Red Sea crisis spares German steel for now
Germany’s steel industry has not yet been affected significantly by the Red Sea shipping disruption caused by Houthi and pirate attacks on vessels trying to access the Suez Canal. Many vessels have opted to take the longer route around the Cape of Good Hope, or are considering to do so.
Thyssenkrupp Steel has not yet experienced supply bottlenecks, the company said in a statement published by Reuters. The news agency stated that the group is nevertheless thinking about alternatives, should the situation escalate. “The logistics departments of our units are in close touch with transportation partners to be able to react flexibly,” it quotes the company as saying.
Thyssenkrupp did not reply to inquiries from Kallanish.
Effects further downstream in the steel supply chain are being anticipated by market players. “The detour around the Cape will cause extra costs for transport, and, not least, for insurance,” a manager of a cold-roller company points out to Kallanish. This will mean higher prices for steel imports, “and I believe that [ArcelorMittal] is already taking advantage of this circumstance with its latest price increases”, he adds.
Christian Koehl Germany
Italian stainless flats market continues to drag
Stagnation is persisting in the Italian stainless flat steel market in the first month of the year. Service centres and re-rollers are seeing a prolonged negative performance for finished product sales. Consumption is not forecast to improve in the first quarter, sources tell Kallanish.
Demand downstream remains weak, as do prices for coil derivatives. Coil values are now beginning to descend, despite mills trying to keep values high due to elevated production costs. Distributors’ stocks are reported as medium in Italy. Distributors and service centres, as well as tube-makers are buying low quantities or not buying at all, instead satisfying demand with their stocks.
Service centres say hot and cold rolled coil prices are too high, and forecast values to decline in the coming weeks by €30-50/tonne ($32-50). Mills in Europe are said to be more willing to negotiate now and are quoting February and March lead times.
With no change seen from Q4 2023, Europe is being affected by low demand and consumption, with some companies said to be in a difficult financial situation.
CRC is seen at about €2,430-2,450/t in Italy and HRC levels are at some €120-130/t less. In the rest of Europe, values for CRC are also below €2,500/t, at about €2,470-2,480/t delivered. Distributors and service centres are chasing volumes, putting pressure on sheet and tube values. No short-term recovery is forecast.
Some CRC from Asia has been sold in Italy at €2,200/t cfr, while HRC can be found in India at €2,000/t cfr. Imported material however requires a 3-4-month delivery time, which discourages buyers. A service centre says its results are about 15% lower than last year, while another talks about a 20-25% reduction.
Natalia Capra France
European HRC prices remain below official offers; sentiment still largely positive
Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Northern Europe at €744.00 ($809) per tonne on Friday, up by €1.08 per tonne from €742.92 per tonne on Thursday January 18.
The index was up by €12.12 per tonne week on week and by €53.58 per tonne month on month.
In Northern Europe, offers of April-delivery coil were heard in the range of €780-800 per tonne ex-works. One mill was heard to be seeking €800-820 per tonne ex-works.
An offer was reported from a German supplier at €750 per tonne ex-works.
An integrated mill in the Benelux area was reported to be accepting bids at €760-770 per tonne ex-works.
Several sources said that mills are able to offer shorter lead times than announced.
“Officially, producers in Northern Europe claim to only have second-quarter delivery coil, but when it comes to a deal, some can still offer lead times in March,” a steel service center in the region told Fastmarkets.
Tradeable values for HRC were reported by most buyer sources in the range of €730-750 per tonne ex-works.
Transactions were reported at €740-750 per tonne ex-works in Germany for limited tonnages.
“Demand is still low. Customers do not believe in €800 [per tonne ex-works for HRC]. Mills still can take orders at €730-760 [per tonne ex-works],” a buyer in the region said.
Meanwhile, Fastmarkets calculated its daily steel hot-rolled coil index domestic, exw Italy at €735.42 per tonne on Friday, up by €0.81 per tonne day on day from €734.61 per tonne.
The index was up by €13.75 per tonne week on week and by €49.17 per tonne month on month.
Offers from Italian suppliers of March-April delivery HRC to Italy were heard in the range of €760-780 per tonne delivered, equivalent to €745-755 per tonne ex-works.
Sources estimated tradeable values at €740-750 per tonne delivered, equivalent to €725-735 per tonne ex-works.
One European mill was heard offering April-delivery HRC to Italy at €780 per tonne delivered.
March-delivery HRC of Serbian origin was heard offered to Italy at €790 per tonne delivered.
Offers of HRC from Asia to Italy were still rare due to risks related to import safeguards and the Red Sea shipping crisis, sources said.
Several sources reported a booking of Turkey-origin coil to Italy at €695 per tonne CFR for end-March shipment, including anti-dumping duties.
Published by: Julia Bolotova
Metinvest, Danieli, Mimit plan €2 billion, 3 million tpy steelmaking facility in Italy
The project would be financed through government grants and external investments totaling about €2 billion ($2.2 billion), a joint statement on the website of Italy’s Ministry of Economic Development (Mimit) said on Wednesday January 17.
“Now, feasibility studies will be carried out at the site [in Piombino]; after that, the binding contract will be signed, outlining specific obligations of the parties,” a source familiar with the matter told Fastmarkets.
Liquid steel production at the Piombino site was stopped in 2014, when a blast furnace with capacity of 2.4 million tpy was idled; it has been operating as a rerolling site since then, Fastmarkets understands.
“This project, with capacity of around 3 million [tpy] of steel, will play a crucial role in Italy’s green transition by implementing sustainable and environmentally friendly industrial practices,” Yuriy Ryzhenkov, chief executive officer at Metinvest Group, said in the joint statement.
The production route for this 3 million tpy facility would most likely be based on electric-arc furnaces for processing direct-reduced iron, Fastmarkets heard.
“Additionally, it will help boost the utilization of our iron ore mining and processing plants in Ukraine, driving their modernization to produce high-quality pellets,” Ryzhenkov said.
Metinvest’s iron ore operations in Ukraine are operating at 35-45% of capacity. Logistics issues, including Russia’s blockage of Black Sea ports, are the major obstacle for production ramp-up, market sources said.
Ryzhenkov has said that Metinvest would consider investing in a new steelmaking asset in Europe.
“The purpose of the industrial project is to develop, build, own, operate and maintain an environmentally sustainable plant for the production of finished steel products obtained through the transformation of ferrous materials into hot-rolled coils subject to further processing, to be produced in Piombino on an area of about 260 hectares,” the joint statement said.
“This agreement is an important first result that will lead to the construction of a plant that will be one of the first fully digital plants and will have a major positive impact on employment,” Gianpietro Benedetti, president at Danieli Group, said in the statement.
JSW Steel and Piombino
India’s JSW Steel acquired the Piombino site from Algeria’s Cevital in 2018. JSW Steel Italia operates three rolling mills in Piombino that make rail, wire rod and bar products and rely on billet and bloom shipments from its parent company.
JSW had announced plans to resume steelmaking in Piombino, but they were never implemented.
Sources familiar with the matter said the Italian government is seeking an agreement with JSW to develop rail production in Piombino.
On Thursday January 18, Minister Adolfo Urso met with Sajjan Jindal, CEO of the JSW Group, to discuss plans for relaunching the Piombino steelmaking hub.
“The meeting made it possible to define the modalities of the new program agreement, aimed at resuming rail production,” a statement on Mimit’s website said.
“In the next few days, the memorandum of understanding between Mimit and JSW will be signed — which, as in the case of Metinvest, will identify timing and procedures to allow the two production projects to be developed in the steel industry,” the statement added.
Published by: Julia Bolotova
Tata Steel to shut hot metal production at Port Talbot by end-2024, install EAFs in 2027
The announcement was made by the company on Friday, after a meeting with representatives of the trade unions in London on the previous day.
The rumors about hot-end closure at the Port Talbot site first emerged in autumn 2023, and on January 19 Tata Steel UK confirmed its plans to shut the BFs down, but keep the hot-strip mill operational.
“Port Talbot’s two high-emission blast furnaces and coke ovens would close in a phased manner, with the first blast furnace closing around mid-2024 and the remaining heavy end assets would wind down during the second half of 2024,” the company said in its press release.
The hot-strip mill will remain operational through the proposed transition period and in future. On top of that, the company’s downstream and steel processing centers would also keep working.
The steel slab for production would be supplied from Tata Steel plants in the Netherlands and India, as well as “other select strategic suppliers,” the release said.
Port Talbot green transition
Tata Steel plans to replace the existing blast-furnace basic-oxygen furnace (BF-BOF) production route at Port Talbot with the more eco-friendly EAF route, Fastmarkets reported.
The total capital costs of Port Talbot’s green transformation would amount to £1.25 billion ($1.59 billion) including a £500 million government loan that Tata Steel UK secured previously.
The combined capacity of the new EAFs at Tata Steel would be around 3 million tonnes of crude steel per year.
Tata Steel pointed out that the new EAF would be fed by predominantly UK-produced scrap. That means that the company would need to buy high-quality scrap grades with lower impurities that are suitable for flat steel production.
The UK is a net scrap exporter, but with new EAF-based steelmaking capacities coming online, it could become an importer of certain grades, sources suggested.
Currently, the UK is one of the largest exporters of steel scrap in the world, after the EU-27 and the US, with 2022 outflows reaching 8.24 million tonnes, according to the Bureau of International Recycling (BIR). In January-June 2023, the UK exported 3.68 million tonnes of steel scrap, down 10.5% from 4.11 million tonnes in the same period of 2022, according to the BIR.
The new EAFs at Port Talbot are expected to be commissioned in 2027, and the proposed investment would reduce the site’s carbon emissions by around 5 million tonnes per year.
According to Fastmarkets’ information, Port Talbot is equipped with two BFs with a combined capacity of 5 million tpy and two BOFs with a capacity of around 4.8 million tpy. The site at Port Talbot produces hot-rolled and cold-rolled coil, as well as tubes.
According to Tata Steel UK’s press release, the company has rejected the proposal of the UK multi-trade union representative body (UK Steel Committee) to keep one of its BFs at the Port Talbot site operational during its transition toward low-carbon production.
Notably, Tata Steel pointed out that such decision would not be financially feasible.
Unions’ reaction; strike possibility looms
The hot flow closure at Port Talbot would potentially result in 2,800 jobs cuts, the company said, with 2,500 of that coming within the next 18 months.
The company said it would support employees affected by the transformation plan and, jointly with the UK and Welsh government, established a transition board with £100 million funding for short-term support and long-term economic regeneration, according to the company.
Trade unions have expressed their disappointment over Tata’s decision to proceed with the BF closures and warned of possible industrial action.
“This is of course extremely disappointing. In one area, the company did accept the multi-union recommendation, which is to keep the hot-strip mill open to roll slab over a transition period, supporting hundreds of jobs there, but Tata have rejected our broader proposals to safeguard production capacity and protect jobs,” the steel unions Community, Unite and GMB said in a joint statement on January 19, seen by Fastmarkets.
“Unite is ready to use everything in its armory to defend steel workers and our steel industry. We have detailed research demonstrating how and why Tata should be expanding UK steel production in line with growing demand, not slashing its workforce. We have secured funding from a future Labour government that could do this. Tata’s plan to close the blast furnaces is simply industrial vandalism on a grand scale,” Unite general secretary Sharon Graham said.
The Community and GMB trade unions said they do not accept Tata Steel’s rejection of the multi-union plan to keep BFs operational during the transitional period.
The unions said they will consult on next steps, stressing that “all options to protect jobs are on the table, including industrial action.”
Lee Allen in London contributed to this report
EUROMETAL met with Belgian steel distributors
EUROMETAL was present this Wednesday at the New Years Drink of the Federation of Belgian Steel Distributors, Belmetal. This networking event brought together the federation’s members, partners and collaborators, in the city of Ghent.
Taking place at the Museum of Industry, housed in an old cotton mill, participants were able to visit the exhibition “Ferro Non Ferro” and get immersed in the world of metallurgy, full of less-known stories and undervalued craftsmanship, discovering the history of this heavy industry in a playful and contemporary setting.
This exhibition is open to the public until 1 September 2024.
Tata confirms UK BF closures, unions threaten strikes
Tata Steel has confirmed it will close the blast furnaces at its Port Talbot steelworks and cut up to 2,800 jobs. The hot strip mill will continue to operate through the proposed transition period, while downstream units will source imported steel feedstock from Tata Steel plants in the Netherlands and India.
The first of the two BFs will close around mid-2024, with the second unit and coke ovens shutting by year-end. The proposal also includes a wider restructuring across the company, including the intended closure of the Continuous Annealing Processing Line (CAPL) in March 2025. The new electric arc furnace is to be commissioned in 2027.
Of the affected jobs, around 2,500 will be impacted in the next 18 months, with a further 300 impacted in the next three years. This could include the potential “consolidation and rationalisation” of cold rolling assets in Llanwern once the required investments are completed at Port Talbot, Tata says.
Following discussions with the UK Steel Committee, Tata agreed to revise its proposal and continue to operate the hot strip mill.
However, it commissioned an independent study that concluded continued blast furnace production while constructing the new EAF is not feasible. This is because of projected operating costs, the risks of building an EAF in an already operating steel melt shop, and the near end-of-life condition of several heavy end assets.
“The course we are putting forward is difficult, but we believe it is the right one,” Tata chief executive T V Narendran says in a note seen by Kallanish. “Having invested almost £5 billion [$6.3 billion] in the UK business since 2007, we must transform at pace to build a sustainable business in the UK for the long-term. Our ambitious plan includes the largest capital expenditure in UK steel production in more than a decade, guaranteeing long-term, high-quality steel production in the UK and transforming the Port Talbot facility into one of Europe’s premier centres for green steelmaking.”
The proposal to invest in an EAF, predominantly fed by UK-produced scrap, mirrors the successful installation of such low-carbon production facilities in other major steel producing markets such as the US. These have cut emissions whilst guaranteeing production of complex, high-quality steel, Tata Steel says.
“On completion, the programme would transform the competitiveness of Tata Steel UK, secure most of its capability in terms of end products, whilst cutting its carbon emissions by about 85% and the UK’s overall carbon emissions by about 1.5%. The proposal to use UK-sourced scrap as the raw materials for future steelmaking would also maintain the country’s self-sufficiency as almost all of the raw materials for the current blast furnaces need to be imported,” the firm adds.
The steelmaker is offering affected workers a £130m support package including redundancy terms, skills training, community-support programmes and job-seeker initiatives. It has also set up jointly with government a £100m dedicated Transition Board to support affected employees.
Reacting to the news, the GMB and Community trade unions have said “all options” are on the table to protect jobs, including industrial action. “It is an absolute disgrace that Tata Steel, and the UK Government, appear intent on pursuing the cheapest instead of the best plan for our industry, our steelworkers and our country,” they note in a joint statement. “Tata Steel and the UK Government must reconsider their positions in order to safeguard the future of British steelmaking, and head off a major industrial dispute.”
They also criticised Unite the Union for undermining the multi-union proposal by “unilaterally campaigning for discredited fantasy solutions”, urging it to return to cooperating.
Minister for the Economy of Wales Vaughan Gething said: “It is by now clear that the case set out for a future that does not require the scaling back covered in today’s announcement has not been fully explored. A key recommendation, that of operating one blast furnace for a significantly longer period was both economically convincing and underpinned a fair and just transition for TSUK [Tata Steel UK]. This proposal highlighted that the Company could have maintained a significant workforce whilst remaining commercially viable.”
“As Tata Steel has stated, any agreement is subject to relevant regulatory approvals, information and consultation processes, and the finalisation of detailed terms and conditions. We urge the Company not to make any irreversible choices based on the current levels of UK Government support,” he added.
Adam Smith | Poland
Vehicle electrification need closer partnership between metals suppliers and carmakers: Volvo CEO
Car manufacturers will have to work closer together with their suppliers to achieve net zero and governments need to make sure to pass legislation that benefits the supply chain of electric vehicle production, Jim Rowan, CEO of Swedish-headquartered car maker Volvo, said Jan. 18.
At a panel discussion on EV rollout at the World Economic Forum in Davos, Switzerland, Rowan said that 98% of the companies’ CO2 emissions come from scope 3, which is the materials supply side.
“We really need to make sure that we work with suppliers, bringing in legislation from government,” said Rowan. “We need green energy, we won’t get green steel, we won’t get green aluminum unless governments really step up in green infrastructure.”
Many companies in different industries across the value chain are reducing their Scope 1 and 2 emissions by implementing energy-efficient technologies, electrifying processes, and using zero-carbon alternatives, but in order to reduce their Scope 3 emissions, which are indirect emissions associated with their value chain, they need low-carbon raw materials.
Hilde Merete Aasheim, CEO of aluminium producer Norsk Hydro, said at the panel that the current dialogue of the electrification of cars takes place on CEO level and not procurement level. “CEOs set the tone,” she said.
Rowan added that discussing on CEO level would help establishing the long-term partnerships.
“We are not satisfied where we are today. We are chasing the CO2 emissions from bauxite to finished products,” Aasheim said, adding that Norsk Hydro’s current focus is to position itself more in producing aluminum via recycling.
The European market has seen several offtake agreements between car manufacturers and steel or aluminum producers of low carbon emission metals products. German OEM Kirchhoff Automotive secured a Eur130 million supply deal with Swedish steelmaker H2 Green Steel Jan. 17 starting in 2027.
Platts carbon-accounted steel premium for hot-rolled coil was assessed at Eur125/mt Jan. 18, up Eur25 on the week. The Platts low-carbon aluminum Good Western premium was assessed at $225/mt Jan. 18, up $30 on the week.
Author Laura Varriale, laura.varriale@
Italian government begins the process for Acciaierie d’Italia to be commissioned
The Italian government has issued a decree enabling Invitalia, the state shareholder of Acciaierie d’Italia (ADI), to interrupt the shareholder corporate continuity and put the company in extraordinary administration within fourteen days, union sources that met the Italian government told S&P Global Commodity Insights on Jan 18.
The decree is set to be signed on Jan. 19 by the President of the Republic, Sergio Mattarella, and paves the way to remove its main shareholder, ArcelorMittal, the sources said.
The Italian government was working to find a solution for the second largest Italian flat steel producer, but last week failed to find an agreement with ArcelorMittal to inject more liquidity to keep running what it was once the largest European steel company. At the moment only two blast furnaces are operational and production is at its lowest-ever level. The company this week was on the brink of having its gas supply cut and a court said that the Italian gas company Snam could stop supplying energy on unpaid bills, although ADI appealed it.
“ArcelorMittal is not a problem anymore and now there are fourteen days to understand if it actually abandons by acknowledging the errors or abandons asking for compensation for damages, but this will not cause any problem to production continuity, because the Government reiterated that there are Eur320 million available for current management and the possibility of opening to private partners as well. All this will happen after making the plants and workers safe,” Rocco Palombella, UILM union representative, said.
“We reiterate our opposition to the extraordinary administration, which in 2015 made a clean sweep and created a disaster for related companies. However, we have received reassurances from all the Ministries involved on safeguarding employment and on the management of a possible administration which will only be temporary and which aims to find a private investor worthy of the former Ilva,” he added.
With this last move from the Italian government the situation is likely to go back to 2015, when the company, formerly known as Ilva, was put under special administration and then sold to ArcelorMittal in 2018. ArcelorMittal, Europe’s largest and the world’s second largest steelmaker, owns 62% of ADI. The other 38% is owned by Invitalia, Italy’s National Agency for Investment Attraction and Business Development that is part of the Ministry of Economy.
An ADI spokesperson declined to comment.
Author Annalisa Villa, annalisa.villa@
Steel beam prices widen down in quiet European market
Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Northern Europe was €770-800 ($837- 870) per tonne on Wednesday, with the price range widening downward by €10 per tonne from €780-800 per tonne a week earlier.
One trader in northern Europe said there was some demand from stock, given little to no new rolling activity.
“Customers could wait a while before new orders, [especially following December price rises],” the trader said.
But a second trader in northern Europe said that trading activity was expected to soon improve and be slightly stronger than it was in December, with buyers having already held back on buying last month.
Scrap feedstock prices in Turkey’s bellwether market moved down on Wednesday after following an upward trend since January 3.
Sources told Fastmarkets that demand for scrap in Turkey had fallen away slightly amid weak finished steel sales in the country’s export markets and slower finished steel trade in its domestic market.
And Fastmarkets’ calculation of its daily index for steel scrap HMS 1&2 (80:20 mix) North Europe origin, cfr Turkey was $415.10 per tonne on Wednesday, down by $3.83 per tonne week on week from $418.93 per tonne.
Fastmarkets’ weekly price assessment for steel beams, domestic, delivered Southern Europe was €770-800 per tonne on Wednesday, widening down by €10 per tonne week on week from €780-800 per tonne.
Published by: Holly Chant