in H2 2024 as economic fundamentals improve
Norway’s steel demand is expected to strengthen in the second half of 2024 and 2025 helped by a recovery in economic fundamentals mainly in the construction sector, Arne Reinertsen, CEO of E.A. Smith, the only steel service center in the country, told S&P Global Commodity Insights on the sidelines of the EUROMETAL conference in Oslo on June 4.
The construction sector was the largest consumer of steel in Norway in the first half of 2024, followed by the oil and gas sector.
“Construction went down 30% to 40% [in H1 2024] from its peak as both residential and commercial real estate were affected by high interest rates, with housing starts hitting 20-year lows, despite population growth,” Reinertsen said. “The offshore sector has been solid throughout, driven by high energy prices and COVID-era tax incentives for capital expenditure.”
Norway’s total steel consumption including all grades and qualities, and shapes and sizes, was around 1.3 million-1.4 million mt in the 12 months ended April that is “pretty flat relative to the preceding 12 months,” Reinertsen said. “Around 90% of this is imported, while the rest is made by rebar producer Celsa [Armeringsstal] in Mo i Rana,” he said, citing Norway statistics data.
“While imports of long steel for construction are down around 40% year on year and traditional flat steel imports down approximately 20% on the year, pipe and steel for the offshore industry have held up total volumes reasonably well,” he said.
Nils Kristian Knudsen, analyst at consumer banking company Handelsbanken expects H2 2024 to be brighter for the Norwegian economy, with houses prices rising 6%-7% each year going forward, sustaining the construction sector and the steel industry.
Norway produced 689.884 mt of steel products in 2023, down 2% year on year, according to wordsteel data. Celsa Armeringsstal is Norway’s only steelmaker. It is part of Celsa Nordic, which serves the broader region, and makes liquid steel via electric arc furnace and finished rebar products.
Celsa Nordic’s low carbon strategy
Celsa Armeringsstal expects its total steel products output for 2024 to be slightly below 2023, Halvard , Celsa Nordic commercial manager and chairman of Norwegian Steel Association told Commodity Insights on the sidelines of the event.
Celsa Armeringsstal uses 55% of all steel scrap in Norway as raw material, and hydropower in its melting processes, making it a low CO2 emitter in the country with 304 kg CO2e/mt each year. Celsa Nordic aims to cut its CO2 emissions by 50% by 2030 and reach zero CO2 emissions by 2050, said.
Celsa Nordic is part of Celsa Group. Celsa Group has said that it expects to sell some of its plants in Poland, Norway and the UK to strengthen its financial position.
Platts, part of Commodity Insights, assessed the price of Northwest European rebar at Eur600/mt ex-works on May 29, up Eur15 on the week.