Polish buyers reluctant to accept higher rebar, wire rod offers
Rebar
Polish mills increased their offers of rebar to 2,950 Polish zloty ($738) per tonne CPT this week, the equivalent of 2,920 zloty per tonne ex-works, sources told Fastmarkets.
Last week, rebar was offered mainly at 2,900 zloty per tonne CPT, equivalent to 2,880 zloty per tonne ex-works. These offers were also available in the market this week, and they were estimated by Fastmarkets’ sources to be tradable.
But buyers were reluctant to accept new prices, sources said, with no major deals heard in the market.
Fastmarkets’ weekly price assessment for steel reinforcing bar (rebar), domestic, ex-works Poland was 2,880 zloty per tonne on Friday, narrowing from 2,870-2,890 zloty per tonne on January 26.
“The construction sector is about to begin [activity] in the March-April period, and demand will probably improve, but so far, it is rather slow,” a buyer source told Fastmarkets.
“Demand is rather average; the clients are in a wait-and-see mode,” a trader source said.
There were not many transactions this week, a distributor source said.
On the secondary market, rebar prices were heard in the range of 2,770-2,890 zloty per tonne CPT.
Import offers from Germany to Poland were heard at €660 ($715) per tonne CPT.
Wire rod
Polish mills reportedly offered wire rod for February delivery in the range of 3,100-3,300 zloty per tonne CPT. Offers were at a similar range in January, with the low end around 3,050 zloty per tonne CPT.
“Demand is very, very weak [this week]. Our market does not accept prices over 3,000 zloty per tonne CPT,” a distributor source told Fastmarkets.
The distributor estimated tradable prices in the range of 2,850-3,000 zloty per tonne CPT, but the lower end of the range was not confirmed by other market participants. According to Fastmarkets’ sources, a price of 2,850 zloty per tonne CPT would be too low considering high production costs of the mills.
Other market participants estimated workable prices in the range of 2,900-3,000 zloty per tonne CPT.
Some limited tonnages were traded at 3,100 zloty per tonne CPT this week.
Thus, Fastmarkets’ price assessment for steel wire rod (drawing quality), domestic, delivered Poland was 2,900-3,100 zloty per tonne on Friday, unchanged week on week.
Offers of imported material from Italy to Poland were heard in the range of €675-700 per tonne CPT.
Ukraine continued to offer mesh-grade wire rod at €660-670 per tonne CPT, Fastmarkets heard, and some deals for such material were concluded at prices in that range.
Published by: Darina Kahramanova
SSAB expects increased steel shipments in Q1 despite subdued demand
The forecast was made in the company’s financial report for the fourth quarter and full year of 2023, published on Wednesday January 31.
In Europe, only one out of seven industry sectors, which are the main consumers of steel, has a “strong” outlook in terms of demand for the first quarter, SSAB said. This is the energy sector, due to the increased demand for the generation of renewable power.
The prospects for the construction sector in the Nordic region, however, remained gloomy.
The company defined the outlook of the other five industry sectors – heavy transport, automotive, construction machinery, materials handling, and service centers – as “neutral.”
SSAB added that there were some signs of a slowdown in demand from the automotive and heavy trucks sectors in Europe, despite positive indications from the sectors producing railcars and vessels in the US.
Indeed, some steel service centers in Northern Europe said that during January their flat steel sales to the automotive sector were around 10-15% less than planned.
In terms of service centers, SSAB said that there was some potential for restocking in the first three months of 2024.
SSAB expected that the two divisions of the company in Europe and the US would make 5-10% more shipments in the first quarter of the year compared with the last three months of 2023. Shipments of SSAB Special Steels were expected to be even higher, increasing by more than 10%.
The company noted that the expected improvements for SSAB Europe and SSAB Special Steels were related to seasonal factors, notably restocking. Indeed, restocking activity in January and reduced supply in the European market, due to output cuts, both supported price rises for flat steel products.
During January, the price of hot-rolled coil in Northern Europe moved up steadily. Fastmarkets’ daily steel hot-rolled coil index, domestic, exw Northern Europe, averaged €731.73 ($792.22) per tonne for the month, the highest since May 2023.
Market sources told Fastmarkets, however, that the current price rise was entirely supply-driven, because many blast furnaces in Europe had not restarted operations. They were uncertain whether the upward trend would continue into the second quarter of 2024.
Green steel sales gain pace
SSAB hoped that demand for green steel globally would continue to grow steadily.
“There was increased interest in products with no carbon dioxide emissions during 2023, and we delivered more than 50,000 tonnes of SSAB Zero,” the company added. SSAB described this product as the “world’s lowest emissions steel product on the market.”
SSAB claimed that its SSAB Zero products were fossil-free for Scope 1 and 2 CO2 emissions.
According to Fastmarkets’ sources, the demand for green steel was very patchy in Europe and was mainly restricted to end-users. Only limited volumes have been traded in the market recently, with the automotive industry seen as a major consumers of such products.
Fastmarkets’ weekly assessment of the green steel, domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €150-250 per tonne on Thursday, unchanged since mid-December 2023.
SSAB’s key indicators in Q4 2023
According to SSAB’s financial report, the group’s crude steel production amounted to 1.71 million tonnes in October-December 2023, up from 1.64 million tonnes in the corresponding quarter of the previous year. Throughout 2023, SSAB’s crude steel production totaled 7.78 million tonnes, compared with 7.29 million tonnes in 2022.
Steel shipments, however, were a bit weaker in the last quarter of the year, reaching 1.49 million tonnes compared with 1.50 million tonnes in the corresponding quarter of 2022.
This was related to a seasonal market slowdown and planned maintenance at SSAB facilities, Fastmarkets understands.
Company revenue in the fourth quarter came to 26.47 billion Swedish kronor ($2.54 billion), down from 30.14 billion kronor in the corresponding quarter of 2022.
SSAB’s adjusted operating income for the fourth quarter of 2023 amounted to 2.40 billion kronor, compared with 3.77 billion kronor in the fourth quarter in 2022.
“The decrease compared with last year’s record high level,” it said, “was primarily due to a weaker market and lower steel prices, especially in Europe.”
Published by: Julia Bolotova, Darina Kahramanova
USSK fourth-quarter shipments, earnings rise amid lower prices
US Steel Kosice (USSK) increased shipments 43% on-year in the fourth quarter of 2023 to 1.02 million net tons. Raw steel production surged 87% to 1.1mnt, with capacity utilisation at 87% versus 47% a year earlier, Kallanish notes.
Average realised sales price fell 20% on-year to $770/net ton. Despite this, net sales grew 13% to $823m and Ebitda turned to positive $3m versus a $48m loss a year earlier. The lower sales prices were partially offset by labour and spending efficiencies due to higher shipments, parent US Steel says. Meanwhile, iron ore, scrap, and alloy costs were lower.
Meanwhile, US Steel’s Flat-Rolled segment shipped 242,000nt of coal to USSK in Q4 versus zero a year earlier.
Hot and cold rolled coil accounted for 60% and 10% of shipments respectively, with coated coil comprising 20%. In terms of revenue, coated accounted for 35%, with semi-finished steel also appearing at 5%. Construction (34%), service centres (22%) and automotive (16%) were the main markets by volume.
In full-year 2023, USSK shipments rose 4% on-year to 3.9mnt, while raw steel output grew 14% to 4.4mnt, with capacity utilisation at 88% versus 77% a year earlier. Net sales fell 17% to $3.55 billion, while Ebitda was down 81% to $98m.
The Flat-Rolled segment shipped 874,000nt of coal to USSK in 2023, while a year earlier USSK sourced 144,000nt of iron ore from the segment.
Adam Smith Poland
Car purchases to fall amid tighter economics: BMI
Global growth in vehicle purchases will slow to 4.3% in 2024 as pent-up demand caused by the shortages of previous years is exhausted and tighter economic conditions take hold, says BMI autos and infrastructure research head Anna-Marie Baisden.
“Our global economists expect weak sentiment, tighter monetary policy and still high – although easing – inflation to weigh on domestic demand in 2024, which is likely to have a knock-on effect for big-ticket purchases such as vehicles,” Baisden noted during a webinar last week attended by Kallanish.
BMI expects the Middle East and North Africa to be the best-performing region in 2024 with a surge in vehicle sales of 17.1%, following 7.9% growth in 2023.
According to BMI autos senior analysts Joshua Cobb, electrification will also face growing headwinds from increased operating costs, reduced electric vehicle (EV) purchase subsidies and the price war. “This will spur new EV financing trends, increased risk of protectionism, manufacturing optimisation and new retail models. We expect the EV markets in large economies with high rates of EV adoption will move from the ‘first adopter’ stage to the ‘mass adoption’ stage in 2024,” he noted.
This will result in a more price-conscious consumer base which will require lower vehicle prices to promote continued electrification of road transportation, BMI claims.
The cost challenge will be heightened by the phaseout of EV purchase incentives, mainly in Europe, and imposition of EV charging fees and road-use taxes. This will be somewhat offset by the easing cost of batteries, Cobb continued.
BMI notes the EU and North America are aiming to decrease their reliance on China in their respective EV supply chains.
A number of key elections will be held in 2024, and these will have implications for the autos industry due to shifts in policies and geopolitical alignments, it notes. The ongoing Hamas-Israel conflict will also drag down the ability of importers to import vehicles for the Israeli, Palestinian and Jordanian markets, and increase risk to Egypt’s vehicle imports as well.
According to BMI, free trade agreements will be one of the most financially efficient ways for developing markets to attract EV-related investments in 2024 amid the ongoing subsidy war and supply chain de-risking trends. “Risks to vehicle production stemming from flooding, droughts and other severe natural disasters will endure in 2024,” it concludes.
Uncertainty looms over French longs market
French long products prices are seen declining slightly in the coming weeks as consumption in the country remains uncertain. Market sources report back-to-back sales and little restocking.
Purchasing groups have bought to replenish stocks but say they are being “prudent”. They are trying to rebuff high sheet and tube prices, in line with coil increases implemented by EU producers, and are not managing to pass increases on downstream. Activity in several end-user sectors continues to stagnate.
Compared to December, French rebar has lost some €20/tonne ($21) on average. EU producers are now more willing to negotiate. With their current high processing costs, some are resorting to production stoppages to balance supply with demand.
Buyers who spoke to Kallanish believe consumption for both long and flat products will be in line with 2023 and see no space for increases. With scrap values flat, construction steel prices are also seen relatively stable this month. Margins for distributors are reported to be under pressure, a source comments.
French rebar values are flat, hovering at €630-635/t delivered on average.
Natalia Capra France
Price gap of ‘green’ and ‘gray’ steel to close steadily until mid-2030s: Thyssenkrupp
Prices of reduced carbon emission steel and conventional steel will continuously align until the 2030s, Thyssenkrupp CEO Miguel Ángel López Borrego said Feb. 2.
At a public shareholder meeting, Lopez said that customers of the German steel unit of Thyssenkrupp would understand that prices of lower carbon emission steel would be at a premium, particularly once it will be produced with green hydrogen.
“However, also gray steel will become more expensive with rising carbon costs,” Lopez said.
Platts assessed the current premium of carbon-accounted HRC at Eur140/mt Feb. 2., up Eur15/mt day on day.
One of the main costs will be green hydrogen, and the company aims to run its new direct-reduced iron plant, which will replace one blast furnace, to be fully run by green hydrogen by 2029. Thyssenkrupp will finalize tenders for the supply this year. Lopez added that he expects Thyssenkrupp to form more joint ventures for hydrogen in the years to come.
Steel JV talks progressing
Shareholders of Thyssenkrupp, which owns Germany’s biggest steelmaker, Thyssenkrupp Steel, questioned the availability of energy for the decarbonization of the steel operations.
“The energy question is the key question,” Lopez said. “That’s why we are favoring a JV with EPH.”
He said that the current favorite option for the steel unit would be a joint venture with Czech energy provider EPH owned by Czech billionaire Daniel Kretinsky. He refused to elaborate on the ongoing talks despite requests by multiple shareholders at the event.
Lopez also said Thyssenkrupp would still be looking at a plan B if the JV would fail but said he would not expand on the alternative.
Thyssenkrupp will be spinning off its steel unit no matter of more government funding to decarbonize the steel industry. The tinplate plant Rasselstein will also be part of the steel JV. The company will invest Eur3 billion in the decarbonization of the steel unit, which includes the support of Eur2 billion from the German government.
The Thyssenkrupp steel mill accounts for 2.5% of Germany’s entire CO2 emissions.
Previous attempts at deals
Thyssenkrupp has had several failed attempts at previous JVs or sales of the struggling steel unit. It ended talks in 2021 about selling its steel unit to Liberty Steel, saying “ideas about the corporate value and the structure of the transaction were far apart” and would drive forward a “sustainable position” for steel on its own.
Prior to that, a steel joint venture with Tata Steel Europe was called off in 2019 following the blocking of the plan by the European Commission without further divestments.
In the fiscal year 2022-23 (Oct 2022-September 2023), Steel Europe shipped 9.4 million mt of steel, down from 9.5 million mt the previous year, while lower spot steel prices caused sales to fall 6% year on year to Eur12.4 billion. In particular, high raw material and energy costs in the first half of the year affected earnings.
Author: Laura Varriale, laura.varriale@spglobal.com
European buyers avoid HRC deals on sufficient stocks
European domestic hot-rolled coil prices remained fairly stable on Feb. 2 as buyers limited purchase volumes due to high inventory levels.
“A lot of import has arrived in Europe and volumes booked earlier from European mills have also arrived,” a service center source said. “As stocks have gone up, the buyers are not willing to accept higher prices.”
Market participants also remained hesitant about near-term price trend due to lack of real demand and improved supplies as steelmakers restart idled blast furnaces.
Deals have been reported at Eur750-760/mt ex-works Ruhr. Tradable values were reported at Eur730-770/mt ex-works Ruhr.
Platts assessed the price of domestic hot-rolled coil in Northwest Europe down Eur5/mt on the day at Eur755/mt ex-works Ruhr Feb. 2.
Interest in imported material remained muted, which aided domestic sentiment.
“Nobody is keen to buy import due to long lead times,” a trader said. “Further delays caused by the geopolitical issues at the Black Sea and concerns regarding safeguard quotas are also decreasing demand for imports.”
Offers for imported HRC were heard at Eur710/mt CIF Antwerp from Asia.
Platts assessed the price of imported HRC in Northwest Europe down Eur20/mt on the day to Eur660/mt CIF Antwerp Feb. 2.
In South Europe, deals for HRC were heard at Eur750/mt ex-works Italy and offers were heard at Eur750/mt ex-works Italy. Tradable values were estimated at Eur750-770/mt delivered Italy.
Platts assessed the price of domestic HRC in South Europe stable on the day at Eur750/mt ex-works Italy Feb. 2.
Imported HRC offers were heard at Eur630-680/mt CIF Italy from Asian mills. Turkish mills made offers at above Eur700/mt ex-works Italy, including anti-dumping duties.
Platts assessed the price of imported HRC in South Europe stable on the day at Eur675/mt CIF Italy Feb. 2.
EU carbon values under pressure on recession, demand worries
Sentiment in the European carbon price market remained bearish in the week to Feb. 2 amid muted demand. Traders and analysts have said they expect prices to remain around Eur60-65/mtCO2e in the coming week, with macroeconomic concerns and reduced power generation dominating headlines.
EU Allowances under the bloc’s Emissions Trading System were trading at Eur63.22/mtCO2e at 1038 GMT on Feb. 2 compared with Eur63.58/mtCO2e on Jan. 26.
Platts, part of S&P Global Commodity Insights, assessed EUA contracts for December delivery at Eur62.19/mtCO2e on Feb. 1.
Many analysts have downwardly revised their EUA price forecast for 2024 due to recession concerns and reduced emissions from the power and industrial sectors.
Analysts at S&P Global expect 2024 average prices to plunge to Eur63.90/mtCO2e compared with Eur85.30/mtCO2e in 2023 and Eur81.50/mtCO2e in 2022.
“EUA prices are expected to decline further due to the expectation of a technical recession despite a resilient labor market,” they said in a recent note. “The slowdown is broad-based affecting sectors like construction, manufacturing, and services. We expect prices to hit the high Eur50/mt mark threshold in February.”
Climate reforms
On Feb. 6, the European Commission is likely to recommend that the EU commit to a 90% reduction in emissions by 2040, which could provide some relief to declining prices.
This target is being backed by several EU countries, but climate policies have become heavily politicized recently, with farmers across Europe currently protesting against costly clean energy regulations.
But many policymakers, analysts and climate scientists insist that the EU must commit to this if it has any realistic chance of reaching net zero by 2050.
The European Council has set a goal for the EU to cut its greenhouse gas emissions by at least 55% by 2030, compared with 1990, and become climate neutral by 2050.
Meanwhile, the inclusion of the maritime sector in the EU ETS, opens up a new set of buyers for EUAs.
The European Commission published a document Jan. 31 attributing each shipping company to an EU member state to help these companies register for EU ETS compliance.
Shipping companies can now open holding accounts to trade EUAs and manage their ETS exposure.
Under the EU ETS guidelines, shipping companies must surrender their first ETS allowances by Sept. 30, 2025, for emissions reported in 2024.
The EU has also agreed on a phase-in period to give the industry some preparation time, with the ETS covering 40% of the emissions in 2024, 70% in 2025 and 100% from 2026 onward.
The shipping sector’s inclusion is projected to add emissions of 90 million mtCO2e this year, which is around two-thirds of the sector’s emissions.
CBAM extension
Meanwhile, the European Commission extended has the period for declarants to submit their quarterly reports under the Carbon Border Adjustment Mechanism by 30 days from the original deadline, after a significant number of importers experienced technical issues that led to some businesses being unable to make submissions.
The new carbon border tax entered into application in a transitional phase Oct. 1, with the first reporting period for importers originally set to end Jan. 31.
CBAM essentially levies a tax on imports of selected carbon intensive materials and products (including aluminum, cement, electricity, fertilizers, hydrogen, iron and steel) into the EU, removing the gap between the EU ETS carbon price and the export country of origin’s carbon price.
The main purpose of the tax is to reduce the risk of carbon leakage — as a result of EU industries locating abroad — and encourage importer nations to introduce their own carbon markets and, so, limit CBAM impacts on their traded goods.
No penalties will be imposed on reporting declarants experiencing difficulties in submitting their first CBAM report, the commission said.
“While the system has been working well in previous days with data and many reports being submitted successfully, technical teams are working around the clock to rectify remaining issues,” the EC said.
The commission has encouraged those reporting declarants that do not encounter any major technical issues to submit their CBAM report by the end of the reporting period.
Author: Eklavya Gupte, eklavya.gupte@spglobal.com
European HRC buyers continue to postpone restocking amid slow end-user demand
Quiet trading conditions prevailed in the European HRC market on Thursday, with buyers continuing to refrain from restocking, citing “sufficient” inventories and poor demand from the end-user side.
“Like 80% of buyers are keeping quiet, sitting on inventory and focused on destocking. Additionally, people are worried about a potential downtrend in the second quarter and are trying to minimize their purchases [of HRC],” a mill source said.
In spite of the subdued activity, domestic HRC prices have held firm, rising throughout January, on support from reduced supply.
“There is no pressure to drop prices – there’s no oversupply and import options are limited due to safeguards and Red Sea shipping issues,” a second mill source said.
Recent steelmaking capacity restarts in the market during January have triggered concerns among buyers that increased supply might hamper the uptrend in prices toward the end of the first quarter or beginning of the second quarter.
“That’s one of the reasons why buyers are waiting, they are unsure about the uptrend’s sustainability,” a steel service center source said.
Deals were reported at €760-770 ($823-834) per tonne ex-works in Germany and Benelux area for April-delivery HRC.
Buyers’ estimations of achievable prices were around a similar level, at €750-770 per tonne ex-works.
Offers were reported at €780-820 per tonne ex-works from integrated mills in the region, mainly for cargoes with lead times in April.
As a result, Fastmarkets calculated its daily steel hot-rolled coil index, domestic, exw Northern Europe at €762.00 per tonne on February 1, up by €1.37 per tonne from €760.63 per tonne on January 31.
The index was also up by €14.50 per tonne week on week and by €67.17 per tonne month on month.
In Italy, market conditions were similar to that in Northern Europe. In fact, market sources pointed out that the traditional €15-20 per tonne gap between Italian and Northern European HRC prices was no longer in place, with prices in both regions moving closer together.
In Italy, offers from local suppliers were heard at around €780 per tonne delivered (€765-770 per tonne ex-works) for coil delivered in March-April.
Market participants estimated the tradable market level to be in the range of €750-755 per tonne ex-works.
“Trading has been on pause in Italy for about two weeks now, only sporadic sales here and there. Buyers are trying to push the stock down, so there are really very few sales,” a trading source said.
Import offers were broadly unmoved on Thursday, with Asia-origin coil with March-April shipment offered to Italy at €655-680 per tonne CFR from Asia.
Several sources reported new offers from India coming in closer to €690-700 per tonne CFR, in contrast with offers of €660-665 per tonne CFR heard earlier in January. Indian suppliers were said to be offering material for shipment at the end of March or early April.
Buyers in Europe were cautious with making overseas HRC bookings, with the shipping crisis in the Red Sea and EU safeguard quotas seen as the major risk factors.
Published by: Julia Bolotova
Limited trading in Europe’s steel beams market, prices widen downward slightly
Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Northern Europe, was €760-790 ($823-856) per tonne on Wednesday, widening downward by €10 per tonne from €770-790 per tonne a week earlier.
Similarly, Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Southern Europe, was also €760-790 per tonne on Wednesday, also widening downward by €10 per tonne from €770-790 per tonne a week earlier.
Offers by major producers to the German market were heard at €760 per tonne, while higher prices were estimated in other parts of Europe.
Consumption by the construction sector has been weak across Europe, but Germany has been significantly affected by weak end-user demand and high energy prices. The country’s steel output last year was at its lowest volume since the financial crisis of 2009, according to national steel industry association WV Stahl.
Meanwhile, scrap costs in Turkey’s bellwether market remained firm, following price rises in November and December last year.
Fastmarkets’ calculation of its daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was $413.47 per tonne on Wednesday, up by $5.85 per tonne week on week from $407.62 per tonne.
Published by: Holly Chant