Italian government approaches investors for the former Ilva
The Italian government is actively looking for private investors in Acciaierie d’Italia (ADI) after Prime Minister Giorgia Meloni said authorities intend to avoid nationalising the troubled steelmaker, Kallanish notes. They are rumoured to be in talks with local steelmaker Arvedi but also with Metinvest and Jindal Steel subsidiary Vulcan Green Steel, informed sources say.
While Arvedi is not commenting on its potential involvement with ADI, Metinvest has stated its interest. The company is currently supplying Taranto with raw materials and sourcing slab from Taranto for its Italian facilities (see Kallanish 31 January). Almost all local steelmakers and large steel processors have also been contacted by the government about investing. In an interview with local TV show Porta a Porta, Giorgia Meloni said that several potential investors are looking at the dossier.
Last week, the Italian government placed ADI into extraordinary administration, thereby passing control of the company to government appointed commissioners, headed by Giancarlo Quaranta. Sources in the market expect the government to name two more commissioners. Quaranta is meeting with the unions, while Italy’s Minister of Enterprises and Made in Italy (MIMT), Adolfo Urso, is discussing with the European Commission a grant of €320 million ($346m) to help pay for raw material and contractors.
ADI sold 2.5 million tonnes of steel in 2023 and currently has 1mt of steel in stock, including raw materials and finished products. It produced about 3mt of crude steel last year. At Taranto, ADI is producing using only blast furnace No.4, which was however idled on 21 February for maintenance for 24 hours.
Natalia Capra France
Trading quiet in European HRC market; buyers wait for prices to fall
Mills in Northern Europe continued to offer HRC at €730-760 ($790-822) per tonne ex-works for material with April lead times, sources said, adding that discounts for firm bids were still available.
“Mills in Northern Europe need volumes to fill their order books [for the second quarter], which is why they are accepting lower prices,” a buyer source told Fastmarkets.
But the lower HRC prices did not result in more-active trading, sources said.
Deals for small volumes were heard at €720 per tonne ex-works in Germany.
Sources estimated the tradable market level at about €700-730 per tonne ex-works.
“Demand [is still] slow despite the lower prices. Buyers think the bottom has not been reached yet,” a second buyer source told Fastmarkets.
According to a third buyer source, customers will try to push the price down to €700 per tonne.
Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €718.75 ($777.64) per tonne on Monday, down by €3.38 per tonne from €722.13 per tonne on Friday February 23.
The index was down by €6.25 per tonne week on week and by €32.50 per tonne month on month.
In Southern Europe, meanwhile, Fastmarkets corresponding daily steel hot-rolled coil index, domestic, exw Italy was calculated at €715.50 per tonne on Monday, nearly unchanged from €715.00 per tonne on February 23.
The index was down by €7.83 per tonne week on week and by €29.50 per tonne month on month.
Offers to Italy of April-delivery material were heard at €740 per tonne delivered, which nets back to about €720-730 per tonne ex-works.
A fourth buyer source told Fastmarkets that trading in Italy was calm, due to high stocks and buyer expectations that prices still have further to fall.
Sources told Fastmarkets that small volumes of HRC had been traded at €710-720 per tonne ex-works.
Market participants estimated the tradable market level for April-delivery HRC at €700-730 per tonne ex-works. But the workable level for May deliveries is expected to narrow to €705-710 per tonne ex-works.
“With the policy of postponing bookings, buyers have been successfully bringing prices down,” the third buyer source said.
Sources added that import offers from Asia were available for April shipment and July arrival.
HRC from Vietnam was offered to Italy at €620 per tonne CFR, Indian HRC at €640-650 per tonne and HRC from Japan at €620-660 per tonne CFR.
Published by: Julia Bolotova, Darina Kahramanova
Polish domestic rebar prices increase slightly, but outlook remains uncertain
Sources said that demand from the construction sector, the main consumer of rebar, remained low.
Polish mills kept their official offers unchanged at 2,900 zloty ($727) per tonne CPT, which nets back to about 2,870 zloty per tonne ex-works, sources told Fastmarkets. But some buyers were heard to have been offered discounts for larger volumes at 2,850 zloty per tonne CPT, which nets back to about 2,830 zloty per tonne ex-works.
Fastmarkets’ sources estimated tradable market prices were at similar levels in the range of 2,850-2,900 zloty per tonne CPT, which nets back to about 2,830-2,870 zloty per tonne ex-works.
Some deals were heard to have been concluded at slightly lower prices in the range of 2,807-2,894 zloty per tonne CPT, which nets back to about 2,787-2,864 zloty per tonne ex-works.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar) domestic, exw Poland was 2,787-2,870 zloty per tonne on Friday, up by 7-50 zloty per tonne week on week from 2,780-2,820 zloty per tonne on February 16.
The assessment reflected the deals heard in the market and buyers’ estimations of achievable prices.
In the secondary market, rebar was traded in the range of 2,780-2,830 zloty per tonne CPT, sources told Fastmarkets.
Some offers of imported material from Italy were heard at €650 ($704) per tonne CPT.
A distributor source told Fastmarkets that even lower offer levels were available for imported rebar from European producers in the range of €635-640 per tonne CPT.
Market participants in Poland shared mainly negative expectations for the future. The weak activity of the construction sector was the major reason for concern.
“I cannot see [any signs of] a pick-up in the construction sector, especially in the infrastructure subsector,” a buyer source told Fastmarkets.
“Demand is poor. The construction sector should be more active, but the last few weeks were rainy in Poland,” a distributor source told Fastmarkets. The distributor source added that buyers purchase only the quantities they really need.
“Buyers are in a wait-and-see mode now,” the source said.
The distributor source expressed hope that the situation would improve with the days getting longer and the weather warmer.
“Demand [is] average to poor. All bigger distributors keep away from stocking up, counting on better prices soon,” a second distributor source told Fastmarkets.
Published by: Darina Kahramanova
Dutch green steel research receives national funding
The “Growing with Green Steel” consortium of the Universiteit Leiden in the Netherlands will receive €100 million ($108m) from the National Growth Fund, Kallanish learns from the university.
Leiden will be granted the subsidy in the coming eight years to develop technologies based on hydrogen, renewable energy, and circular iron and steel processing. Within the project, Professor of Industrial Ecology René Kleijn will appoint two PhD candidates and a postdoctoral researcher for research collaboration with the universities in Delft and Utrecht.
Kleijn aims to assist technology developers in designing their processes and products. “We want to avoid solving old problems only to create new ones. This includes addressing issues like the release of hazardous substances during recycling,” he says.
To achieve this, the Leiden team is mapping out which material flows are associated with current and new methods of steel production. “It’s crucial that the proverbial mammoth tanker gets on the right course from the start,” Kleijn explains.
He adds that he strongly believes in the approach of growth fund projects. “With projects like these, we can develop new, sustainable technology in the Netherlands that strengthens and sustains our own economy. Subsequently, other countries can adopt this technology,” he concludes.
Christian Koehl Germany
EU approves Germany’s €1.3 billion aid to ArcelorMittal
The European Commission approved on Friday a €1.3 billion ($1.4 billion) state aid measure to support steelmaker ArcelorMittal to decarbonise its operations in Germany.
The German measure, made available part through the Recovery and Resilience Facility (RRF), will support ArcelorMittal Bremen and ArcelorMittal Eisenhüttenstadt through a direct grant. The company plans to use the funding to build a direct reduction plant and three new electric arc furnaces, Kallanish learns.
The project, expected to enter operation in 2026, will enable the replacement of two of ArcelorMittal’s three existing blast furnaces, and two of the four existing oxygen furnaces. The new direct reduction plant will initially operate with natural gas, but “ultimately operate exclusively using renewable hydrogen,” the EC says, without providing a timeline.
“By making steelmaking greener [through the use of hydrogen], it helps to achieve the EU’s target of climate neutrality by 2050. At the same time, the measure ensures that possible competition distortions remain limited,” comments Margrethe Vestager, executive vice-president in charge of competition policy.
ArcelorMittal expects to produce 3.8 million tonnes/year of green crude steel in Germany, which will avoid the release of over 70mt of carbon dioxide over the 16-year lifetime of the project.
The EC says the steelmaker has committed to “actively share” the experience and technical know-how through the project with industry and academia. It did not specify how much hydrogen demand the project would potentially unlock.
Germany’s Federal Ministry for Economic Affairs and Climate Action issued the subsidy pledge earlier this month (see Kallanish 7 February). The announcement gave ArcelorMittal the assurance that it can expect the same state support as the other German oxygen-route steelmakers. Salzgitter, thyssenkrupp Steel and Saarland mills Dillinger and Saarstahl have already received the green light for subsidies for their respective transition projects.
Thyssenkrupp has started a tender for the supply of low-carbon hydrogen for its first direct reduction plant at its Duisburg site. Procurement will start in 2028 at 104,000t, before rising to 143,000t/y during 2029-2035. Hydrogen purchase should then increase to 151,000t/y in 2036-2037.
EU coil mills hold firm in contract talks
While mills are having a hard time keeping their coil prices up on the spot market, they appear more successful in asserting them in the outstanding talks for long-term supply contracts.
Most contracts of this type were finalised by early/mid-January, especially those negotiated directly between mills and OEMs.
“We completed all our talks with automotive customers in December,” one mill source tells Kallanish. He points ahead at negotiations the mill will hold in April for other contracts starting in the second quarter for some customers, mostly non-automotive.
Still, a smaller number of contracts that started in January have not yet been concluded retroactively, mainly with tier-1 type suppliers, sources suggest.
“We for ourselves have completed all contracts, but I did hear that mills are still negotiating with some of the tiers,” a manager of a cold-roller firm says.
Contracts closed earlier were signed at a lower price than one year previously, but the concessions turned out to be milder than feared by mills. Initially, OEMs wanted at least a €100/tonne ($108) reduction from last year’s figure, but eventually confined it to €20/t year-on-year. Some contracts ended with larger gaps, depending on the figure struck a year ago. Roughly, hot rolled coil has been secured by many for a little under €800/t.
Big customers were careful not to hurt their reliable domestic steel suppliers too much, whilst generous figures of annual contracts helped in pulling up the spot market prices in their wake. But the wind on the spot market has turned, and prices keep softening, to now around €730/t for HRC, or less. There is some doubt among market participants that this will affect the outstanding long-term contract talks.
“Mills have concluded the lion’s share of their contracts, and so they will not be willing to divert from the figures they secured earlier,” the cold-roller manager says.
His opinion is backed by the manager of a large German service centre. “Mills remain uncompromising and are keeping their talks separate from the spot market,” he says.
He states that mills are standing firm in case buyers from tiers ask for a discount on the volumes already delivered in January/February.
Christian Koehl Germany
European buyers avoid HRC bookings despite lower prices from the mills
Major European steelmakers were ready to accept lower prices for domestic hot-rolled coil Feb. 23 to draw interest from buyers who were avoiding restocking and were focused on back-to-back trade of smaller volumes.
Buyers, however, remained reluctant to restock due to sufficient inventories and limited end-user demand.
A major German steelmaker with significant exposure to automotive contracts were reported at Eur720/mt delivered Ruhr for May shipment material, which market sources estimated as an equivalent to Eur700/mt ex-works Ruhr.
“Spot prices are getting lower, but it seems that the mills ready to sacrifice prices to get volumes,” a mill source said. “They settled long-term contracts at prices they wanted and the mills might look at average prices – long term and spot and have positive figures in the quarter.”
A smaller German mill offered at Eur720-730/mt ex-works Ruhr for April shipment cargoes. Tradable values were estimated at Eur700-730/mt ex-works Ruhr.
Tradable values have been heard at Eur700-730/mt ex-works Ruhr.
Platts assessed the price of domestic hot-rolled coil in Northwest Europe stable on day at Eur715/mt ex-works Ruhr Feb. 23.
Market sources expected steel demand in the second quarter to not be softer than what has been witnessed in Q1.
Owing to weak demand, some market participants also anticipated mills to trim output by idling some blast furnaces soon. However, others believed prices will bottom out soon as lack of imported material can aid domestic sentiment.
Longer lead times and geopolitical conditions dampened appetite for seaborne material along with concerns that safeguard quotas may get exhausted within the first week of April after being declared for Q2. In addition, the European authorities are expected to prolong safeguard measures for two more year – until mid-2026 following the ongoing review. As buyers remained uncertain if any changes in quotas would be included in the updated measures they remained cautious with booking for Q3 arrival.
No offers were heard for imported HRC in Northwest Europe but tradable values for Asian material were estimated at Eur640/mt CIF Antwerp.
Platts assessed the price of imported HRC in Northwest Europe stable on the day at Eur650/mt CIF Antwerp Feb. 23.
In South Europe, tradable values were estimated at Eur700-720/mt ex-works Italy. Mills made offers at Eur715-720/mt ex-works Italy.
Platts assessed the price of domestic HRC in South Europe stable on the day at Eur710/mt ex-works Italy Feb. 23.
Tradable value for imported HRC in South Europe was heard at Eur620/mt CIF Italy for Asian HRC. Import offers for July delivery cargoes were reported at Eur600-640/mt CIF Italy from Japanese, Vietnamese mills for late June-July arrival.
Platts assessed the price of imported HRC in South Europe down Eur4/mt on the day at Eur620/mt CIF Italy Feb. 23.
Author Maria Tanatar, maria.tanatar@
How Ukraine’s war-torn steel industry has transformed since Russia’s invasion, with closer ties to EU
The hostilities and the loss of vital logistics routes through the Black Sea ports in the south have significantly affected the production, export volumes and sales geography of Ukrainian producers.
But the countries of Eastern and Central Europe have become the new strategic partners for Ukraine’s mining and metallurgical complex during these challenging times of war and have accepted the major share of Ukrainian exports.
In 2023, Ukraine’s total iron ore exports fell to 17.75 million tonnes, down by 26% from 22.37 million tonnes in 2022, according to the data from Ukraine’s State Customs Service. The 2023 total was also down by 60% from 28.4 million tonnes tonnes in 2021 – the year preceding Russia’s invasion.
Slovakia became the largest consumer of Ukrainian iron ore in 2023, accounting for 28.39% of total exports in monetary terms, with the Czech Republic taking 19.7% of the total and Poland 19.6%.
Back in 2021, China was the main destination for iron ore exports from Ukraine, accounting for 41.9% of the total, with the Czech Republic taking 9.6% and Poland 8%.
In terms of semi-finished steel, Ukraine’s exports dropped to 1.2 million tonnes in 2023, down by 36.7% compared with 2022’s 1.64 million tonnes and down 82.2% from 2.19 million tonnes in 2021, according to the State Customs Service data.
Around 90% of the 2023 exports was as steel billet because the key mills that produced slab – Azovstal and Ilyich Iron & Steel – were both located in the Azov Sea port city of Mariupol and were destroyed by Russia in 2022.
Bulgaria has become the main destination for Ukraine’s semi-finished exports in 2023, accounting for 36.7% in monetary terms, followed by Poland with 23%. In 2021, the main export destinations were Italy, on 30.9%, Turkey at 12.8%, and the Dominican Republic on 8%.
A similar scenario has been seen in finished steel exports.
According to the data from Global Trade Tracker (GTT), Ukraine exported around 361,000 tonnes of various finished long steel products in 2023, which is around 75% lower than the 1.5 million tonnes shipped in 2021.
Of the total, nearby countries in Europe took 292,000 tonnes, representing about 80% of the export total.
The share going to Europe was only 20% in 2021, while the countries of Africa imported 36.6%, 20.6% went to the Middle East and 15.4% to South America.
HRC exports to EU gaining pace
In terms of flat steel exports in 2023, Ukraine shipped 603,916 tonnes of HRC to the EU, up by 18.4% from 509,896 tonnes in 2022, according to GTT data.
Poland was the major destination for Ukraine-origin HRC exports, accounting for about 42% of the total.
“Ukrainian suppliers are mainly active in the commodity-grades HRC market,” a buyer in Poland said.
Fastmarkets weekly price assessment for steel hot-rolled coil domestic, exw Central Europe, was €720-730 ($780-791) per tonne on February 21, down from €740-745 per tonne on February 16.
Market participants said that Ukraine-origin coil was normally sold with a discount of about €20 per tonne compared with Europe-origin material.
In addition, European steel processors using Ukraine-origin feedstock to manufacture finished steel products (including tubes and sections among other things), are able to ship those products to the US without facing import taxes.
The US suspended Section 232 import tariffs on steel from Ukraine in May 2022, following to Russia’s invasion earlier in the year and in May 2023, US Department of Commerce confirmed that it had extended the suspension for another year.
Ukraine was also exempted from all anti-dumping duties and safeguard measures in the EU.
In September 2023, Ukraine managed to ship two vessels of steel and raw materials via the Black Sea – the first time it had used its traditional route for steel exports since it was blocked by Russia at the start of the invasion.
Since then, sources have reported sporadic offers for Ukraine-origin HRC in Italy on a CFR basis, although such deep-sea HRC exports have remained irregular and most flat steel deliveries from Ukraine go by rail to Central and Eastern European destinations.
The most recent HRC offers to Italy from Ukraine were reported at €660-680 per tonne CFR at the beginning of February.
Pig iron deliveries to the EU decline
The opposite situation now prevails in terms of pig iron supplies and, in contrast to all other products, Ukraine reduced its pig iron exports to the EU during the past two, war-affected years.
In 2023, Ukraine exported a total of 1.39 million tonnes of pig iron, according to data from GTT, but only 228,878 tonnes, or 16% of the total, was supplied to EU countries. In 2022, the EU share of Ukraine’s pig iron exports was 23% and in 2021 it was 29.86%.
The US was a preferred destination for Ukrainian pig iron suppliers in 2023, because of the price premium there.
In 2022, Fastmarkets’ average price assessment for pig iron import, cfr Gulf of Mexico, US was $643.27 per tonne, whereas Fastmarkets’ average price assessment for pig iron, import, cfr Italy, was $526.11 per tonne – putting the premium to the US market over Italy at $117.16 per tonne.
Fastmarkets understands, however, that Ukrainian pig iron supplies to the EU may increase this year, due to the reducing attractiveness of the US market.
The gap between the EU and US reduced to $68.49 per tonne in 2023, but by mid-February the gap had narrowed to $45 per tonne, with the average price assessment for pig iron imports in the US at $480 per tonne CFR, while the price from Italy was $435 per tonne CFR.
“The Italian market is becoming more and more attractive to us,” a supplier said. “The US still has some premium, but considering the difference in the freight rates, it is pretty likely that we can switch shipments to Italy.
“Freight to Italy is around 30% cheaper than to the US, because the available fleet for 10.000-15.000 tonne cargoes is larger.”
Vanishing steel plate exports
Ukraine used to be one of the key steel plate suppliers to the EU until Russia’s invasion and the EU was the key export outlet for Ukraine-origin plate.
Ukraine had an individual quota for steel plate, with a quarterly allocation of about 218,557 tonnes.
According to statistics from the regional steel industry association Eurofer, in 2021, Ukraine shipped 864,637 tonnes of plate to the EU, which accounted for 43% of the total 2.02 million tonnes of steel plate imported to the bloc that year.
But, in 2022, exports from Ukraine to the EU dropped to just 195,719 tonnes, and in 2023 that had fallen to zero.
Ukraine’s key plate-producing assets were Metinvest’s Mariupol-based plants Azovstal and Ilyich Iron & Steel, which were destroyed by Russia in the invasion.
Russia, which had been the second-largest supplier of steel plate to the EU, was also out of the European market, because the ban that was imposed on deliveries of Russian finished steel on March 15, 2022, in response to the invasion.
Since then, the European Union has had to rely on increased deliveries of steel plate from Asian suppliers, – although these volumes cannot fill the gap left by Ukraine and Russia.
Inside, the EU trading bloc, sources said they had noticed a shift in trade flows, with an increased presence of Italian heavy plate in Germany, Central and Eastern European markets.
Trading has been slow in the European heavy plate market in recent weeks, however, with buyers avoiding restocking amid downbeat price expectations and slow downstream sales. But the market situation was a bit better in Central and Eastern Europe due to supply issues, sources said.
“Prices [for heavy plate] are better in Central Europe due to limited supplies, with Ukraine and Russia gone and with two local mills [domestic producers in Poland and Romania] no longer producing for various reasons. [So it] looks like all re-rollers will try to fill up their order books in Central Europe,” a buyer source said.
Fastmarkets’ weekly price assessment for steel domestic plate, 8-40mm, exw Northern Europe, was €800-830 per tonne on Wednesday, widening down by €10 per tonne from €810-830 per tonne ex-works seven days earlier.
Surprising Polish construction slump in January bodes poorly
Polish construction activity slumped 6.1% on-year in January, compared to the consensus of 8.1% growth. This follows impressive 14% on-year growth in December. ING, which projected a 3.1% increase in January, says the data bodes poorly for a recovery in investments this year.
Many EU-backed projects from the previous perspective have ended, with a slow start to new ones and a weaker housing market, the bank observes.
Production growth in civil engineering construction plunged 10.5% in January, reflecting the final phase of infrastructure projects financed by disbursements from the 2014-20 EU financial perspective. Launching new projects, financed by the new EU budget, is time-consuming.
Building construction also declined, by 7.3%. “In December, the ‘2% Safe Credit’ programme came to an end. A new programme is unlikely to be launched before the second half of 2024, and its details are still being worked out. Data for the end of 2023 show that, after a period of rapid growth in mortgage credit demand, there was a sharp slowdown,” ING observes.
“Given the cap on the price of housing qualifying for public subsidies, the completed programme saw most impact in smaller towns. It is probably difficult for developers to assess locations of the most favourable places to start new investments,” the bank adds.
In early January, Poland’s main construction steel producer, CMC Poland, said supply-side adjustments and the impact of increasing levels of residential and infrastructure construction should drive sequential improvements in financial results beginning in spring (see Kallanish passim). However, conditions in Europe are expected to remain challenging, it added.
Adam Smith Poland
European steelmakers remain concerned over green hydrogen cost
European steelmakers are concerned by the high costs of green hydrogen and how these could slow down or jeopardise the transition towards low- or zero-emission steelmaking, Kallanish notes.
ArcelorMittal Europe chief executive Geert van Poelvoorde reiterated this point by confirming that the use of green hydrogen – especially produced in Europe – would make steelmaking uncompetitive. In an interview this week with Belgian magazine Trends the executive said that using green hydrogen in the short term would push steelmakers out of the market for being uncompetitive. European green hydrogen production is still too expensive and imports from Africa, for example, still incur a high freight cost.
The view echoes the official position of ArcelorMittal reported in its climate action report published in July 2021.
Green hydrogen-based direct reduced iron production would increase the cost of steel production by $150-250/tonne compared to natural gas-based DRI, the report stated. “On a like-for-like basis (excluding CO2 costs), hydrogen would need to fall below $1/kg to compete with natural gas DRI in Europe, and below $0.7/kg to compete in the USA,” the firm said.
ArcelorMittal anticipated that green hydrogen costs could drop to $1.5/kg by 2030 if renewable energy costs drop further – on a global level.
As a result of the issues related to high costs of green hydrogen, European steelmakers might focus their attention in the short term on electric arc furnace-based steel production rather than building captive DRI plants. A solution in the medium term could be finding other sources of DRI beyond Europe, where hydrogen production costs are lower.
Emanuele Norsa Italy