German steel distributors’ January sales rise 74% on month
German steel distributors’ sales saw a robust rebound in January, reaching 807,924 mt, up 73.7% from the prior month, German steel stockholders’ association BDS reported Feb. 21.
The rise in steel sales and ensued destocking have drawn down inventories within the German steel distribution network to under 2.5 months’ worth of sales, from four months previously, according to BDS.
Steel sales in January were, however, 3.4% lower year on year. It exceeded 2023’s per-month average by 2.8% but remained 10% below the 900,300 mt/month sales made during 2014-2021.
Flat-rolled steel comprised 535,192 mt or two-third of the January total sales. Being broadly stable compared with January 2023, the sales in this category recovered by 85% month on month.
German distributors sold 203,901 mt of long-rolled products in January, 42% more than in December, although 11% lower year on year.
The 1.9 million mt stocks held in January reflected roughly 70 days’ worth of sales, which reveals destocking, given that in 2023 and over 2014-2022 average per month inventories would cover 75- and 77-days’ worth of sales, respectively, according to BDS.
Destocking is particularly noticeable against the inventories accumulated within the country’s distribution network in December 2023, when they were as high as four-month worth of sales.
European steel coil buyers are currently limiting their procurements and avoiding restocking due to a bearish sentiment amid weaker appetite from construction and agricultural sectors, all of which make some expect weaker demand in the second quarter of 2024 compared with significant improvement in January-March.
Platts, part of S&P Global Commodity Insights, assessed European domestic hot-rolled coil prices at Eur720/mt ex-works Italy and Eur725/mt ex-works Ruhr Feb. 20, unchanged on the day, but down by Eur20/mt each on the month.
Author: Katya Bouckley, katya.bouckley@spglobal.com
European steel HRC buyers wait for further price drops
In Northern Europe, integrated mills could still offer HRC on quite short lead times – including April.
Offers of such material were heard at €740-760 ($797-819) per tonne ex-works. This compared with €780-820 per tonne ex-works announced in January for coil to be delivered in the second quarter.
Rare deals for limited volumes were heard at €720-730 per tonne ex-works in Germany and €740-750 per tonne ex-works in the Benelux area.
“Mills have started to grant discounts on HRC to secure bigger volumes, but traded volumes in fact remained low – there is no restocking,” a buyer source in Germany said.
“It is not a question of price [for HRC] these days, it is a question of demand [from end-users], which remains quite poor,” a source at a steel service center in the Benelux area said.
Fastmarkets calculated its daily steel HRC index, domestic, exw Northern Europe, at €725.25 per tonne on Tuesday, up by €0.25 per tonne from €725.00 the previous day.
The index was down by €22.25 per tonne week on week and down by €18.75 per tonne month on month.
Buyers were said to be pushing prices toward €700 per tonne ex-works, with most sources agreeing that this level would be “rock bottom” for mills.
“I don’t think mills would accept bids below €700 per tonne ex-works, they [steel mills] would rather trim output,” a second buyer in Germany said.
In Southern Europe, Fastmarkets calculated its daily steel HRC index, domestic, exw Italy, at €723.33 per tonne on Tuesday, unchanged from a day earlier.
The index was down by €20.42 per tonne week on week and down by €12.09 per tonne month on month.
Offers from local suppliers for April-delivery HRC were heard at €740-750 per tonne delivered (€725-735 per tonne ex-works), with buyers’ estimates of tradeable values reported at €720-730 per tonne ex-works, and some bids reported even lower – €700 per tonne ex-works.
Transactions were heard at €720-730 per tonne ex-works, but for small lots of less than 500 tonnes, market sources said.
But some sources suggested that limited domestic supply, as well as difficulties in procuring overseas coil, would cushion local HRC prices from a sharp decline, despite chronically low demand.
“Acciaierie d’Italia [one of two local suppliers] has been running with only one blast furnace [BF] since end-January. So that leaves Arvedi as the single big supplier, with a couple of re-rollers which can supply small volumes,” a buyer in Italy said.
Meanwhile, new import offers from Asia were available for April shipment and July arrival, market sources said.
The current steel import safeguards, shielding the European market from excessive imports, will expire on June 30, 2024. Market sources suggested that these measures were likely to be extended, but it was not clear what changes would be made, so importing was considered risky.
The European Commission started an investigation into a possible extension of the measures in February, it announced earlier this month.
“Some Asian countries might get individual quotas after June 30 [and] we might have different allowances. So, imports are not viable for most buyers,” a trading source in Italy said.
HRC from Vietnam was offered to Italy at €620 per tonne CFR.
At the same time, offers from Egypt, Japan and Taiwan were reported at €650 per tonne CFR.
Published by: Julia Bolotova
Cogne acquires Mannesmann Stainless Tubes, eyes increased sales
Walsin Lihwa, the leading stainless steelmaker in Taiwan, has purchased 100% equity of Mannesmann Stainless Tubes GmbH (MST) from German steelmaker Salzgitter Group. The deal was done through Walsin Lihwa’s Italian subsidiary, Cogne Acciai Speciali (CAS), for €135 million ($146m).
The transaction is subject to regulatory approvals by authorities, Kallanish notes.
Walsin Lihua says: “The recent series of acquisitions not only build CAS’s unique position as a one-stop stainless steel and nickel-based alloy manufacturer in Europe, but also accelerate Walsin Lihua’s strategic layout of penetrating high-end and high-growth potential markets.”
“We are pursuing active portfolio management with strategic acquisitions and growth steps, as well as sales of companies that are not part of our defined development areas,” says Salzgitter chief financial officer Burkhard Becker. “This approach is an integral part of our Salzgitter 2023 strategy. Cogne provides MST and its employees further reaching entrepreneurial opportunities within the new network, and ranks as a renowned industrial partner.”
MST is a global seamless pipe manufacturer, specialising in high-end pipe that can withstand extreme pressures and temperatures. Its customers include companies in the oil and gas, aerospace, chemicals, new energy and other industries. It is not integrated into the Salzgitter Group’s supply of primary materials.
Cogne manufactures long products in stainless steel and nickel-based alloys for aerospace, automotive, energy – and in particular the oil and gas industry.
After the acquisition, Walsin Lihwa expects MST to expand market share, supported by stable raw material supplies from CAS, and thus expects CAS to fully utilise its melting capacity.
Italy takes control of Acciaierie d’Italia, names commissioner
The Italian government has placed Acciaierie d’Italia (ADI) into extraordinary administration, thereby passing control of the company to government appointed commissioners, headed by Giancarlo Quaranta.
“This ends ArcelorMittal’s involvement in ADI, which started in 2018,” ArcelorMittal says in a note sent to Kallanish. Since that time, ArcelorMittal has funded an €800 million ($865m) environmental programme that ensured ADI’s compliance with the Integrated Environmental Authorisation set out by the Italian government, as well as €1.2 billion in upgrading equipment.
ArcelorMittal says it put forward “pragmatic” proposals to address the discrepancy in capital investment between itself and fellow ADI shareholder, state-owned Invitalia, and then offered to sell its shareholding in ADI to Invitalia. However, neither was successful.
“Had ADI been able after April 2021 to access traditional debt financing and been able to raise the working capital required to fund its ongoing needs, rather than relying on equity injections from its shareholders as its sole source of capital, this situation could have been avoided,” ArcleorMittal notes.
“Unfortunately, the conditions precedent to allow ADI to convert its lease of the assets into a formal purchase – conditions that ADI has no control over, were originally set to be completed before May 2022, and subsequently extended to May 2024 – remain unmet today,” it continues.
“ADI’s financial situation has been further impacted by the Italian Government delivering less than one-third of the €2 billion of support measures it offered to at the time the public-private partnership with Invitalia was established,” it adds.
The situation was complicated by the temporary removal of criminal immunity applicable during the implementation period of the environmental investment programme, the demand environment during the Covid crisis and the energy crisis in Europe last year, the group concludes.
New ADI commissioner Quaranta has long experience with Ilva group, as the company was known prior to ArcelorMittal’s takeover. Since 2022, he has also headed the consortium of Italian steelmakers created to study and develop new opportunities related to the production and supply of direct reduced iron. Local trade unions have welcomed his appointment as ADI commissioner.
Adam Smith Poland
European HRC prices decrease further amid sluggish trading
“Apparent demand remains weak,” one buyer source told Fastmarkets.
Buyers continued to postpone restocking, waiting to see if prices would drop further still.
A second buyer source said that potential buyers had good inventory levels as well as some import tonnages awaiting customs clearance, implying that they were in no hurry to book new volumes of HRC.
In Northern Europe, some offers of HRC were heard in the range of €740-760 ($797-819) per tonne ex-works on Monday. But these levels were not said to be workable.
Sources estimated that tradable market levels varied in the range of €700-730 per tonne ex-works.
No major deals were heard in the market.
Fastmarkets calculated its daily steel HRC index domestic, exw Northern Europe at €725.00 per tonne on Monday, down by €7.13 per tonne from €732.13 on Friday February 16.
The index was down by €22.50 per tonne week on week and down by €19 per tonne month on month.
Fastmarkets calculated its corresponding daily steel HRC index domestic, exw Italy at €723.33 per tonne on Monday, decreasing by €7.50 per tonne from €730.83 per tonne on Friday.
The index was down by €24.17 per tonne week on week and down by €12.09 per tonne month on month.
HRC trading in the Italian spot market was also slow on Monday.
“[There is] no repurchasing attitude [in the market] even at the new prices due to the low demand and high stocks,” a third buyer source told Fastmarkets.
Local mills continued offering April-delivery material of around €750 per tonne delivered (€735-740 per tonne ex-works).
Sources estimated workable market levels in the range of €725-735 per tonne ex-works.
Some deals for small volumes were heard at €730 per tonne delivered, which nets back to around €715-720 per tonne ex-works.
Offers of imported HRC remained limited in the market. Some offers of Asian HRC were heard at €630-640 per tonne CFR to Italy. The Asian region is expected to become more active this week following the end of the Lunar New Year holidays.
Turkish mills reportedly offered April-shipment HRC at €670-680 per tonne CFR to Italy, with anti-dumping duties included.
Published by: Julia Bolotova, Darina Kahramanova
Nippon means ‘opportunity’ for USSK, subsidy needed: government
The potential acquisition of US Steel by Nippon Steel is a “huge opportunity” for Slovakia and US Steel Kosice (USSK), but state support will be crucial to ensuring the plant is decarbonised, says Slovakian environment minister Tomáš Taraba.
Slovak government representatives met with Nippon Steel management in Tokyo earlier this month to discuss the future of USSK.
At a later working meeting with USSK trade union representatives, Taraba said it is a “priority” of his to modernise production, fulfil decarbonisation obligations and retain competitiveness at USSK.
“It is obvious that without the involvement of the state and cooperation with partners on both sides, it will not be possible to successfully push the Kosice steel mills towards decarbonisation,” Taraba says in a ministry statement.
“The guarantee of financial aid in the amount promised by the state of €600 million [$646m] is part of this, even if we were forced to guarantee these resources from other financial schemes compared to those that were envisaged originally.”
USSK was guaranteed by the government last year funds for transitioning to electric arc-furnace based steelmaking.
A senior steel industry representative indicated last month that Nippon’s USSK takeover could be a good opportunity for the Japanese steelmaker to work with one of the Japanese carmakers in Central and Eastern Europe (see Kallanish passim).
USSK shipments rose 4% on-year in 2023 to 3.9 million net tons, while raw steel output grew 14% to 4.4mnt, with capacity utilisation at 88% versus 77% a year earlier.
Adam Smith Poland
Imports fail to faze German rebar market
Rebar prices in Germany have held relatively steady for a while, and buyers see little cause to look for more competitive material abroad.
“Italy is not interesting at all, and in Poland the market is healthy, so why should they send material over here?” a manager in central Germany tells Kallanish. He therefore concludes there is little pressure from outside on mills’ current base asking prices, which they are mostly managing to achieve in deals.
Quotes are at around €400/tonne ($431), plus the size extra of €265 which adds up to €665/t delivered. With base prices in Italy currently at around €350/t, the difference would be eaten up by transport fees.
A northern German buyer confirms the domestic price, noting that the level for orders from countries west and east would be similar, and that Italy is too far south for him anyway. However, he finds that certain offers from overseas could be worth reconsidering. Such is the case with a shipload from Oman reported concluded at $620-630/t cfr Germany, for shipment in March. In euro terms, this would be €575-585/t, possibly involving a margin for the trader in between.
Another observer is more critical, stating that the range of product dimensions given in such offers is limited and that coiled rebar is not included. Moreover, delivery in late April is too risky for him, with prices on the construction market falling further. “On top of that, you now have to worry about the CBAM documents, and that’s where the worry with imports really starts,” he says.
Christian Koehl Germany
ArcelorMittal objects Invitalia’s move to place Acciaierie d’Italia under special administration
ArcelorMittal owns 62% of ADI — formerly called Ilva — with the remaining 38% owned by government investment agency Invitalia. The company, once the country’s biggest steel mill, was put under special administration in 2015 and ArcelorMittal bought it in 2018 for Eur1.8 billion.
ADI has been at the center of multiple legal and political disputes with ArcelorMittal and the Italian government over investments and ownership.
According to a letter dated Feb. 18 and seen by S&P Global Commodity Insights, ArcelorMittal was not informed of Invitalia’s decision to file a request for special administration.
“We were surprised and disappointed to read in the Italian media tonight that Invitalia requested the Government of Italy to commence the process to place ADI into extraordinary administration,” ArcelorMittal wrote. “This is an egregious breach of the Investment Agreement,” the company added.
As underscored in the letter of the Luxembourg holding “intensive discussion took place between the government and the steelmaker to find an agreement to provide support to ADI or for our orderly exit.”
ArcelorMittal declined to comment while Invitalia did not answer when contacted by S&P.
ADI has been facing financial concerns, with production at the company’s mill in Taranto reaching its lowest ever level of around 3 million mt of crude steel in 2023, well below its breakeven point estimated at 6 million mt.
Unions and government representatives are due to meet late on Feb. 19 to discuss the latest developments.
Author Annalisa Villa, annalisa.villa@
EU HRC buyers slow purchases as they await further price corrections
Buyers of European hot-rolled coil prices slowed their deal conclusions Feb. 19 amid healthy inventory levels as they await further price corrections.
“People are reluctant to buy now with the risks of price decrease [in the near term],” an Italy-based source said. “As soon as the mills started to decrease prices the market froze, as there is no clarity on where the price will bottom out and they do not want to risk it.”
Some market participants were of the view that mills may have to either trim output, despite the recent restart of idled blast furnaces, or reduce prices as buyers remained reluctant to book tonnages now and add to existing inventories.
“The demand is very weak now,” said a German service center source. “Our stocks are good for the second quarter now so we think in the next quarter the demand may not be that good.”
Deals were heard in Northwest Europe at Eur720-730/mt ex-works Ruhr. Tradable values were also estimated at Eur720-730/mt EXW Ruhr. Offers were reported at Eur735-750/mt EXW Ruhr.
Platts assessed the price of domestic HRC in Northwest Europe stable on the day at Eur725/mt EXW Ruhr Feb. 19.
Interest in imports remained dull due to longer lead times and concerns about the volumes that will be allocated under safeguard quota for Q2.
Cargoes arriving in April-May were heard offered at Eur670-680/mt CIF Antwerp. No bids or deals were heard.
Platts assessed the price of imported HRC in Northwest Europe stable on the day at Eur649/mt CIF Antwerp Feb. 19.
Offers of HRC in Italy have been reported at the Eur720-725/mt EXW Italy and tradable values were at Eur720/mt EXW Italy.
Platts assessed domestic prices for HRC in South Europe unchanged on day at Eur720/mt EXW Italy Feb. 19.
Platts assessed prices imported HRC in the region up by Eur15/mt on day to Eur635/mt CIF Italy Feb. 19.
The assessment was based on deals heard for the material from Japan settled in Italy at Eur635/mt CIF Italy.
Offers of HRC from Vietnam have been reported at Eur615/mt CIF Italy, buyers showed limited interest in the market due to long lead times and Platts excluded in from the assessment as delivery exceeded the methodology.
EU’s 2030 climate targets highly ambitious but policy on track: MEP Liese
Provisional data for 2022 indicate a 32% drop in climate emissions has already been achieved by the EU, while a record annual reduction is foreseen for 2023.
Liese, a leading conservative candidate for North Rhine-Westphalia in the upcoming European Parliamentary elections this June, said the current economic slowdown was a key challenge to the transition.
“If anyone says this [Fit-for-55] isn’t enough, they haven’t understood how challenging it is,” Liese said.
The EC’s recent proposals to cut emissions by 90% by 2040 assume fulfillment of the Fit-for-55 legislation. The 2040 target will need to endorsed by a new commission before going before the European Council and Parliament. The current commission’s term of office runs to Oct. 31, 2024.
Analysts at S&P Global Commodity Insights forecast EU emissions will decline by 42% to 2030, and by 82% to 2040.
Uncompetitive energy costs were a key driver for Europe’s economic slowdown, Liese said. Also noting energy security concerns, the MEP called for an open debate on nuclear in Germany to explore a potential re-opening of two or three shuttered reactors or even new construction.
Without a shift in policy even the agreed 2030 coal exit in his home state of North Rhine-Westphalia was at risk, Liese said.
“We shouldn’t completely block the way for new nuclear, but clear priority should be the expansion of renewables,” the MEP said.
Europe’s emissions trading system was a key instrument to maximize CO2 reductions at lowest cost, but there was growing opposition in Germany to plans to add transport and heating as compliance sectors, he said.
Platts, a unit of S&P Global Commodity Insights, assessed EU carbon allowances (nearest December) at Eur53.44/mt on Feb. 19, down 6.5% day on day to its lowest level in 28 months.
German generation strategy
Meanwhile, Germany’s secretary of state at the energy ministry Stefan Wenzel said the Berlin government was working on the details of a power plant strategy with a decision on a proposed capacity market from 2028 due this summer.
The coalition plans four tenders of 2.5 GW each for hydrogen-ready gas-fired power station capacity, allowing for early coal and lignite plant closures.
Wenzel noted some progress on global CO2 markets citing the UAE’s early stage moves to set up carbon trading as an example.
The EU’s Carbon Border Adjustment Mechanism or CBAM would help to shield Europe during the green transition, but industry needed to be aware of external competition, Wenzel said.
“We may see green steel from India or China faster than expected. We need to be prepared,” he said.
Despite ambitious domestic targets, Germany would still need to import two thirds of its future hydrogen demand, Wenzel said, noting the government was continuing to build out its hydrogen strategy, his ministry recently confirming availability of the next Eur3.5 billion tranche of support for the H2Global import scheme.
Import talks are underway with Denmark, Norway and Spain, while Germany also targets North Africa for supplies to be shipped mainly in the form of ammonia.
Germany’s steel sector will be a key offtaker of clean hydrogen with steel association Wirtschaftsvereinigung Stahl (WV Stahl) estimating some 600,000 mt/year to 850,000 mt/year of demand by 2030.
“The new direct reduction steel plants also offer some flexibility during the ramp up and can switch first from coal to use natural gas before the switch to clean hydrogen,” WV Stahl CEO Kerstin Maria Rippel told the conference.
First projects target a 2025 or 2026 start date.
S&P Global Commodity Insights analysts see 2030 EU green hydrogen production of around 3.2 million mt under its European Planning Case.
Europe is among the most expensive global regions for electrolytic hydrogen production, according to the Platts Hydrogen Price Wall.